PJM Thwarts Maryland’s Coal-Free Ambitions While Costing Marylanders Millions

As of November 2023, every coal-burning power plant in Maryland has announced plans to cease operation by the end of 2025.  This is a monumental accomplishment in a state where in 2006 61% of in-state generation came from coal. One of the plants scheduled to retire in 2025 is a massive, two-unit plant known as Brandon Shores, which is nearly 40 years old and sits on the banks of the Patapsco River near Baltimore. 

To the dismay of local residents, PJM Interconnection—the grid and transmission system operator for 13 states and D.C.—has concluded that local reliability issues require Brandon Shores to keep running for three and a half years longer than planned.  Fortunately, a more cost-effective clean energy solution exists, which could be implemented quickly and allow Maryland to become coal-free.

An image of the Brandon Shores coal plant's smoke stacks with a boat in the foreground
Brandon Shores Generating Station in Anne Arundel County, MD. (Credit: Maryland Sierra Club)

What is preventing Brandon Shores from shutting down on time?

In 2020, Talen Energy announced that it would shut down or refuel Brandon Shores by December 2025, as part of a broader strategy to redevelop many of its coal plant sites with renewable energy and energy storage technologies. Although Talen pursued permits to switch to burning oil, the company went through bankruptcy in the intervening years. In April of last year, Talen told PJM that they would instead shut down the 1,282 MW plant in June 2025. PJM studied the reliability impacts of this retirement and found that major transmission upgrades, costing nearly $800 million, would be needed. These transmission upgrades, which include extending two high voltage lines from Pennsylvania into Maryland, are projected to be ready at the end of 2028. 

Currently, PJM’s only tool to support reliability while waiting for the transmission projects to be complete is to offer to pay the retiring generator to stay in operation. The resulting “reliability must run,” or RMR, agreement could be extremely costly, while providing limited reliability benefits. For example, an RMR agreement for a much smaller coal plant in Delaware, known as Indian River, could cost as much as $357 million over several years, while not obligating the plant to actually run when called upon. Delaware customers are already paying an extra $6.45 each month on their bills for the Indian River RMR, on top of the cost of transmission upgrades to enable retirement of that plant in 2026. 

Moreover, as PJM has acknowledged, large transmission projects like those planned to allow Brandon Shores to shut down are prone to delays, which can stem from supply chain, land use, and permitting issues. Thus, there is a high probability that PJM will keep Brandon Shores operating well past 2028. Based on the cost of the RMR at Indian River and Brandon Shores’ much larger size (three times that of Indian River), an RMR at Brandon Shores could cost Marylanders around $250 million each year.  

A more cost-effective, less polluting solution for reliability

Maryland ratepayers and communities deserve better. Fortunately, paying a polluting coal plant hundreds of millions of dollars a year to barely operate is not the only choice. For the last several months, power system experts at GridLab and Telos Energy have been tasked with recreating PJM’s transmission reliability models to identify more cost-effective alternatives. The basic problem created by Brandon Shores’ deactivation is that there is insufficient power supply within the transmission-constrained Baltimore Gas & Electric (BG&E) zone. This means that transmission lines into the region could be overloaded if demand spikes in the Baltimore area at the same time that the system suffers an unexpected outage elsewhere. It also means that some additional generation is needed within the BG&E zone to support the voltage of the grid.

GridLab and Telos Energy’s alternative solution involves three main components: 

  • Installing a 600 MW battery with four-hour duration and 20-year lifetime, equipped with grid-forming inverters to support voltage, at or near the Brandon Shores site.
  • Replacing the wires on a half-dozen short sections of lower voltage transmission lines in the region. This process, known as reconductoring, is much faster than building entirely new lines because it does not require land acquisition or major permitting processes.
  • Expediting voltage support technologies that PJM already plans to install in nearby areas, known as capacitors and STATCOMS. Like reconductoring, installation of these technologies is far less complicated and prone to delay than construction of major new transmission lines.

GridLab estimates that the upfront cost of the battery plus targeted reconductoring would be about $480 million. However, because the battery could earn about $350 million in net revenues over its lifetime, the net cost would be substantially less, potentially as low as $135 million.  Given that the Brandon Shores RMR could cost as much as $875 million ($250 million annually, for three and a half years), Marylanders stand to save a lot of money if the storage solution can be implemented quickly. Even if the battery alternative could replace only 6 months of the Brandon Shores RMR, it could be a cost-effective solution.

The battery storage solution can also be more reliable than the coal solution, since batteries can start up and inject power far more quickly than a coal plant. Many reliability events arise on short notice due to unexpected outages of other power facilities, so the quick response of the battery could make all the difference in keeping the lights on.

Unfortunately, PJM lacks a framework to evaluate alternatives like this to RMR agreements.  Instead of clearly defining the reliability need and seeking the most cost-effective solution, PJM assumes only the retiring generator can provide reliability, and will pay whatever it takes to keep them online. Scarce ratepayer resources should be used to develop grid assets that will provide value for many years, rather than being poured down a drain. PJM’s approach reflects a missed opportunity to uphold its responsibility to ensure bulk power system reliability while also supporting state clean energy policies. For example, last year Maryland enacted a new law requiring the deployment of 3 GWs of batteries within the state over the next decade. While PJM has professed its intentions to work with states, it cannot do so if it lacks a framework to examine alternatives to out-of-market retention of retiring generators.   

Implementing the storage-based solution will require coordination and leadership by both PJM and Maryland to quickly update regulatory frameworks and deploy the various components in time. A large diverse group of states has urged PJM to take a broader and more innovative approach to the generation retirement process. While PJM has expressed openness to this idea, it has so far failed to act on the opportunity before it. Rather than looking at a robust set of solutions to the present reliability issue, it seems to be focused on doing whatever it takes to keep the coal plant running.

In contrast, many other jurisdictions across the country are capitalizing on retiring coal plants to quickly connect lower cost renewables and storage that make the grid more resilient, reliable, and affordable. For example, an Indiana utility is shutting down a coal plant and installing an 800 MW battery at the same site to take advantage of the existing grid connection. Recent federal legislation provides significant support in the form of tax credits and loans for the conversion of existing power plant sites to clean energy. Brandon Shores’ retirement presents an important opportunity for Maryland—not only to enjoy cleaner air and water, but also to accelerate the state’s clean energy transition. 

Up Next

Próximo Artículo