New federal rule will hurt renewables, help gas and coal

Enlarge / Pennsylvania wind turbines that probably spent the day trying to understand what a "MOPR" is. (credit: Jeff Kubina)

On Thursday, the US Federal Energy Regulatory Commission (FERC) issued a long-awaited decision that had been log-jammed until Commissioner Cheryl LaFleur stepped down, breaking a 2-2 tie. The details are complex, and they relate to a part of the electrical system you likely didn't know existed, but the decision could have the effect of significantly stifling renewables in the mid-Atlantic US.

The story starts with PJM Interconnection, a grid operator responsible for balancing power in a region spanning 13 states, from Illinois to Delaware. PJM runs a capacity market, with annual auctions to secure enough generation to cover peak demand several years into the future. Utilities bid on these contracts based on their cost to provide power.

However, some generators in recent years have complained that they were losing to lower bids from renewables and nuclear in some places, on the basis that those sources can benefit from state subsidies. Renewables only claimed a very small slice of the pie in the last auction, but generators were concerned this would grow.

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