Low natural gas prices over the next 20 years would accelerate coal retirements and bring emissions in PJM Interconnection territories below the targets set by the Environmental Protection Agency’s Clean Power Plan (CPP), according to a new report from the regional transmission organization (RTO).
Modeling for gas prices ranging from $3-4/MMBtu in constant 2018 dollars over a 20-year period, PJM estimated that nearly 30 GW of coal-fired capacity would be retired from its system, while 35 GW of natural gas-fired capacity would come online to maintain reliability.
“Because of accelerated retirements” in a low-gas price scenario, “there would be no cost to achieve compliance, and the resulting emissions would be below the final Clean Power Plan targets, even without the Clean Power Plan,” PJM said.
PJM, which operates the electric grid for all or part of 13 states in the Mid-Atlantic and Midwest, modeled a number of compliance pathways for its region and found that “resource adequacy is maintained” throughout its footprint regardless of the scenario.
Lower natural gas price would have “a greater effect on emissions levels, the retirement of fossil steam resources and new entry of natural gas combined cycle resources than even the most stringent of the studied compliance pathways that also regulate the CO2 emissions of new natural gas combined-cycle resources,” PJM said.
PJM estimated fairly modest costs to comply with the CPP, the Obama administration’s signature plan to mitigate climate change by reducing carbon dioxide emissions from U.S. power plants by 32% by 2030 based on 2005 levels (see Daily GPI, Aug. 3).
PJM said it could achieve emissions targets under the CPP at a levelized compliance cost ranging from $0.61/MWh to $1.93/MWh, or an increase of 1.1-3.3%, with regional compliance models using emissions credit trading costing less to implement than individual state plans.
PJM’s analysis comes as gas-fired power generation continues to show year/year increases in 2016, according to EIA data (see related story).
The CPP has faced legal scrutiny and court challenges led by coal companies and states with ties to the industry. Earlier this year, the U.S. Supreme Court issued a stay blocking the administration from enforcing the CPP until its legal fate has been decided (see Daily GPI, Feb. 10).