PJM has urged Talen Energy to delay its deactivation of two of four units at the 840-MW coal, oil, and gas–fired Herbert A. Wagner Generating Station in Maryland until transmission upgrades are put into service around 2028.
The nation’s largest regional transmission organization (RTO) on Jan. 10 said it informed Talen that the deactivation of Units 3 and 4—a combined 774 MW located outside Baltimore in Anne Arundel County—“would adversely affect the reliability of the system absent transmission upgrades.”
Wagner 3, completed in 1966, is a 359-MWe coal-fired unit that Talen converted to run on fuel oil at the end of 2023. Wagner 4, built in 1972, is a 415-MWe oil-fired unit. The power plant also comprises Wagner 1, a 133-MWe coal-fired unit built in the 1950s, and it hosts a 13-MW gas-fired combustion turbine, which can serve as a peaking unit. Talen retired Wagner 2, a 136-MW coal-fired unit, in 2020.
The H.A. Wagner Power Plant, located outside Baltimore, MD, is fueled by coal, natural gas, and oil. It includes an approximately 13-megawatt gas turbine unit, which can serve as a peaking unit. Unit 3 will convert to run on oil by the end of 2023. Courtesy: Talen Energy
Retirements Pegged to Economic, Environmental Concerns
Talen in October 2023 notified PJM it intended to deactivate all four existing Wagner units by June 2025, citing environmental and economic reasons. “The Wagner facilities’ Title V air permit limits operation to capacity factors under 15% when operating on oil. The limited run hours on the Wagner Facilities are not sustainable to continue operations, especially in light of the amount of time the Wagner facilities have recently been running in the market,” the company said.
“The combination of low margin energy market economics, low-capacity prices and significant Capacity Performance penalty risk due to run hour limitations results in the economics being outweighed by the risk associated with continued operation.” While the Wagner units have capacity market obligations through May 31, 2025, the plant is not designated a “black start” unit, Talen noted.
But, according to PJM, regional reliability concerns are compounded by Talen’s April 2023 announced closure of another mammoth fossil-fired facility, the two-unit 1.3-GW coal-fired Brandon Shores Generating Station. Talen in the first quarter of last year canceled plans to convert the power plant in Anne Arundel County, Maryland—which is located six miles away from the Wagner plant—to fuel oil combustion. In April 2023, Talen moved to deactivate the plant by June 2025.
In a letter to PJM, Talen cited National Pollution Discharge Elimination System permitting limitations for Brandon Shores, which “precludes operation using coal on or after January 1, 2026.” Talen also said it determined that a conversion to fuel oil combustion is “uneconomic and does not justify operating after June 1, 2025.” The Brandon plant has capacity market obligations through May 31, 2025, it noted.
Following an analysis, however, PJM in June 2023 told Talen it found that the Brandon units were required for reliability. The RTO urged Talen to keep them online under a reliability-must-run (RMR) arrangement.
Talen in financial documents has noted that “it does not agree” to the units’ continued operation under an RMR agreement. However, “Discussions with PJM are ongoing and may result in Brandon Shores continuing to operate for some period of time until transmission constraints hindering reliability are relieved by PJM,” it says.
PJM: Wagner Deactivations Could Prompt Widespread Voltage Deviations
While PJM has no authority to order plants to continue operation, the RTO is compelled to maintain reliability. To mitigate reliability concerns owing to Brandon’s potential deactivation, PJM ordered transmission upgrades (built by the transmission owner) to accommodate the loss of generation.
Earlier this month, PJM told Talen in a letter that after performing a study of the transmission system, it found that while Wagner 1 and the plant’s combustion turbine can retire without reliability implications, the deactivation of Wagner 3 and 4 will cause reliability violations. PJM said it identified voltage and thermal violations that could potentially affect multiple transmission owner areas. “Reliability tests indicate widespread voltage deviation violations upon Wagner deactivations. [The] majority of them are associated with losing Brandon Shore’s Generator(s),” it said.
While the Wagner retirements will not necessitate additional transmission upgrades, upgrades underway to resolve the Brandon Shores violations “will resolve all reliability issues identified attributed to the deactivation of Wagner units 3 and 4” when completed in 2028, it suggested. PJM added that its analysis revealed that to maintain system reliability Wagner 3 and 4 “will be needed to operate under a Reliability-Must-Run (RMR) arrangement”—especially during “the interim time period from the proposed deactivation date of June 1, 2025 to the completion date of all required upgrades.”
