Natural Gas Plant Build-out Disrupts PJM Power Market

Natural Gas Plant Build-out Disrupts PJM Power Market

May 11, 2017

by Margarita Fournier, Copyright 2016 by Competitive Assets, LLC.  All rights reserved

On 5/10/17, Electric Light & Power reported that “[a] large influx of natural gas plants entering PJM Interconnection due to the cheap gas supply from Marcellus Shale will pose severe challenges for generators operating in the region, according to a new report from Moody’s Investors Service. Powered by the glut in supply, new plants coming online will drive down market power prices, which could lead to widespread closures of coal plants and pressure margins for all generators, including other gas-fired plants. Moody’s estimates that new high-efficiency gas plants coming online between 2016 and 2020, will produce about 100 terawatt hours (TWh) per year of additional on-peak power compared to 2015 levels, resulting in a 25 percent increase in supply during on-peak hours. According to the report, however, the growth in supply will occur at a time with little or no growth in demand.”.

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