Talen Vitality has reached an settlement with PJM Interconnection, the Maryland Public Service Fee, Maryland electrical utilities, client representatives, and the Sierra Membership to increase operations at its 1.3-GW coal-fired Brandon Shores energy plant and 774-MW oil-fired H.A. Wagner items till Could 31, 2029, below a reliability-must-run (RMR) contract.
If permitted by the Federal Vitality Regulatory Fee (FERC), the settlement will permit Talen to run the crops nicely past their Could 2025 retirement dates and supply the unbiased energy producer with fastened funds of $312/MW per day for Brandon Shores and $137/MW per day for Wagner. The figures embody efficiency incentives of $5 million for Brandon Shores and $2.5 million for H.A. Wagner, the corporate stated.
In complete, Talen stands to obtain roughly $180 million yearly below the settlement from the Maryland energy crops, together with efficiency incentives. Individually, the corporate may also obtain reimbursements for gasoline prices and variable operations and upkeep bills.
Integral for Reliability
Wagner, situated in Anne Arundel County, includes Wagner 3, a 1966-completed 359-MWe coal-fired unit that Talen transformed to run on gasoline oil on the finish of 2023. Wagner 4, inbuilt 1972, is a 415-MWe oil-fired unit. The facility plant additionally includes Wagner 1, a 133-MWe coal-fired unit constructed within the Nineteen Fifties, and it hosts a 13-MW gas-fired combustion turbine, which might function a peaking unit. Talen retired Wagner 2, a 136-MW coal-fired unit, in 2020. The 2-unit 1.3-GW coal-fired Brandon Shores Producing Station is situated exterior Baltimore. Unit 1 was accomplished in 1984, and Unit 2 in 1991.
Talen on Monday stated the RMR settlement is “supposed to supply the ability obligatory to keep up grid and transmission reliability in and across the Metropolis of Baltimore till obligatory transmission upgrades to supply dependable energy to the world from different sources are full.” the corporate stated on Jan. 27.
Talen had initially sought to retire the 2 energy crops this 12 months, citing financial and environmental constraints. The corporate formally notified PJM of its intent to deactivate all 4 Wagner items in October 2023 and had already introduced in April 2023 that it could shutter Brandon Shores by mid-2025, pointing to deteriorating market situations, together with declining vitality market margins and low-capacity costs, which made continued operation financially unsustainable. The corporate stated additionally confronted rising regulatory constraints.
At Wagner, air allow restrictions below its Title V allow capped oil-fired items at a capability issue beneath 15%, severely limiting income potential. Talen cited these restrictions, together with the monetary dangers of PJM’s Capability Efficiency penalties, as key elements making continued operation unviable. At Brandon Shores, Talen initially thought-about changing the plant from coal to gasoline oil however deserted the plan in early 2023, figuring out it was not economically viable. A main impediment was compliance with the Nationwide Air pollution Discharge Elimination System (NPDES), which prohibits coal operations on the plant after Jan. 1, 2026. Confronted with excessive conversion prices and uncertainty over the monetary viability of an oil-fired facility, Talen concluded that preserving Brandon Shores on-line past June 2025 was not possible.
Nonetheless, PJM raised important reliability considerations concerning the closure of the ability crops—a mixed 2.1 GW. Deactivating Wagner and Brandon Shores in 2025, earlier than deliberate transmission upgrades have been accomplished in 2028, would end in voltage instability and thermal violations throughout a number of transmission proprietor areas in and round Baltimore, the regional transmission operator (RTO) warned. “Reliability exams point out widespread voltage deviation violations upon Wagner deactivations,” particularly for items 3 and 4—a mixed 774 MW. The “majority of them are related to dropping Brandon Shore’s Generator(s),” it stated.
Whereas the Wagner retirements won’t necessitate further transmission upgrades, upgrades underway to resolve the Brandon Shores violations “will resolve all reliability points recognized attributed to the deactivation of Wagner items 3 and 4” when accomplished in 2028, PJM stated. The RTO added that its evaluation revealed that to keep up system reliability, Wagner 3 and 4 “will likely be wanted to function below an RMR association”—particularly throughout “the interim time interval from the proposed deactivation date of June 1, 2025, to the completion date of all required upgrades.”
Crops Will Not Take part in PJM’s Capability Market
Whereas PJM has no authority to compel continued energy plant operation, an RMR settlement permits mills wanted for system stability to recuperate working prices. Talen, notably, initially opposed the RMR settlement however moved in April 2024 to file cost-of-service charge schedules for the crops with FERC masking their operations by December 2028. FERC accepted the speed schedules in June and has launched proceedings. The timeline for ultimate approval stays unsure, and modifications might come up, Talen famous. FERC should additionally approve the settlement introduced on Monday and “could also be contested by the PJM Unbiased Market Monitor,” Talen famous.
Underneath the settlement, notably, Brandon Shores and Wagner won’t take part in PJM’s capability market or face capability efficiency penalties. Nonetheless, PJM will embody them within the provide stack, with their provide costs in future capability auctions relying on the result of an ongoing Part 205 continuing at FERC. “The provide value for the crops in upcoming auctions will rely upon the result of PJM’s pending Part 205 continuing, which proposes to incorporate RMR assets administratively in provide as price-takers,” Talen stated.
The delayed retirement of Brandon Shores’ was additionally opposed by Sen. Chris Van Hollen and several other Maryland congressional representatives, who argued that the related RMR contract would unfairly burden Maryland ratepayers whereas failing to align with the state’s clear vitality targets.
Maryland’s Local weather Options Now Act of 2022 mandates a 60% discount in greenhouse gasoline emissions from 2006 ranges by 2031 and targets net-zero emissions by 2045. To fulfill its clear vitality targets, the state is creating a framework for a clear vitality commonplace aimed toward reaching 100% clear electrical energy by 2035. Wagner and Brandon Shores are amongst Maryland’s final remaining coal-fired energy crops. In the meantime, pure gasoline technology—which has greater than tripled since 2015—now offers the majority of the state’s electrical energy, whereas the two-unit Calvert Cliffs nuclear energy plant equipped 40% of Maryland’s complete technology in 2023.
On Monday, Talen CEO Mac McFarland, steered the RMR settlement marked an necessary milestone “within the collective efforts” of PJM, Talen, the Maryland Public Service Fee, and different representatives of Maryland customers to make sure the dependable provide of electrical energy to the folks of Baltimore and its surrounding space. “Talen is happy to do its half to assist present important infrastructure with an RMR construction that concurrently creates dependable electrical energy in Baltimore and protects Maryland client charges,” he stated.
—Sonal Patel is a POWER senior editor (@sonalcpatel, @POWERmagazine).
