A significant increase in new combined-cycle natural gas plants is expected to add 3,414 MW of capacity to PJM Interconnection’s power supply resources beginning in June 2022 through May 2023, according to the results of its latest auction.
This year’s auction produced 144,477 MW of total resources for the 2022/2023 period. Headquartered in Valley Forge, PA, PJM is the grid operator for 65 million customers in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, West Virginia, and the District of Columbia.
Natural gas, renewables and nuclear saw the biggest increases in cleared capacity. Renewable capacity also grew, with wind up 312 MW for a total of 1,728 MW. Solar reached 1,512 MW, up by 942 MW. In total, renewables would account for up to 11,761 MW in the PJM system in the 2022/2023 period.
Nuclear generation also rose significantly, clearing an added 4,460 MW from the last auction. Energy efficiency programs also saw an increase of 1,979 MW, or 70%. Meanwhile, coal capacity decreased by 8,175 MW, and demand response was down 21% from the 2021/2022 delivery year at 8,812 MW.
For most of the PJM territory, prices in the latest auction averaged $50/MW per day, far lower than 2018’s auction prices of $140. PJM said prices in this year’s auction were lower than in previous years because of a lower load forecast and reserve requirement, a 19% decrease in the net cost of new entry, and lower offer prices overall from participating resources.
Typically, auctions are held three years prior to the delivery year. However, the 2022/2023 auction was postponed from May 2019 while the Federal Energy Regulatory Commission considered approving new capacity market rules.
PJM has compressed its auction calendar to return to a three-year-forward basis. The next annual auction for 2023/2024 is scheduled in December.
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