Analysis: PJM finds 49GW at risk from CO2 rule
That worst-case scenario would mean the retirement of 30pc of existing capacity on the largest US electric grid and will likely provide fresh ammunition to critics of the rule. PJM's worst-case scenario assumes higher fuel prices, nuclear retirements and limited availability of energy efficiency and renewables. A less-extreme scenario found that only 14,500MW of capacity is at risk of retiring.
The lower estimate is based on how PJM applied a metric called the net cost of new entry (CONE), which determines the capacity revenue a new plant needs each year to remain economic after factoring in energy and ancillary services revenue. If an existing plant needs at least half of net CONE to stay in business, the grid says that resource is at risk of retiring.
PJM typically calculates retirement risks based on the net CONE of a combustion turbine, considered the cheapest plant to build. Using this method, the grid found that as little as 6,200MW risks retiring because of the rule, with 14,500MW in a worst-case scenario.
But PJM also wanted to find out what would happen if combined-cycle generators are more frequently the lowest-cost resource, which could occur as they are dispatched more often and need less capacity revenues to remain economic. This alternate method found 48,900MW as the worst scenario.
The retirement estimates will form a basis for PJM studies into transmission upgrades required by the CO2 rule. The grid operator plans to use the average of the two worst-case scenarios for those transmission studies, which is 31,700MW.