New Jersey and other states in its regional grid are retiring traditional sources of electricity generation prematurely, causing a man-made scarcity that drives up prices. Those making this argument have usually been dismissed as right-leaning pundits who are trying to inflame public opinion against Gov. Phil Murphy’s zero-emissions agenda.
The argument gained new support during an Assembly Communications and Utilities Committee hearing on Oct. 2 when Jason Stanek, executive director of government services for PJM Interconnect, the regional grid operator for 13 states including New Jersey, told the legislators that policymakers in New Jersey and other states must not continue to allow power-generating resources to go offline until there is sufficient new generation capacity to replace them. The retirement of energy sources, when combined with the increasing demand, is worrisome for the grid operator.
As Stanek explained it, we are talking about basic economic principles where growing demand and tightening supply lead inexorably to higher prices.
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The power grid operator for 13 states told N.J. legislators that policymakers must not allow power-generating resources to go offline until there is new generation capacity to replace them.
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Renewables are increasing as sources of electrical power, but not at anything like the rates projected by state officials when they set what are turning out to be unreachable goals.
We are in the midst of a transition in our energy profile that has lost cohesion, with parts of the initiative moving rapidly while other dependent parts are falling back. PJM, in its annual planning report for 2023, referenced “the retirement of large conventional steam-powered generators.” It also noted a significant “increase in interconnection requests from renewable resources.” Interconnection requests from renewable suppliers are piling up because the task of adding dispersed sources of energy to a grid designed for centralized power plants is a process in need of further reforms.
The Lawrence Berkeley Lab projects that the grid connection backlog has grown by 30% in the last year. In yet another disconnect in policy, the Inflation Reduction Act incentivized new efforts at renewable energy generation, but the plan did not take into account the new bottleneck of grid interconnection and permitting. Connecting to the grid is not a plug-and-play activity.
Simply put, we have actual, real retirements of electricity generation plants supposedly being offset by a vision of not-yet-available renewable sources of electricity. Much of New Jersey’s plan for hitting the goal of 100% clean energy by 2035 rests on an offshore wind initiative that has yet to see a single turbine in operation. Atlantic Shores South is in line to be the first Garden State wind farm, and it is planning to begin construction in 2025. Even that is unclear, given that Atlantic Shores rebid its project in the most recent New Jersey solicitation, seeking some changes in the terms of its award.
One does not have to be against this energy transition to wish it could be a better-managed one. A factor noted in the report is state and federal policy driving the electrification of the transportation, industrial and building sectors, driving demand ahead of supply.
Since 2011, the PJM report notes, 42,000 megawatts of coal generation has retired. In 2023 alone PJM received deactivation notices for 31 units totaling 5,800 megawatts.
As a context for all of this we need to keep in mind that New Jersey generates only 75% of what it consumes, and that number, according to Stanek, is going down, not up.
In Cape May County, the B.L. England power plant at Beesley’s Point was closed in 2019. It was one of the last remaining coal-fired plants that was kept online from a proposed closing in 2017 because the grid needed the supply.
There was an attempt to convert the plant to natural gas, but opposition from environmental groups and difficulties in getting permission to run a necessary gas pipeline through the Pine Barrens led ultimately to its closure instead. Another contributor of electrical power, this one in our own backyard, was decommissioned. The plant provided approximately 450 megawatts of generating capacity from three units.
The need for power has led Microsoft to a 20-year agreement to buy power from a planned reactivated Three Mile Island power plant. The site of the worst nuclear plant disaster in U.S. history is being brought back online because of scarcity of supply.
It is worth mentioning that no one in the United States has ever reactivated a decommissioned nuclear power plant before. The first attempt will be in Michigan with the old 805 megawatt Palisades power plant. Financing for the effort included a $1.5 billion loan from the Department of Energy.
What is going on here?
There is underway a poorly planned and even more poorly executed transition from fossil fuels as a source of generating electricity. Old coal plants are being kept on because of supply problems caused in part by the decommissioning of so many plants in the last decade. New regulations are being issued for gas plants that are still being built because they are needed. The public relations term for the effort hinges on calling gas-powered plants “transitional” to cleaner energy sources. Nuclear plants are being subsidized to stay open and, as mentioned, decommissioned ones are being reactivated.
But they are running a race to replace retiring generation sources in an increasingly tight supply of electrical power.
All of this also translates into necessary modernization of the electrical grid, with all of the capital improvements dollars recoverable from ratepayers.
State and federal policies are achieving their goal of increasing electricity demand through electrification initiatives. However, the supply of renewable energy is not expanding as quickly as expected, leading to higher energy bills for consumers.
Quotes from the Bible
“But don’t begin until you count the cost.” From Luke 14:28
