Coal in the first quarter gained back some market share in PJM

PJM Interconnection‘s wholesale electric energy and capacity markets produced competitive results in the first three months of 2013, with coal taking back some market share lost lately to natural gas, according to the 2013 State of the Market Report for PJM.

The report was released May 16 by Monitoring Analytics LLC, the Independent Market Monitor (also known as the Market Monitoring Unit or MMU) for PJM.

The Independent Market Monitor, Joseph Bowring, said: “Our analysis concludes that the results of the PJM Energy and Capacity Markets in the first three months of 2013 were competitive.”

The market dynamics changed in the first quarter of 2013, the report said. A combination of increased, weather related, demand, and higher fuel costs led to a reversal of the downward trend in locational marginal pricing (LMP). The hourly average load increased 5.8% in the first three months of 2013 compared to the first three months of 2012. The load-weighted average LMP was $37.41 per MWh, 19.9% higher in the first quarter of 2013 than in the first quarter of 2012.

The price of natural gas, especially in the eastern part of PJM, increased in the first three months of 2013, and coal prices were mixed in the first quarter compared to the first three months of 2012. As a result of the relative changes in fuel costs, coal-fired units were more competitive with gas-fired units, coal-fired output increased in the first quarter and gas-fueled output decreased, also reversing the trend towards reduced coal output.

“The results of the energy market dynamics in the first quarter of 2013 were generally positive for new coal units,” said a May 16 statement from the monitor about the report. “In a continuation from the fourth quarter of 2012, new coal units ran at a lower fuel-only marginal cost than new combined cycle units. The combination of higher energy prices and higher gas prices relative to coal prices resulted in significantly higher energy market net revenues for a new entrant coal plant in the first three months of 2013. Energy market net revenues for a coal plant in seven zones in the first three months of 2013 exceeded fifty percent of the energy market net revenues for the full year of 2012.

PJM average real-time generation in the first three months of 2013 increased by 5.3% from the first three months of 2012, from 88,068 MW to 92,776 MW. During the first quarter, coal units provided 44.5%, nuclear units 35.5% and gas units 15.1% of total generation. Compared to the first three months of 2012, generation from coal units increased 16.2%, generation from nuclear units increased 2%, and generation from gas units decreased 17.2%. This represents a reversal of the recent trend of decreasing coal-fired output and increasing gas-fired output. The change is primarily a result of increased natural gas prices in the first three months of 2013, particularly in eastern zones, and lower or constant coal prices.

Of the total installed capacity in PJM as of March 31: 41.8% was coal; 28.6% was gas; 18.2% was nuclear; 6.2% was oil; 4.3% was hydroelectric; 0.4% was solid waste; 0.4% was wind, and 0.0% was solar.

Due to environmental regulations and agreements to limit emissions, many PJM units burning fossil fuels have installed emission control technology. Environmental regulations may affect decisions about emission control investments in existing units, investment in new units and decisions to retire units lacking such controls, the report noted. As of March 31, 68.4% of coal steam MW’s had some type of FGD (flue-gas desulfurization) technology to reduce SO2 emissions, while 97.6% of coal steam MW had some type of particulate control. NOx controls are used by nearly all fossil fuel unit types, and 91.0% of fossil fuel fired capacity in PJM has some form of NOx emission control technology in place.

Gas combined-cycle dominates the future construction picture

As of March 31, there was 73,156 MW of capacity in generation request queues for construction through 2020, compared to an average installed capacity of 197,000 MW in the first three months of 2013. Wind projects account for approximately 19,079 MW of nameplate capacity, or 26.1% of the MW in the queues, and combined-cycle projects account for 42,217 MW, or 57.7% of the MW in the queues.

On the other hand, there is 11,844 MW of capacity in PJM that are in the works to deactivate by the end of calendar year 2019. A total of 7,131 MW of generation capacity retired from January 2012 through March 2013, and it is expected that a total of 20,297 MW will have retired from 2011 through 2019, with most of this capacity retiring by the end of 2015.

Retirements from January 2011 through March 2013 account for 8,453 MW, or 39.6% of retirements during this period. Units planning to retire in 2013 account for 237 MW, or 1.2% of retirements during this period. Overall, 3,508 MW, or 29.6% of all MW planned for deactivation from 2013 through 2019, are expected in the American Electric Power zone of PJM.

