A glut of supply in America’s biggest power market may be sticking around for a while.
This May, newly-built or expanded natural gas-fired plants, wind farms and solar installations will compete in an annual auction for electricity supplies in the mid-Atlantic and Midwest. As demand flags, the flood of generation means payouts from the grid manager, PJM Interconnection LLC, may fall to as low as $90 a megawatt-day, the lowest in four years, according to Prajit Ghosh, director of power and renewables research at Wood Mackenzie Ltd. in Houston.
Competition from wind farms in the annual auction may more than double to more than 2,000 megawatts from a year ago as new rules that place a higher value on such supplies kick in, according to report in November by the grid operator. Dramatically lower costs, combined with state and federal subsidies, will lead to more than 14,600 megawatts of new wind capacity through 2024, according to a report by market watchdog Monitoring Analytics LLC.