(Reuters) - The capacity auction in the PJM power grid is not expected to change plans to retire several nuclear reactors in Ohio, Pennsylvania and New Jersey over the next few years, analysts said on Tuesday.
PJM, which operates the grid in all or parts of 13 U.S. Mid Atlantic and Midwest states, will release the results of its capacity auction Wednesday afternoon. Last year’s auction was worth about $7 billion.
FirstEnergy Corp and Exelon Corp plan to retire six reactors in PJM before 2022 as cheap natural gas from shale fields has depressed power prices over the past several years, making it uneconomic for generators to keep operating some nuclear plants.
“Our forecast of the auction results is slightly better than last year, but it won’t be enough to change plans to close reactors,” said Michael Weinstein, energy analyst at Credit Suisse.
PJM uses the capacity auction to make sure the grid has enough resources in the future. In the latest auction, PJM sought about 166,000 megawatts of capacity for the June 2021-May 2022 delivery year.
One megawatt is enough for about 1,000 U.S. homes.
FirstEnergy said it would retire four reactors in Pennsylvania and Ohio in 2020-2021 unless the states or federal government offer some form of subsidy.
FirstEnergy Solutions, the unit that owns the reactors, which total about 3,942 MW, sought bankruptcy protection a few days after saying it would retire the units in March.
“We’ll wait and see what happens before making any announcements,” said Tom Mulligan, spokesman for FirstEnergy Solutions, noting the company bid its reactors in the auction as required under PJM rules.
Exelon said last year it would shut the 805-MW reactor at Three Mile Island in Pennsylvania in late 2019. The company said it would move the long-planned retirement of its 615-MW Oyster Creek reactor in New Jersey to October 2018 from 2019 due to economic reasons.
Exelon could not comment on what units it bid into the auction.
Exelon has said Three Mile Island had not cleared the past three capacity auctions. The company is still working with PJM and federal and state officials on policies to provide more money for nuclear energy.
“The reactors in question are so uneconomical and uncompetitive that the capacity market simply cannot deliver enough revenue to change their fortunes,” said Tim Judson, executive director at the Nuclear Information and Resource Service, which seeks to shut nuclear plants.
Reporting by Scott DiSavino; editing by Diane Craft
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