“A potentially significant change in the distribution of unit types within the PJM footprint is likely as a combined result of the location of generation resources in the queue and the location of units likely to retire,” the report noted. “In both the EMAAC and SWMAAC [Locational Deliverability Areas], the capacity mix is likely to shift to more natural gas-fired combined cycle (CC) and combustion turbine (CT) capacity. Elsewhere in the PJM footprint, continued reliance on steam (mainly coal) seems likely, despite retirements of coal units.”

EMAAC stands for Eastern Mid-Atlantic Area Council (mostly New Jersey and eastern Pennsylvania), while SWMAAC is Southwestern MAAC (around Washington, D.C., and Baltimore).

Planned deactivations of PJM units, most of them coal-fired, as of May 1, 2013, are:

Unit    Zone    MW    Projected Deactivation Date

  • Warren County Landfill, JCPL, 2.9, 09-Jan-13
  • Ingenco Petersburg Plant, Dominion, 2.9, 31-May-13
  • Hutchings 4, DAY, 61.9, 01-Jun-13
  • Indian River 3, DPL, 169.7, 31-Dec-13
  • BL England 1, AECO, 113.0, 30-Apr-14
  • Riverside 6, BGE, 115.0, 01-Jun-14
  • Burlington 9, PSEG, 184.0, 01-Jun-14
  • Chesapeake 1-2, Dominion, 222.0, 31-Dec-14
  • Yorktown 1-2, Dominion, 323.0, 31-Dec-14
  • Portland, Met-Ed, 401.0, 07-Jan-15
  • Beckjord 2-6, DEOK, 1,024.0, 01-Apr-15
  • Titus, Met-Ed, 243.0, 16-Apr-15
  • Shawville, PENELEC, 597.0, 16-Apr-15
  • Gilbert 1-4 and 8, JCPL, 188.0, 01-May-15
  • Glen Gardner, JCPL, 160.0, 01-May-15
  • Werner 1-4, JCPL, 212.0, 01-May-15
  • Kearny 9, PSEG, 21.0, 01-May-15
  • Cedar 1-2, AECO, 67.7, 31-May-15
  • Deepwater 1 and 6, AECO, 158.0, 31-May-15
  • Middle 1-3, AECO, 74.7, 31-May-15
  • Missouri Ave B, C and D, AECO, 60.0, 31-May-15
  • Essex 12, PSEG, 184.0, 31-May-15
  • Clinch River 3, AEP, 230.0, 01-Jun-15
  • Glen Lyn 5-6, AEP, 325.0, 01-Jun-15
  • Kammer, AEP, 600.0, 01-Jun-15
  • Kanawha River, AEP, 400.0, 01-Jun-15
  • Muskingum River 1-4, AEP, 790.0, 01-Jun-15
  • Picway 5, AEP, 95.0, 01-Jun-15
  • Sporn, AEP, 580.0, 01-Jun-15
  • Tanners Creek 1-3, AEP, 488.1, 01-Jun-15
  • Ashtabula, ATSI, 210.0, 01-Jun-15
  • Eastlake 1-3, ATSI, 327.0, 01-Jun-15
  • Lake Shore, ATSI, 190.0, 01-Jun-15
  • Hutchings 1-3 and 5-6, DAY, 271.8, 01-Jun-15
  • Bergen 3, PSEG, 21.0, 01-Jun-15
  • Burlington 8 and 11, PSEG, 205.0, 01-Jun-15
  • Edison 1-3, PSEG, 504.0, 01-Jun-15
  • Essex 10-11, PSEG, 352.0, 01-Jun-15
  • Mercer 3, PSEG, 115.0, 01-Jun-15
  • National Park 1, PSEG, 21.0, 01-Jun-15
  • Sewaren 1-4 and 6, PSEG, 558.0, 01-Jun-15
  • BL England Diesels, AECO, 8.0, 01-Oct-15
  • Chesapeake 3-4, Dominion, 354.0, 31-Dec-15
  • Oyster Creek, JCPL, 614.5, 31-Dec-19

 Total 11,844.2

PJM operates a centrally dispatched, competitive wholesale electric power market that, as of March 31, 2013, had installed generating capacity of 181,896 MW and about 820 market buyers, sellers and traders of electricity in a region including more than 60 million people in all or parts of Delaware, Illinois, Indiana, Kentucky Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.