Letter to the Editor

Editor:
Fracked gas faces a shaky future in Pennsylvania.
According to a recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) that evaluated the economic health of energy projects across the PJM grid, the “gas-fired gold rush looks to be over.” The report goes on to say that those gas-fired power plants still in the planning stages in Pennsylvania face an uncertain future. The plant proposed for Renovo is listed as “unlikely” to be built.

The report gives several reasons for this.

One is the growing competitiveness of renewables and battery storage. Solar, wind, and battery storage projects continue to add renewable capacity to the energy market, thus limiting the need for gas-fired energy generation.
Second, due to factors like energy efficiency measures, which are on the rise, the demand for natural gas has decreased — even at peak summer levels. This means that projections are flat, with only minimal growth expected over the next ten years.

Third, the buildout of gas-fired plants over the last several years has been based on stable gas prices. Recently these prices have climbed significantly. This volatility makes it difficult for investors to figure out whether a plant will be profitable in the long term.

And finally, given the increased market attention to climate change and the real probability that fossil fuel plants will need to shut down by 2050, investors and developers are having second thoughts about funding projects that appear to have an uncertain future.

Several factors that have ensured the growth of this industry are no longer in place, making investment in gas-fired power plants a risky move and creating especially daunting hurdles for plants still on the drawing board. The Renovo plant, for example, has consistently had its starting-point revised; at this time, no specific date has been set for breaking ground. In a recent interview, Mike Flanagan, CEO of the Clinton County Economic Partnership, reported that final financing for the project has still not been secured.

Another difficulty arose in October when permits for two gas-fired power plants were denied in New York. The reason given for the denial is that operation of these plants would be inconsistent with the state’s Climate Act. The plan for Renovo was that its plant would export half of the electricity it produced to New York. This recent denial makes it unlikely that the Renovo plant will be able to send half of its output north to New York.

The report concludes by saying, “The gas capacity-building spree in PJM is coming to an end. Developers and investors face a growing number of risks that IEEFA believes will prevent most of the 23,000MW of planned capacity still in the region’s development queue from being built.” The investment market is delivering its verdict loud and clear. At what is clearly an energy.

Maureen Ruhl
Renovo, PA