US power payout sends surprise boost to coal, N-plants

Bloomberg

Embattled coal and nuclear power-plant operators stand to get a lot more money to provide capacity to the biggest US electricity grid — if they can hold on for another three years. Generators are going to make $140 a megawatt-day for the year starting in June 2021, 83 percent more than the prior year, according to the results of an auction by PJM Interconnection LLC. It was the first increase in three years and 19 percent more than the highest analyst estimate compiled by Bloomberg. They ranged from $75 to $118.
“Everybody’s going to be happy tonight,” said Kit Konolige, a utility analyst for Bloomberg Intelligence. “It’s got to be a few billion dollars extra for your friendly generators out there.”
Years of declining power prices have made it tough for plant operators, and at least 7 gigawatts of coal and nuclear capacity in the PJM region are at risk of closing by 2021. The higher rates will help generators and show that the market can still support these plants even as natural gas and renewables continue to gain market share. The US Energy Department is weighing a March request from FirstEnergy Corp.’s competitive power unit — now in bankruptcy — for government aid to help keep money-losing nuclear and coal-fired power plants online. Nuclear and coal proponents argue that their loss could imperil the reliability of the nation’s electric grid.
After years of rapid growth in gas plants, the pace of new entries was the slowest in seven years, according to a statement from PJM.
“You have had low energy prices, so it wouldn’t surprise me if people were saying, ‘Hey, if we’re gonna bid into this market, we’re going to require a higher level of revenue from capacity,’” said Paul Patterson, an analyst for Glenrock Associates LLC.