Outlook 2022: PJM to see 9.5-GW net gain despite surge in coal plant retirements

A legislative lifeline ensured two large nuclear plants set to shut down in 2021 will continue to provide 4,000 MW of carbon-free and firm generation in the nation's largest grid.

With the loss avoided, the PJM Interconnection LLC market should see a net gain of nearly 9,500 MW of capacity in 2022, according to an analysis of S&P Global Market Intelligence data, adding to the 218,300 MW operating at the end of 2021.

The analysis shows 13,358 MW of planned additions, largely natural gas, solar and wind, offset by nearly 3,900 MW of retirements almost completely tied to the deactivation of coal-fired power plants.

Planned coal retirements are expected to more than triple from 1,031 MW of coal-fired generation taken offline in 2021.

In 2021, PJM faced the potential loss of more than 4,100 MW of nuclear generation as Exelon Corp. prepared to shutter its 2,346-MW Byron and 1,805-MW Dresden nuclear plants in Illinois.

On the day Exelon prepared to permanently shut down its two-unit Byron Generating Station, Illinois lawmakers approved a massive energy bill that includes nearly $700 million in subsidies for nuclear generation. The legislation was signed into law days later. The five-year subsidy package also extends to the 2,384-MW Braidwood Generating Station.

The nuclear fleet is now owned by Constellation Energy Corp. following its February 2022 separation from Exelon.

After seeing a net decline in overall capacity in 2019 and 2020, PJM experienced a net gain of more than 3,200 MW of capacity in 2021 and finished the year with 218,318 MW of installed capacity.

The bulk of the region's new capacity additions over the previous five years has come from gas-fired resources.

About 6,450 MW of natural gas generation is expected to be added to the PJM grid in 2022.

The 1,875-MW Guernsey Power Station in Ohio, expected online in September, is the largest of the region's planned capacity additions.

Privately held companies Caithness Energy LLC and Apex Power Group Inc. each own a 50% interest in the combined-cycle natural gas plant.

Meanwhile, capacity retirements in PJM from 2017 to 2021 are primarily linked to coal-fired resources.

Power provider NRG Energy Inc. announced that it would retire about 1,600 MW of coal capacity in the PJM Interconnection in June 2022 following the low clearing prices in the grid operator's most recent capacity auction. NRG, however, could delay the planned retirement of its 410-MW Indian River plant in Delaware to help ensure reliability.

Vistra Corp. said in July 2021 that it planned to shut down the 1,333-MW W.H. Zimmer coal-fired plant in Ohio on May 31, 2022, five years ahead of a previous retirement schedule. Energy Harbor Corp.'s 1,300-MW Pleasants coal plant in West Virginia has a scheduled June 2022 retirement date as part of an October 2018 transfer agreement entered into with FirstEnergy Corp.

Robust renewables

The PJM region also is expected to add 5,580 MW of solar generation and 1,268 MW of wind generation in 2022, the analysis shows.

More than 1,700 MW of wind and more than 1,500 MW of solar cleared PJM's capacity auction for the June 2022 to May 2023 delivery year.

The 300-MW Highland Solar Farm in Highland County, Ohio, and the 274-MW Yellowbud Solar Project in Ross County, Ohio, are the region's two largest solar projects slated to come online this year, according to Market Intelligence data.

Renewable energy developer Hecate Energy in May 2021 said it sold the Highland project to an unspecified buyer. Highland's website lists New York-based asset manager D. E. Shaw Renewable Investments as its owner.

National Grid PLC subsidiary National Grid Renewables LLC owns the Yellowbud project.

Apex Clean Energy Inc.'s 297.7-MW Emerson Creek Wind Project in Huron County, Ohio, could be the largest wind project to enter commercial operations in 2022.

The Charlottesville, Va.-headquartered developer in January 2020 entered into an agreement to supply 240 MW of Emerson Creek's total output to American Electric Power Co. Inc. subsidiary AEP Energy Inc.

PJM's 2022 summer peak demand is forecast at about 149,000 MW.

Wholesale power prices in the PJM region are expected to hover around $45/MWh, with forward prices reaching as high as $52.02 in December at PJM's Western Hub, according to Market Intelligence data. Forward natural gas prices at the Leidy Hub are forecast to dip as low as $2.28/MMBtu in October and getting as high as about $3.39/MMBtu in December.

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