Latest Post | Last 10 Posts | Archives
Previous Post: Oppo dump! (Updated)
Next Post: MLB open thread
Posted in:
* Yesterday, the Tribune Editorial Board published “An electricity crisis is looming for Illinois. Is anybody paying attention in Springfield?”…
In 2021, Illinois enacted a comprehensive clean energy law mandating the closure of all coal- and natural gas-fired power plants by 2045. As part of the Climate & Equitable Jobs Act, one of Gov. JB Pritzker’s signature legislative accomplishments, a large number of gas-fired facilities were to be shuttered by 2030.
At the time, there were warnings from industry and others that the intermediate 2030 mandate would jeopardize electricity reliability in the state. With Illinois then producing more power than it consumed, Pritzker and the many environmental groups that backed the law said such predictions were alarmist and off-base.
Just three years later, it appears the alarmists were right, and Pritzker and the green lobby were wrong.
Payments to power generators in return for their promise to produce to their capacity when demand is highest — as established via an auction overseen by PJM Interconnection, the grid manager for a large swath of the U.S. from northern Illinois to the mid-Atlantic — are set to soar more than 800% and will raise all our electric bills beginning next June.[…]
Power-hungry data centers, the development of which a number of Chicago aldermen are encouraging within city limits as a way to generate more property tax revenue, are on the drawing boards. ComEd projects that new data centers throughout its territory easily could require four gigawatts of electricity. To put that in context, such an enormous amount alone would consume nearly the entire output of two of the five nuclear stations serving the region. […]
It’s becoming clearer all the time that the 2030 deadlines are unrealistic and need to be made more flexible. Backsliding on the law’s gas plant-closure mandates is anathema to environmental groups, who surely would fight hard against such an effort and likely would criticize any Democratic “friends” who consider such a thing. But gas-fired “peaker” plants, which can rapidly fire up and just as rapidly turn off, for many years have been the most critical resources to keep the lights on when the temperatures soar (or plummet). They remain critical.
* Governor Pritzker participated in a panel discussion about climate change and technology yesterday and said that the editorial got some things wrong. During the ensuing press conference, I asked the governor what the Tribune editorial got wrong…
Isabel: Governor, you mentioned that the Tribune editorial got some things wrong. What were those things?
Governor Pritzker: I mean, my point is that there’s a broad topic that was raised, but only specific solutions that were proposed in it. And so that’s all, I think there were things missing from the presentation of that editorial. The broad topic is we need more electricity production in the state period, end of sentence. And as I said just a few minutes ago, I agree, and we should be going after that, and we are. There’s never a moment that we’re not talking about electricity production as well as climate action in the context of that in the state of Illinois.
* Some more background from the governor’s office…
In July, we saw historically high prices coming out of the electric capacity market for all states in PJM - including Northern Illinois.
But it is important to recognize that these capacity prices, and the broader problems facing our grid, are not caused by CEJA. These are national issues, and there are a lot of factors at play.
A lot has changed since the passage of CEJA.
· When developing CEJA, policymakers drew on respected, industry projections for electricity demand, used by transmission planners to manage our national grid.
· These projections have risen dramatically over the past two years, for everyone.
· When CEJA was passed, energy efficiency improvements were leading to reductions in demand, but the rapid growth of data centers, in particular, has reversed that trend. Not just for Illinois – many states, from Texas to California to Virginia, are all seeing rapid increases in demand.
· While these changes were not the expected outcome, we are not unprepared either. CEJA includes the 2025 ICC study on resource adequacy that this article references, so we have a way of responding to exactly these kind of changes.
· In fact, CEJA has played a role in addressing these problems.
· The Carbon Mitigation Credits that kept our nuclear plants open (a major source of capacity, themselves) also offset roughly 1/3 of the impact of these capacity prices for our consumers. That is, without CEJA, the bill impact experienced by consumers would be 50% higher than it is now.
The results of these auctions also go beyond “simple supply and demand.” The outcomes are based on regional transmission organization rules that are neither designed for, nor work for Illinois.
· For one, PJM recently downrated “capacity factors” for many kinds of generation, arguing that these facilities cannot provide as much capacity as PJM previously thought. This increases the amount of capacity needed, driving up prices even without any changes in actual generation facilities.
Additionally, there is currently more capacity waiting in the queue, for approval to connect to the grid, than there is serving the State of Illinois today, and the wait time for this queue is longer than ever. Reforms are dearly needed to enable new electricity generation and storage, much of it supported by state policy, to actually get connected and start serving Illinois customers.
Governor Pritzker has joined PJM Governors in calling for improvements to the current system, to reduce queue wait times and to adopt auction rules that better reflect the actual capacity resources of our state. We continue to engage with both regional transmission organizations, other states, and federal stakeholders to push for these changes.
This is a challenge, but we can overcome it without pushing back the closure of plants actively polluting in EJ communities.
