Challenged federal rule could price many renewables out of PJM’s capacity market

Sweeping “minimum offer” rule will likely cut into the competitive edge for renewables as a hedge against fossil fuels.

Motions filed this week are asking the Federal Energy Regulatory Commission to change a ruling that could price many renewables out of the PJM capacity market, while driving up prices for consumers.

FERC’s Minimum Offer Price Rule, or MOPR, calls for PJM to set minimum bids for state-subsidized electricity generators in those auctions. The rule could indirectly give coal-fired power plants an extra lease on life in the country’s largest capacity market, while making it harder for new wind or solar plants to enter the market and compete.

“The decision is really the worst case scenario” of possibilities considered during the period leading up to the ruling, said attorney Christie Hicks at the Environmental Defense Fund.

PJM’s capacity auctions pay generators to guarantee they will provide power at a future date, usually about three years out. Lower-priced energy resources clear the auction ahead of higher-priced ones. All who clear get paid the same rate as the highest successful bidder. 

Most coal and natural gas plants in the PJM footprint won’t be subject to the rule, outside of a few that get state subsidies, as under Ohio’s House Bill 6. However, the rule includes indirect benefits from state policies that could be deemed to provide an advantage.

Viewed in that way, renewable portfolio standards would fall under the rule, largely because utilities can meet those standards by buying renewable energy credits, or RECs.

Continue reading here:

https://energynews.us/2020/01/23/midwest/challenged-federal-rule-co...

About PJM

https://www.pjm.com/about-pjm/who-we-are.aspx

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Comment by Willem Post on January 25, 2020 at 4:46pm

Highly subsidized wind owners were underbidding traditional bidders in the forward market, because wind owners have no fuel cost.

http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-na...

Without cost shifting and subsidies, those owners would have to DOUBLE their prices.

That meant traditional bidders, including coal plants, would get TOO low prices for their electricity, even though their electricity was STEADY, NOT VARIABLE, NOT INTERMITTENT, NOT DEPENDING ON THE VAGARIES OF THE BLOWING OR NOT BLOWING WIND.

Yet, these traditional plants have to ramp up and down to accommodate winds variability and intermittency, which costs money, and for which they are NOT compensated.

Comments on Below Table

 

Indirect subsidies are due to loan interest deduction and depreciation deductions from taxable incomes.

Direct subsidies are due to up front grants, waiving of state sales taxes, and/or local property (municipal and school) taxes. See URL.

 

An owner of ridgeline wind would have to sell his output at 18.8 c/kWh, if the owner were not getting the benefits of cost shifting and upfront cash grants and subsidies.

That owner could sell his output at 16.4 c/kWh, if his costs were reduced due to cost shifting.

He could sell his output at 9 c/kWh, if on top of the cost shifting, he also received various subsidies. The same rationale holds for solar. See table.

 

In NE construction costs of ridgeline wind and offshore wind are high/MW, and the capacity factor of wind is about 0.285 and of solar about 0.14. Thus, NE wind and solar have high prices/MWh. See table.

 

In US areas, such as the Great Plains, Texas Panhandle and Southwest, with much lower construction costs/MW and much better sun and wind conditions than New England, wind and solar electricity prices/MWh are less.

 

Those lower prices often are mentioned, without mentioning other factors, by the pro-RE media and financial consultants, such as Bloomberg, etc., which surely deceives the lay public

 

Future electricity cost/MWh, due to the planned build-out of NE offshore wind added to the planned build-out of NE onshore wind, likely would not significantly change, because of the high costs of grid extensions and upgrades to connect the wind plants and to provide significantly increased connections to the New York and Canadian grids.

 

NOTE: For the past 20 years, Germany and Denmark have been increasing their connections to nearby grids, because of their increased wind and solar.

 

The subsidy percentages in below table are from a cost analysis of NE wind and solar in this article. See URL.

http://www.windtaskforce.org/profiles/blogs/excessive-subsidies-for...

 

Values for 2018 are represented in below table.

 

NE Wind/Solar

NE Wind

%

NE Solar

%

Ridgeline

Large-scale

c/kWh

c/kWh

Price to utility

No direct/indirect subsidies

No cost shifting

18.8

100

23.5

100

Less cost shifting

2.4

13

2.1

9

Price to utility

No direct/indirect subsidies

With cost shifting

16.4

87

21.4

91

Less subsidy, wind

45% of 16.4

7.4

39

Less subsidy, solar

45% of 21.4

9.6

41

Price to utility*

With direct/indirect subsidies

With cost shifting

9.0

48

11.8

50

 

* Owner prices to utilities are based on recent 20-year electricity supply contracts awarded by competitive bidding in New England. These prices would have been about 48% to 50% higher without the direct and indirect subsidies and the cost shifting. Similar percentages apply in areas with better wind and solar conditions, and lower construction costs/MW, than New England. The prices, c/MWh, in those areas are lower than New England.

Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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