The nation’s largest electricity market is warning that it will face a steep capacity shortfall by the close of the decade as forced power plant retirements far outpace planned additions. Policy-driven closures of primarily coal plants threaten to leave PJM Interconnection – which serves 65 million Americans in 13 states and the District of Columbia – not only short of capacity but facing a reliability crisis during periods of peak demand.

PJM’s warning is just the latest siren blast alerting policymakers to the unshakeable reality that the energy transition is moving without the guardrails needed to reliably keep the lights on.

PJM’s projected shortfall is a remarkable development for a grid that has been awash in capacity and a dependable source of energy for neighboring grids. The startling reality is this: if PJM is in trouble, there isn’t an area of the country that’s safe.

EPA is Driving the Crisis

PJM projects that it will lose 40 GW of generating capacity by 2030 – 21% of the market’s existing capacity – with only 31 GW of additions in the same period. To put that into perspective, that’s the equivalent of losing the electricity needed to power 30 million homes. While the losses will be primarily from the closure of coal plants – plants that can provide electricity 24/7 and which are often called upon to ramp up during periods of peak demand – the additions will be largely from intermittent renewable capacity, which, by definition, is often unavailable when needed.

If there is any confusion over what’s driving this projected shortfall, there shouldn’t be. Of the 40 GW of projected losses, PJM expects 25 GW to be pushed off the grid due to policy, namely U.S. Environmental Protection Agency (EPA) regulation and state-mandated clean energy targets. PJM believes three EPA rulemakings – part of a suite of six the agency is promulgating to force accelerated coal plant retirements – could force 10,500 MW of capacity off the grid. As stark as that projection sounds, it’s more than likely an undercount.

The loss of so much coal capacity so fast is opening a massive gap grid operators, utilities and energy regulators are increasingly at a loss to fill. The mounting challenge of siting, building and integrating new wind and solar generation, as well as the transmission infrastructure needed to support it, is proving herculean. And compounding the danger from the loss of capacity is soaring electricity demand. Electrification of heating, industry and transportation, along with burgeoning power demand from big data (as PJM notes, Loudon County, Va. Is the data center capital of the world), cries out for a more robust and reliable power supply, not less.  

Unfortunately, the very folks widening this gap between what’s needed and what’s available – here’s looking at you EPA Administrator Regan – seem extraordinarily uninterested in the power supply shortfalls, rising prices and potential blackouts they’re helping create.

PJM maybe the latest indication of the crisis now at our doorstep but it’s hardly the first. California, Texas and New England have already seen blackouts, near-misses or extraordinary energy prices due to supply shortfalls. The Midcontinent Independent System Operator, the grid operator for much of the Midwest, is also now warning capacity losses are moving much faster than the ability to replace them.

Warnings Unheeded

Notably, we knew this was coming. Regulators and utilities have been warning about the loss of fuel-secure dispatchable capacity for years. They’ve warned of markets unable to value the reliability attributes provided by the coal fleet and they’ve warned about the danger of regulatory overreach.

For example, four utility executives wrote to PJM five years ago pleading for market reform to forestall the very capacity losses now deemed so alarming.  They explained that PJM’s efforts to reform pricing and address market failures have fallen short of the “fundamental changes that are needed to support baseload electric generator units over the long-term.” They warned that “PJM has not taken the proactive steps needed to value resiliency attributes, such as fuel security and fuel diversity, of its generating fleet.” Now, EPA is only adding fuel to the market failure fire.

Of course, regulators at both the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation (NERC) have not minced words about an impending reliability crisis. NERC, for its part, has specifically warned against an accelerated loss of existing capacity, encouraging careful work to preserve dispatchable fuel diversity. NERC’s recent long-term reliability assessment was unprecedented in its conclusion of a national power supply on the ropes.

The Value of What’s Being Pushed Aside

What’s particularly disturbing is the ongoing campaign to downplay – if not dismiss – the critically important role the coal fleet plays on grids across the country. Consider the importance during two recent winter events of the same coal plants PJM is warning it’s about to lose.

Over this past Christmas, during winter storm Elliot, when blackouts hit Tennessee and part of the Carolinas – and pushed PJM into emergency operating conditions – it was coal that provided the extra power to keep the lights on. The coal fleet provided 38% of the increased electricity generated nationwide during Elliott. In PJM, coal provided 47% of increased power.

In January of 2018, when bitter cold blanketed the eastern part of the country, fuel-secure coal plants also came to the rescue. As electricity demand soared, coal plants supplied 57% of the increased generation over the previous month.

Weather-dependent renewables and 4-hour battery storage aren’t going to cut it. And additional natural gas capacity will at best paper over the crisis. Again and again, during bitter cold, gas supply comes up short to meet both heating and power demand. During Elliot this Christmas, PJM had 46 GW of outages due to the storm. Of those, 70% — 32 GWs – were gas plants. Interruption of gas supply is a reoccurring and increasingly dangerous problem across the country.

The coal fleet is absolutely essential to the nation’s grid reliability. Policymakers shouldn’t have needed anymore crises or warnings to recognize the threat of how the force-fed energy transition is proceeding. But just maybe, this alarming warning will be what it takes to spur desperately needed action. Hope – like the steady drumbeat of grid reliability warnings – springs eternal.