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PJM's transmission needs shifting due to flat demand, changing fuel mix

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PJM's transmission needs shifting due to flat demand, changing fuel mix

The PJM Interconnection's transmission needs are shifting away from large-scale, cross-system backbone projects to smaller expansions and projects needed to maintain reliability when generators retire, according to a new report.

"The $3.2 billion of baseline transmission investment approved during 2017 continues to reflect a shift in the dynamics driving transmission expansion needed through study year 2022," according to PJM's 2017 report on its regional transmission expansion plan issued Feb. 28, 2018. The annual report summarizes transmission enhancements undertaken to maintain or strengthen reliability.

Flat load growth, energy efficiency, generation shifts and aging infrastructure, among other factors, are resulting in fewer large-scale projects at the 345-kV, 500-kV and 765-kV voltage levels and higher levels of transmission investment below 345 kV, according to the report.

The grid operator's 2017 PJM Load Forecast Report shows a 10-year regional transmission organization summer normalized peak growth rate of 0.2%, with average 10-year annualized summer growth rates for individual PJM zones that range from -0.3% to 0.4%. Near-flat growth results from evolving customer behavior that includes the use of more efficient manufacturing equipment and home appliances and the growth of distributed energy resources such as behind-the-meter rooftop solar installations.

PJM said it is managing "an unprecedented capacity shift" led by federal and state public policy and broader fuel economics. These are some of the more pronounced changes in PJM's markets:

* New generating plants powered by Marcellus and Utica shale natural gas.

* New wind and solar units driven by federal and state renewable energy incentives.

* Generating plant retirements.

* Market impacts from demand resources and energy efficiency programs.

Natural gas plants with a combined output of more than 57,700 MW account for 80% of the generation seeking capacity interconnection rights in the region. PJM said "favorable fuel economics" emerged with the development of the Marcellus and Utica shale formations in the middle of its territory.

Based on retirement plans submitted to date, more than 27,000 MW of coal-fired generation will shut down in PJM between 2011 and 2020. The economic impacts of emissions regulation and other public policy initiatives coupled with plant age — many over 40 years old — make ongoing operation "prohibitively expensive," the report said.

PJM estimates that natural gas as a percentage of its generation capacity mix will continue to grow while plants powered by coal will decrease, with coal making up less than 30% of PJM's capacity by 2023.

Transmission projects driven by retirements

Deactivation studies conducted during 2017 identified thermal and voltage reliability criteria violations requiring system reinforcements in several areas across PJM. In its western subregion, the grid operator received notification that the coal-fired J.M. Stuart plant and Killen Station and related diesel-fueled J.M. Stuart IC and Killen CT units — totaling over 2,900 MW — will retire June 1. Located in southwestern Ohio, the plants are operated by a unit of AES Corp. These shutdowns drove the need for nine regional transmission expansion plan projects across several PJM western zones totaling $58.3 million.

PJM had 21 storage devices connected to its system totaling 524 MW of nameplate capacity as of Dec. 31, 2017. These mainly consist of battery and flywheel technology, and several of them are part of hybrid plants paired with wind-powered generation. The storage systems participate in PJM's ancillary service markets, often supplying frequency regulation. Meanwhile, prototype projects are exploring the benefits of electric vehicle-to-grid technology and thermal storage, which uses large electric water heaters that can respond to grid needs, according to the report.

Energy storage can also serve as a transmission asset that can relieve congestion. As part of the 2016/2017 Long-Term Regional Transmission Expansion Plan Proposal Window, PJM received two proposals that included battery energy storage systems. One involved constructing a new 230-kV line coupled with a 20-MW/40-MWh battery to relieve congestion on the Conastone-Graceton and Graceton-Bagley 230-kV lines, located in the BGE zone in Maryland.

Jared Anderson is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.