PJM urged Talen to notify PJM within 30 days whether it will agree to continue the operation of the two units past their June 2025 deactivation date. “While PJM cannot compel a unit to remain in service, in unique circumstances such as this, PJM can formally request that the unit owner continues operating the unit to support reliability,” the RTO explained. “This process, detailed in Part V of the PJM Open Access Transmission Tariff, offers a deactivating unit the opportunity to remain in service and recover its operating costs until all necessary transmission upgrades are in place.”
Retirements Are a Major Concern at PJM
PJM, which coordinates the movement of wholesale power across 13 states and the District of Columbia, has expressed broad concerns about its supply-demand balance, which has grown more precarious as resource retirements and load growth exceed the pace of new generation entry.
In a much-cited study published in February 2023 exploring “a range of plausible scenarios up to the year 2030,” the RTO suggested that as much as 40 GW of existing generation is at risk of retirement by 2030. “This figure is composed of 6 GW of 2022 deactivations, 6 GW of announced retirements, 25 GW of potential policy-driven retirements, and 3 GW of potential economic retirements. Combined, this represents 21% of PJM’s current installed capacity,” it warned.
“The amount of generation retirements appears to be more certain than the timely arrival of replacement generation resources and demand response, given that the quantity of retirements is codified in various policy objectives, while the impacts to the pace of new entry of the Inflation Reduction Act, post-pandemic supply chain issues, and other externalities are still not fully understood,” PJM said. About 60% of its anticipated retirements will be coal-fired, 30% natural gas, and 10% other sources.
In 2023, according to PJM’s Generator Deactivation records, 6.8 GW of generation capacity within PJM’s footprint was deactivated. About 4.4 GW was coal generation (from nine coal units), while 1.5 GW was gas generation (from five units), and 823 MW was oil and diesel generation (from eight units).
PJM records another 4.2 GW of future deactivations through 2026, including 2.2 GW of coal, 476 MW of gas generation, and 1.5 GW of oil and diesel generation. Along with Wagner and Brandon Shores, some larger units include NRG Energy’s 411-MW Indian River 4 (though that unit is currently running with an RMR agreement) in Delaware, and Constellation Energy’s Eddystone Units 3 and 4 in Pennsylvania, a combined capacity of 760 MW.
Looming regulations that the Environmental Protection Agency (EPA) finalized or proposed in 2023 may also accelerate retirements. In December, the U.S. Supreme Court agreed to hear oral arguments in February 2024 about whether to stay the EPA’s “Good Neighbor Plan,” a rule that could require coal, oil, or gas steam power plants in 22 states to reduce their nitrogen oxide emissions levels by 50% by 2027. PJM noted it worked with the EPA on the rule, which the EPA estimates could result in an additional 14 GW of coal retirements nationwide.
PJM also worked with the EPA to maintain grid reliability on the EPA’s proposed rule on New Source Performance Standards for Greenhouse Gas Emissions. In recent comments, PJM joined with other independent system operators and RTOs (including MISO, ERCOT, and SPP) to suggest that the EPA consider a suite of “reliability safety valves” to address potential immediate needs for unit-specific relief, enabling generators to operate during system emergencies.”
PJM’s long-term load forecast, meanwhile, shows demand growth of about 1.4% per year over its footprint for the next 10 years. A new long-term load forecast the RTO published on Jan. 8 predicts estimated electricity demand growth of 1.7% per year for summer peaks, 2% for winter peaks, and 2.4% for net energy over a 10-year planning horizon starting in 2024. PJM’s 2024 summer forecast peak demand stands at 151,254 MW, with peak load increasing to 178,895 MW in 2034 and 193,123 in 2039—an increase of nearly 42,000 MW. Peak winter loads echo this projection: For the 2024 winter, the forecast is at 134,663 MW for the 2023–2024 winter, surging to 164,824 MW in 2034 and 178,241 in 2039—an increase of more than 43,000 MW.
“This forecast reflects the accelerated growth that we discussed with our stakeholders throughout 2023, driven by the electrification of multiple sectors combined with consumer demands for technology,” Kenneth S. Seiler, senior vice president of PJM Planning, said on Tuesday. “It also underscores the need to maintain and develop enough generation resources to serve that growing demand.”
Finally, PJM’s New Services Queue is composed of 94% renewables assets and 6% gas. “Despite the sizable nameplate capacity of renewables in the interconnection queue (290 GW), the historical rate of completion for renewable projects has been approximately 5%,” it said. At the end of 2023, 40 GW of projects had come through the PJM study process, PJM said, though it noted that capacity had yet to move to construction.
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