Dive Brief:
- Amid a wave of coal plant retirements, natural gas installed capacity in the PJM Interconnection market surpassed that of coal for the first month ever in May, Argus reported.
- Gas capacity totalled 54,600 MW compared to just shy of 51,000 MW of coal in the nation's largest electricity market.
- Federal air quality standards and the low price of natural gas are driving coal retirements. The U.S. Energy Information Administration anticipates about 90 GW of coal-fired production will be taken offline by 2040 as a result of the EPA's Mercury and Air Toxics Standards and its proposed Clean Power Plan.
Dive Insight:
What a difference a year makes.
According to Argus, last year the PJM market had about 12% more installed coal capacity than gas, but as aging and inefficient plants are shuttered that balance has shifted significantly. Now, gas outstrips coal nameplate capacity by about 3%.
Carbon regulation is the driving factor, and the shift is expected to grow. The Obama administration's Clean Power Plan and MATS rule will take 90 GW of coal capacity off the table, according to federal projections. Just this year, 12,000 MW will be mothballed due to the MATS rules that went into effect in April and aim to reduce levels of mercury, dioxins and other toxic emissions.
Despite the generating mix's evolution, Argus notes that coal still generated about 44% of PJM's electricity last year, with nuclear contributing about a third. Gas made up less than 20% of the total, because the plants only run when demand is high.
The Supreme Court is considering a challenge to the MATS rule, and is expected to rule next month. But the regulation is already having a significant impact, with some 4,600 MW already shuttered this year and almost 8,000 MW on the chopping block for the end of the year.
