A year and a half after bellyaching about rules in the electricity capacity market, the Federal Energy Regulatory Commission voted 2-1 Thursday to hamper investments in renewables and energy storage while giving an advantage to fossil fuel-burning power plants. The latest assault from the Trump regime on state moves to decarbonize in the face of the climate crisis means that plants generating electricity from solar, wind, and nuclear can be assessed what amounts to a surcharge when bidding to build new plants in the nation’s largest market for electricity, while those powered by coal and natural gas cannot. The rule only covers grid operator PJM Interconnection, which provides electricity to 65 million customers in 13 states.
Result: Not only will customers have to pay more for power coming from fossil fuel plants at risk of retiring—mostly coal—but they will also have to pay more for power generated by clean sources. This directly undermines state mandates to cut carbon emissions by expanding the amount of electricity generated from clean sources.
Said FERC Chairman Neil Chatterjee, “I recognize and respect state authority to make decisions about the types of generation that serve their communities. Nothing in this decision prohibits that. But there can be no question those decisions effect markets. It’s our role to make sure the actions of one state do not negatively effect the wholesale markets and to ensure a level playing field.” He said he didn’t “buy it at all” that the move will disadvantage clean energy sources.
That’s not how Commissioner Richard Glick sees things. As Rod Kuckro and Jeremy Dillon report at the paywalled EnergyWire, the Democrat labeled the decision "a bailout, plain and simple," that creates "regulatory uncertainty" and would "stunt the transition to clean energy resources" in those states with policies favoring renewables as a means of reducing the greenhouse gas emissions from fossil fuels still generating 62% of U.S. electricity.
Capacity markets are designed to ensure a steady flow of electricity to meet fluctuating demand. In effect, they provide a reserve. Power plants already on line and those seeking investments for new plants to provide this capacity bid in auctions to provide PJM and other capacity markets with power. If they win the bid, they are given regular capacity payments. Of late, as solar and wind have become ever cheaper, coal and natural gas can’t effectively compete at these auctions.
Said Mike Jacobs, a senior energy analyst with the Union of Concerned Scientists, “Federal regulators today have sided with PJM to effectively nullify state laws by excluding power plants meeting state policies from federal markets. By agreeing to this proposal, FERC is not indifferent to state policies that address carbon emissions—they are actively attacking them.”
In its arguments for changing the rule, PJM claimed that state incentives for clean energy—which vary in each of the 13 states it serves—are “market interference,” a term it conveniently does not apply to the subsidies for the dirty fossil fuel plants.
“PJM is pretending there aren’t subsidies in the markets they run, but the irony is they’re everywhere,” Jacobs said. “Now, FERC is rounding up the usual suspects—wind and solar power—but are ignoring the obvious ones under their nose.”