A Pennsylvania state senator plans to soon introduce a bill to create a revolving fund that would offer low-interest loans for building power plants in the state.
The Pennsylvania Baseload Energy Development Fund would be modeled after the Texas Energy Development Fund, which was initially funded at $5 billion, Sen. Gene Yaw, a Republican and chairman of the Senate Environmental Resources and Energy Committee, said in a press release on Wednesday.
In July, Texas Gov. Greg Abbott, R, said he wants to expand the program to $10 billion “to build more new plants as soon as possible.”
The Pennsylvania loan fund would help entice more baseload generation for the PJM Interconnection grid in Pennsylvania, Yaw said in a memo to Senate colleagues.
PJM has said that in the next seven to 10 years it expects about 40 GW in its footprint will retire and that it will also need an additional 40 GW, according to Yaw. “That would be an estimated 80,000 megawatt spread in power needs within the grid,” Yaw said in the memo. “This program would help provide opportunities to increase base load generation that connects to PJM within that time frame.”
The potential legislation could come weeks after PJM capacity auction prices spiked to record levels, which the grid operator said is a sign that its region needs more power supplies to meet growing electric demand. PJM operates the grid and wholesale power markets in 13 Mid-Atlantic and Midwest states and the District of Columbia.
The results — with capacity prices hitting $290/MW-day for most of PJM’s footprint — were not unexpected, according to Yaw.
“I think the handwriting has been on the wall for a couple of years as to where things are going to go,” Yaw said in an interview. “The PJM auction just kind of confirmed what a lot of people have been talking about with the supply situation.”
Thermal baseload power plants have been retiring in PJM without adequate replacements, according to Yaw.
Pennsylvania can’t wait to act, given the years it takes to permit and build power plants, Yaw said. “We can't continue to sit around and do nothing, which is, unfortunately, ... what we're doing,” he said.
Yaw is also considering legislation that aims to make the power plant permitting process in Pennsylvania more certain by setting a single statute of limitations for all of a project’s permits, he said.
“What happens is you get one permit, and then the groups that are opposed will delay things so that by the time you get to the end of the permitting process, the first permit has run out,” Yaw said.
Having a single statute of limitations on the permits would give project developers more certainty about the legal status of their permits, Yaw said.
Passing the loan fund and permitting reform bills would be “major steps forward in encouraging electric generation to take place in Pennsylvania,” which has significant natural gas supplies to fuel power plants, according to Yaw.
