The most recent RGGI quarterly auction (Auction 57) was held on September 7, 2022. The clearing price was $13.45/ton, three percent lower than the clearing price of $13.90/ton on June 1, 2022 (see Figure 1). Although the clearing price was only $0.45/ton lower than the most recent auction, Auction 57 marks the first time since Auction 45 in September 2019 that the clearing price has declined from the previous auction.
Renewable generation in PJM has been increasing over the past few years and will play a larger role in the market’s resource mix going forward. Coal-fired capacity is retiring at a rapid pace, and the interconnection queue is heavily comprised of renewable capacity. There is approximately 133 GW of utility-scale solar, wind, and offshore wind projects with queue positions in various stages of development.
Ethan Howland reports in Utility Dive that power plant owners have started the process of potentially retiring 3,228 MW of coal-fired generation in the PJM Interconnection’s footprint this month, according to the grid operator’s generator deactivation list. Another 1,024 MW of coal shut down last year. Looking at the explanations for the planned retirements, our Julia Criscuolo, ESAI Power’s Manager of Renewables and Emissions, said about a third are driven by environmental regulations, a quarter by unfavorable economics and roughly 20% by “end of life” plant issues.
The EPA issued a proposed rule in February 2022 that, if finalized, will implement significant programmatic changes, and establish lower emissions limits to the existing Group 3 Ozone Season Cross-State Air Pollution Rule (CSAPR) beginning in the 2023 ozone season. Following the issuance of this proposed rule, Group 3 CSAPR NOx allowance prices have quadrupled from approximately $6,500/ton in February to $28,500/ton (June 6).
The most recent RGGI quarterly auction (Auction 56) was held on June 1, 2022. The clearing price was $13.90/ton, three percent higher than the clearing price of $13.50/ton on March 9, 2022 (see Figure 1). Although the clearing price was only slightly higher than the most recent auction, the $13.90/ton price marks the highest clearing price since the start of the program. Notably, the clearing price fell just short of the 2022 Cost Containment Reserve (CCR) trigger price.
Congestion in April will largely be driven by outage-related transmission constraints, as maintenance for both generator and transmission kicks into gear. Electricity demand across the Northeast RTOs bottoms out in April, moderating demand-driven congestion. However, while warmer temperature forecasts moderate April load expectations in New England and New York, warmer-than-normal April weather is likely to trigger some cooling demand and increased electricity consumption in PJM.
ESAI Power is excited to spend time with clients, partners and friends at the ACORE Finance Forum in New York on June 7th & 8th and talk through Renewable Energy Project Finance challenges and opportunities. If you’re planning to attend, please email Brian Doyle on [email protected] to schedule a meeting with our Capacity or Renewable Energy teams.
ESAI Power’s recent Capacity Watch includes our forecast for the PJM BRA 2023/24. Our PJM analysis this quarter includes ESAI’s forecast for the PJM BRA 2023/24 and reflects upon MOPR, MSOC, ELCC and VRR Curves.
Power forward contracts for this summer are trading north of $100/MWh in PJM, NYISO, and ISO-NE. Implied forward spark spreads – an indicator of the profitability of gas-fired power plants – have exploded, greatly exceeding anything that has historically been realized in the power markets.
Ethan Howland reports in Utility Dive that ISO New England has proposed ending its “minimum offer price rule” in 2025, with a transition that exempts up to 700 MW of qualified state-supported capacity — or roughly 2,000 MW of nameplate capacity — from the MOPR over the next two capacity auctions. Learn what Scott Niemann, ESAI Power director and principal, says about ending the rule.
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ESAI Power is a market research and consulting firm that delivers focused analysis of the wholesale power markets in the Northeast region of the US: PJM, NYISO, and ISO-NE. Since 2001, ESAI has been providing market-focused research product content and custom consulting services for Northeast power market participants including investors (banks, private equity, & hedge funds) & developers, generation owners & operators, utilities & retail electricity suppliers, regulators & RTOs, traders, and end-users & buyers.