· The same tight market that led to such a big spike in prices also means that even small changes can lead to larger drops in prices than we generally expect. Change is needed – but it will have a big impact.
· In terms of timing, the 2030 gas peaker plant closures are limited to inefficient, costly plants located in environmental justice communities. We should not accept that the only way to have abundant electricity is by sacrificing the health of already-overburdened communities. This is a manageable set of plants to replace in the time we have.
· In addition to exacerbating the burden on EJ communities, rolling back our climate actions contributes to increasing the chance and intensity of the same extreme heat waves that create our high electric capacity needs.
· We are actively working with stakeholders on potential solutions to this time-sensitive challenge. That includes not just the battery storage industry, but also our partners in the legislature, organized labor, and a wide range of industry and nonprofit stakeholders.
Thoughts?
posted by Isabel Miller
Thursday, Sep 19, 24 @ 12:33 pm
Previous Post: Oppo dump! (Updated)
Next Post: MLB open thread
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
He didn’t really push back. He agreed with the premise of the editorial that we need to build new capacity in Illinois to manage our growing demand. He is right. This is a matter of some urgency.
Comment by New Day Thursday, Sep 19, 24 @ 12:37 pm
As usual the tribune editorial board takes a complex issue, fails to do even the most basic research to actually understand it, and reaches a conclusion that the progressives/libs/Democrats just don’t get it.
I doubt they’ll even bother to read the well thought out response from the Gov’s office.
Comment by Excitable Boy Thursday, Sep 19, 24 @ 12:48 pm
= Climate & Equitable Jobs Act=
JB is dancing around the longer-term problems. Once the plants in the queue are connected, Illinois will be an outlier in that no new gas plant will locate in Illinois due to the Zero emission by 2040 regulation in CEJA. the SMRs will take decades to clear regulatory and environmental issues. The knock-on effect will be that large energy-intensive infrastructure projects like the Data centers that are projected to have huge growth over the next few decades will be forced to locate elsewhere.
Comment by Donnie Elgin Thursday, Sep 19, 24 @ 12:52 pm
So why don’t these data centers provide their own power supply? Wouldn’t that be more efficient and cost effective for them?
Anyway, the growing demand could be met with an aggressive development of more renewables and overnight storage systems as well as those mini nuclear plants, some of which could be installed on the existing coal and gas power plant properties. That could keep some powerplant jobs and property tax revenue going in those legacy power plant areas.
Comment by Give Us Barabbas Thursday, Sep 19, 24 @ 1:00 pm
===The knock-on effect will be that large energy-intensive infrastructure projects like the Data centers that are projected to have huge growth over the next few decades will be forced to locate elsewhere. ===
You’ve made a good argument against your own premise.
Comment by Rich Miller Thursday, Sep 19, 24 @ 1:06 pm
I’m no fan of the Trib editorial board, but that piece was undoubtedly written by Steve Daniels, who before joining the Trib recently was Crain’s energy reporter for years. He knows the subject matter as well as any journalist in the state and I think he presents a pretty balanced view of the state of things.
CEJA does have a safety valve in place — the 2025 resource study that could allow some gas plants to remain open. But the enviros raise legit concerns about the impact those old, dirty plants have on environmental justice communities. The best answer might be to allow a few new, highly efficient peaker plants to open. It would make the grid resilient during high demand spikes with minimal environmental impact. I’m sure the greens will be against that, but they should be open to considering that as the lesser evil when compared to the threat of the power grid failing, which would be a damaging political defeat for their movement.
Comment by DC Thursday, Sep 19, 24 @ 1:15 pm
Illinois legislators should be very sober about where the state is right now. Electric demand is rising because businesses want to come here. Supply is mandated to change because of CEJA. Highly dispatchable power is required to shutdown while intermittent power is required to replace it. The feds and transmission organizations are not coming to the rescue. In fact, the transmission orgs are a very significant part of the problem.
The utilities are going to need more storage, more demand response, more energy efficiency, more robust transmission within the state, and more renewable energy to keep the lights on. All of these are things the state can and should set policy on.
It’s to no one’s benefit to politicize the steps necessary to have a reliable electric grid.
Comment by Atlas Thursday, Sep 19, 24 @ 1:21 pm
–Data centers that are projected to have huge growth over the next few decades will be forced to locate elsewhere.–
Will they also be digging up and moving all those fiber interconnects and nodes which congregate in the specific geographic areas where they want to build data centers?
You can’t just plop down a datacenter in some random place. Otherwise, it’s like building a shipyard in the middle of Wyoming. Sure, you can build it. But it’s not going to be very useful to anyone without an ocean connection once construction is done. It’s far easier and cheaper to just build near the ocean, than try to build a canal to your land-locked shipyard.
Comment by TheInvisibleMan Thursday, Sep 19, 24 @ 1:26 pm
- So why don’t these data centers provide their own power supply? -
Some are planning to.
