May

28

 PJM capacity auctions for the post smokestack-era shows coal did not exit the market as many expected. Approximately 15,500 MWe more capacity show up than was needed (equivalent to 15 - 20 nuclear power plants). Of the 15,500 MW, 10,000 MW was coal.

In my opinion, this is huge. Power producers paid billions to upgrade their coal units to comply with EPA's new regulations effective 2015. Many of those units failed to clear the auction. Companies like Exelon gambled most these units would avoid the capex and exit the market. Companies like NRG Energy gambled ROI's on additional capex for older coal units would pay off. Both companies may have miscalculated, at least for 2016.

The aggregate loss in the PJM market is over $4 billion (when compared to the previous year). This loss is only for 2016. Subsequent years are unknown.

The President of the Old Speculator's Club, Jack Tierney, writes: 

Germany already has one of the highest per capita carbon footprints in the EU, largely driven by its use of coal. Phasing out nuclear will increase coal use significantly. Germany is building new lignite stations without prospect of carbon capture and storage (CCS). These are the worst possible policies from a climate change perspective.

German policy, with a nuclear moratorium and a move to more coal but without mitigating CCS, seems short-sighted and parochial. It undermines the EU position on climate change issues, already weakened by the shortcomings of its flagship emissions trading scheme.

A good article about it.

Additionally, CBI is supposedly lined up to do a significant amount of work in constructing new gas-to-LNG plants - a major reason it has moved up substantially this year.


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