PJM Interconnection, in a May 5 study that shows its market design attracts new power generation projects, offered a table that contrasted some recent, costly power projects in regulated markets against what it would cost to build a new gas-fired combined cycle project in PJM.
Those projects are:
- Kemper County IGCC in Mississippi, coal with carbon capture, $6.5 billion cost, 582 MW, cost per kW of $11,168, converted to dollars/MW-day $3,272;
- Crescent Dunes, solar with molten salt storage, $0.91 billion cost, 110 MW, cost per kW of $8,200, converted to dollars/MW-day $2,402;
- Watts Bar 2 of TVA, nuclear, $6.1 billion cost, 1,150 MW, cost per kW of $5,304, converted to dollars/MW-day $1,554;
- Vogtle 3 and 4 in Georgia, nuclear, $14 billion cost, 2,230 MW, cost per kW of $6,700, converted to dollars MW-day $1,963;
- Prairie States in Illinois, supercritical coal, $5 billion cost, 1,600 MW, cost per kW of $3,125, converted to dollars/MW-day $915; and
- Comparison Generator Benchmark, Natural Gas Combined Cycle, cost per kW of $1,400, converted to dollars/MW-day $410.
PJM noted that the above-mentioned comparison benchmark value was offered in 2015 testimony to the Public Utilities Commission of Ohio as representing a working benchmark used by IHS CERA. In fact, other firms publish ranges lower than this value. Actual new combined cycle entry in PJM (both merchant and regulated) is coming on-line at costs well below this value, the report added.
Said the report: “The conclusion from this table is clear. Investment in high capital, high risk and experimental technologies will not find footing in PJM as they might in regulated regimes. The price of these projects is intolerably high in contrast to the natural gas combined-cycle alternative that today’s market offers.”
The study later added: “Recent combined-cycle development in Virginia represents entry under a full cost-of-service paradigm. These new plants have been praised by the industry as extremely well executed by the utility (Dominion Virginia Power) and cost effectively managed by the State Corporation Commission. The regulatory process that evaluated and accepted these resources also benefits from unusual transparency as each of the three examples considered below (Brunswick County, Bear Garden and Warren County) were approved with separate rate riders that state a specific annual revenue requirement for each plant. While just a ‘snapshot,’ the Virginia plants would seem to reflect the operation of regulation at its best. Therefore, they serve as a fair representative of the overall regulated model against which to compare PJM’s market-driven outcomes.”
During a conference call on the report, PJM Senior Vice President and General Counsel Vincent Duane said that PJM is “agnostic” on fuel types. It is not opposed to new baseload coal or nuclear generation, once such new plants become more cost competitive, Duane said.