DUNKELFLAUTE. PJM AND THE COMING ELECTRICITY RATE INCREASES IN NEW JERSEY
The finger pointing about the upcoming sizable electricity rate increase this summer in New Jersey is very noticeable. But what about the coming Dunkelflaute.
It should be pointed out, PJM, the independent grid operator, doesn’t build electric generation. It is responsible to ensure the power grid is reliable. Currently there are enough private sector generation projects in the queue to connect to the power grid to mitigate the current power shortfall and significant new demand issue causing the price issues facing PJM consumers. But 95% of the projects in the queue are renewable solar and wind projects. These generation projects could not be given access to the PJM transmission system because it would create serious reliability issues. Wind and solar are intermittent and the energy is only available at certain times and conditions. A power grid at this point with that level of solar and wind would crash. This needs to be resolved either by new dispatchable electric generation or battery storage. The private sector needs to be given the direction to develop new dispatchable generation or develop longer duration storage as a shift to renewables takes place.
Germany chose to disregard the fundamentals of electricity flow and now faces what they call Dunkelflaute. This is when cloudy and calm weather days reduce renewable energy production, and the lack of dispatchable resources available cause grid failure. Our modern economy needs continuous flow of electricity for manufacturing, commercial and residential needs. Both Spain and Portugal power girds, dominated by renewables also recently faced serious blackouts causing public safety dangers due to the unbalanced grid.
Unless and until a future Jersey Dunkleflaute is resolved the current situation will be exacerbated. New dispatchable resources are needed. New investment in nuclear, gas and technological advancement in battery storage are needed.
For New Jersey, new in-state dispatchable generation that can manage its policy to expand renewable sources of energy has to become state policy.
The coming rate hikes have been in the works for several years. The state needs to focus on both reliability and affordability.
Dan Aschenbach
AGVP Advisory
Agvpadvisory.com
AGVP Advisory provides consulting services on assessment of strategic financial risks and credit impacts.