Comment by Excitable Boy Thursday, Sep 19, 24 @ 1:30 pm
Chris Jones should stick to having his ed board opine about topics on which he actually knows something, like New York theater and British politics.
The ed board got spun hard by some folks who are throwing a lot of money around right now and didn’t bother to ask any critical questions. Sad.
If the Trib had integrity, the governor’s office would have been asked to respond to the criticisms in advance, for the sake of having a better informed editorial.
Comment by Moe Berg Thursday, Sep 19, 24 @ 1:37 pm
===Illinois will be an outlier in that no new gas plant will locate in Illinois due to the Zero emission by 2040 regulation in CEJA.
This is based on outdated models of how energy is going to be created. California already has created a peak energy capacity with large batteries and Texas did even if their politicians don’t understand what happened. Minnesota is moving the same way as Illinois and with large scale batteries, there will be plenty of capacity. We do need significant work on the grid to make this work, but in terms of production, storage changes everything we used to assume.
Comment by ArchPundit Thursday, Sep 19, 24 @ 1:43 pm
“The ed board got spun hard by some folks who are throwing a lot of money around right now and didn’t bother to ask any critical questions. Sad.”
Which part of the capacity issues they identified in the editorial are wrong? Agree or disagree on the CEJA issue, capacity is a huge problem because of the spike in demand. Not just here but all over. The capacity auction price spike and expected even larger one in December is the market speaking very loudly. Which part of that is wrong?
Comment by New Day Thursday, Sep 19, 24 @ 1:50 pm
NY Times yesterday wrote a great story about how fossil Texas is increasingly relying on batteries and renewables for their grid needs. It’s what we need to see here.
https://www.nytimes.com/2024/09/18/us/texas-grid-renewables-battery-storage-solar.html
Comment by New Day Thursday, Sep 19, 24 @ 1:54 pm
@ New Day - let’s start with the hysterical headline. Plenty in Springfield are paying attention, and Pritzker and his admin have been critical of PJM, a deeply troubled system operator, for a while now. Insulting bad faith from jump.
An 800% capacity charge increase translates to a 10.5% residential bill increase. Not to sneeze at a $100 electric bill going to $110.50, which would be a hardship for some, but it doesn’t merit the world-is-ending hyperbolic tone of this editorial.
Morgan Stanley predicts 800% could be 2,200% by 2026, and when has Wall Street ever been wrong, right? Literally, take it to the bank.
The editorial is flaming Pritzker for the PJM auction results as if Illinois energy policy was the determinate factor, as opposed to one of them in a market that includes 13 states.
The ed board also buys into the data center hype, rather than, I dunno, taking a breath and realizing it might be very overblown. Despite the billions being spent, plenty of computer scientists are deeply skeptical about AI, at least as it is presently constructed. Progress seems to have stalled and no one, save NVDIA, is actually making money on it. Unclear if anyone else will or how. So, to just assume that we are going to need a lot of data centers or that computer chips won’t become much more power efficient is just wrong.
The Trib is trying to stampede the legislature - and I’d have a look at where Alden, its owner, might have some of its other dollars deployed - into taking action, telling it not to wait for no stinking studies because the Trib, and some foks with a vested financial interest, came to talk to it have it all figured out.
And, just like with Wall Street, when has the Trib editorial board ever been wrong? LOL.
Comment by Moe Berg Thursday, Sep 19, 24 @ 2:48 pm
Yeah, storage can help, but it’s not some magic solution. We need much more production capacity of all clean sources, including nuclear, if we want clean air and a stable climate, as well s continued investment in the grid itself.
These new data centers are requiring even more power than we thought two years ago, due to the exploding market demand for AI functionality. I don’t see it slowing down any time soon — though Moe Berg might to know more.
The Trib ain’t got much push to stampede in this GA.
Comment by walker Thursday, Sep 19, 24 @ 4:33 pm
@Moe Berg, I agree with you that the Trib is being overly dramatic and they are wrong when they say no one is paying attention in Springfield. (They also should have pointed more blame PJM and MISO’s way.)
But the Trib gets much more right than it gets wrong here. I don’t think there’s any reason for JB or the Enviros to be overly defensive about what’s in the editorial. There have been fundamental changes to the energy market since CEJA passed — higher than anticipated demand, lagging transmission development, and much, much slower connections to new renewable generation by PJM and MISO, just to name a few.
Every complex regulatory law needs tweaking after a few years. CEJA is no exception.
Comment by TNR Thursday, Sep 19, 24 @ 4:40 pm
I’m not sure it matters how affordable my electric bill is when the trade off is a shift in planetary climate that threatens modern civilization.
Electricity has only been cheap because we’ve never been paying for the cost of the pollution that comes along with it. If private companies can’t produce electricity at a profit without also contributing to the destruction of our climate, then those companies should become public entities.
Comment by Candy Dogood Friday, Sep 20, 24 @ 1:09 am