Study Warns Against Investment in Gas-Fired Energy as WV Plant Put on Hold
West Virginia will not be seeing its first natural gas-fired power plant in Brooke County. Earlier this month, Energy Solutions Consortium LLC. announced that it would no longer pursue a natural gas power plant in West Virginia.
The plan was to build West Virginia’s first gas-fired power plant in Brooke County. The site would have been capable of generating 830 megawatts of power to support approximately 700,000 homes in the state, as well as selling some power to PJM Interconnection, the nation’s largest independent power system operator. In a statement about the matter, Energy Solutions Consortium pointed to “changing conditions in the energy and financial markets” as the reason for the halt in its plans. The project sought a $5.6 million dollar loan, but was offered a $5.5 million loan from West Virginia’s Economic Development Authority, which was approved on Sept. 9. However, just a month later, the Consortium walked away from the loan and project altogether.
At the same time, a joint study by the Applied Economics Clinic and the Institute for Energy Economics and Financial Analysis (IEFFA) released earlier this month warns investors against backing gas-related projects within the PJM Interconnection’s territory. The PJM Interconnection, which stands for Pennsylvania-New Jersey-Maryland, “coordinates the power flow from generators to local utilities across all or parts of 13 states and the District of Columbia.” Those thirteen states include Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Pennsylvania, Tennessee, Virginia, and West Virginia.
The article names six growing risks for natural gas power in the area, which the authors believe outweigh the potential rewards of investment. The risks identified are:
· Increasing price competitiveness of clean solar, wind, demand response and battery storage alternatives;
· Significant existing overcapacity, flat demand growth and market turmoil;
· High-impact, unpredictable global events such as COVID-19 that radically reshape markets and expectations of future demand;
· Uncertainty over the future direction of gas prices, particularly given the substantial increase in U.S. liquefied natural gas (LNG) exports;
· Actions by state governments within the PJM market to limit future fossil fuel generation and/or even withdraw from the market entirely, and,
· Public opposition that can delay project development and raise overall costs.
Though the energy and financial markets have been significantly impacted by the pandemic, other natural gas-related projects are advancing in West Virginia, such as another gas-fired power plant project in Harrison County.
As of now, renewables are tied with nuclear energy, 19 percent each, but both are eclipsed by fossil fuels. The current energy mix is dominated by natural gas, with 37 percent of all electricity being generated by gas in 2020, while renewables only account for 19 percent of generation. However, according to Energy Information Administration (EIA) estimates, renewables, primarily solar power, will out-generate natural gas by 2050, 38 percent to 36 percent. While that does indicate a major ramp-up in renewable power, it also indicates a shared load between natural gas and renewables that will generate the majority of power in the country, while coal is phased out.