Tuesday, September 11, 2012

Stunning Fact: Gas Generation In PJM Power Pool Up 168% Since 2008

The epicenter of both the shale gas production revolution and the boom in natural gas generation is within the PJM power pool, the world's largest wholesale electricity market, that also sits atop most of the approximately 450 trillion cubic feet of gas in the Marcellus Shale.  The rapid transformation of the fuel mix within PJM generation fleet that serves 60 million people and contains 185,841 megawatts of generation is creating stunning facts.

In 2008, natural gas power plants supplied just 7.3% of PJM's electricity, even though they comprised 29.3% of PJM's 2008 installed capacity.  www.monitoringanalytics.com at Table 2-2, page 21 of the 2008 Market Report.  Gas power plants largely sat idle, because high has prices meant that they could not compete with coal-fired power, except in the highest demand hours of the year.

With gas sidelined by its high prices, PJM was essentially a coal and nuclear power pool, with them together generating 90% of the total electricity produced in 2008.  Then coal was still king within PJM, as coal plants produced 55% of PJM's power, while nuclear plants produced 34.6%.

Gas, hydro, wind, solid waste, biomass, and oil together accounted for the 10% of PJM's supply not coming from coal and nuclear. Notably hydro and wind supplied 1.7% and 0.5% respectively, during 2008.

Less than 4 full years later, the shale gas revolution has swept through PJM, and wind has quadrupled its market share.  The latest PJM market report states that, during the first 6 months of 2012, the market share of gas had increased to 19.4% (up from 7.3% in 2008) or by an incredible 168%.  Coal provided 40.3% of PJM's power, down 14.7 percentage points or a 27% decline in market share. And nuclear supplied 35.2%.
www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2012.shtml at page 116.

The rise of gas quickly converted PJM from a 90% to a 75.5% coal and nuclear power pool.  Importantly, nuclear power provides a considerably higher portion of PJM's power than its approximately 20% national average.  And its market share is holding steady within PJM and nationally.

Wind in PJM has also had an excellent 3.5 years since the end of 2008, with it providing 2.0% of all electricity within PJM, a four-fold increase in market share.  In fact, wind now provides more electricity than hydro that registered a 1.8% market share.

Within PJM, we again see the simultaneous boom in gas and wind.  It is not a question of one or the other.  Indeed, gas and wind are better together than separately, because gas can firm wind, while wind hedges gas price volatility and is zero-carbon generation. And those different strengths make both of their futures better together than apart.

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