When the U.S. Environmental Protection Agency (EPA) launched its new suite of rules targeting the coal fleet, it waived away an avalanche of concern over the threat its strategy posed to the nation’s supply of power. EPA pointed to new flexibilities in its rules – namely small changes in the so-called Clean Power Plan 2.0 – as evidence that it had tailored the rules to reflect the feedback of key stakeholders in the power sector.

But EPA’s spin about flexibility – never more than lipstick on a pig – has now given way to cold reality. PJM Interconnection, the grid operator of the nation’s largest power market serving 65 million Americans, has joined the chorus of voices saying EPA’s power plant rules are unworkable.

In a statement on May 8, PJM warned that EPA’s rulesare incompatible with surging power demand.

What they’re saying: “We are seeing vastly increased demand as a result of new data center load, electrification of vehicles and increased electric heating load. The future demand for electricity cannot be met simply through renewables given their intermittent nature,” PJM wrote in its statement.

“Yet in the very years when we are projecting significant increases in the demand for electricity, the Final Rule may work to drive premature retirement of coal units that provide essential reliability services and dissuade new gas resources from coming online,” PJM added. “The EPA has not sufficiently reconciled its compliance dates with the need for generation to meet dramatically increasing load demands on the system.”

This was not the first time PJM has expressed concern over EPA’s regulatory agenda. Last year, Manu Asthana, the President & CEO of PJM Interconnection, testified to Congress that, “we will need to slow down the retirement or restriction of existing generation until replacement capacity is deployed… frankly, we see this as the single largest risk in the energy transition.”

It’s now clear EPA did not listen. On key pieces of its power plant strategy – such as emissions control requirements for new natural gas plants – EPA doubled down.

PJM Faces a Capacity Shortfall

Last year, PJM projected the loss of 40 GW of generating capacity by 2030 – 21% of the market’s existing capacity – with only 31 GW of additions in the same period. PJM’s Independent Market Monitor (IMM), PJM’s watchdog, followed that forecast and projected an even larger loss of capacity – an alarming 58 GW – by 2030.

Why it matters: While some pieces of EPA’s power plant strategy were considered for those forecasts, the full suite of rules was not, with the Clean Power Plan 2.0 noticeably missing.

• Already facing a capacity shortfall by the close of the decade, PJM is now staring down a crisis.
• Neighboring grids won’t be able to bail PJM out.
• Until very recently, PJM had been the lifeline to surrounding markets, boasting a large reserve margin with a diverse mix of on-demand generating capacity.

Brandon Shores Previews What’s to Come

In fact, operating conditions are so tight in some parts of PJM, the loss of just one key coal power plant can be the straw that breaks the camel’s back.

Consider the 1,283-megawatt Brandon Shores coal plant’s expected premature closure date in 2025. The plant – located outside Baltimore and a critical source of on-demand generation when renewables or natural gas fall short — has been called a “poster child” for the threat to electric reliability posed by the quickening loss of coal capacity.

What they’re saying: “If that plant does shut down, we could be in big trouble. That can’t happen,” Joseph Bowring, president of PJM’s independent market monitor, told E&E News.

“We now have some plants scheduled for retirement that have the potential to create some massive reliability challenges,” Jim Robb, chief executive of the North American Electric Reliability Corp., the nation’s grid reliability regulator, told a conference in March, citing Brandon Shores. “I don’t know if it’s going to come to a head this summer or if it’s next summer.”

The bottom line: PJM and the nation’s reliability regulators recognize just how perilous the reliability equation has become. Essential dispatchable capacity is retiring far faster than new renewable capacity and its enabling infrastructure can be built and connected to the grid. Brandon Shores is just the first of many plants forced into retirement that will leave the nation’s grid operators and reliability regulators scrambling.