Key Takeaway:
The PJM Interconnection’s market monitor is against Constellation Energy’s request for exemptions from certain rules as the company works to reactivate the Crane nuclear power plant, previously known as Three Mile Island Unit 1, in connection with a deal involving Microsoft.
Overview:
To ensure the Crane unit can fully deliver power when it restarts, potentially next year, Constellation seeks to shift Capacity Interconnection Rights (CIRs) from a fossil-fueled plant set for retirement. This request requires approval from the Federal Energy Regulatory Commission (FERC).
The independent monitor, Monitoring Analytics, stated that Constellation’s application does not satisfy FERC’s criteria for waivers, particularly noting potential negative impacts on other market participants.
PJM confirmed in its filing that while it does not oppose Constellation’s request, future assessments will determine when power from the Crane plant can be fully integrated into the grid.
In-Depth Analysis:
Constellation’s plan, costing $1.6 billion to restart the 835-MW Crane unit, faces challenges due to PJM’s need for transmission upgrades to safely deliver the unit’s energy. These upgrades, involved in significant voltage projects, are not expected to finish until December 2030, potentially delaying the plant’s operations, projected for 2027.
To enhance the viability of Crane, Constellation requested to transfer CIRs from its Eddystone units near Philadelphia, which the Department of Energy has mandated to remain operational due to an energy emergency.
Despite this, Monitoring Analytics expressed concerns that the waiver does not meet necessary criteria. The monitor remarked that simply wanting relief from business decisions does not justify a waiver.
Additionally, changes after a certain decision point in PJM’s process could complicate matters and potentially transfer costs onto other interconnection customers.
PJM has indicated that further studies need to be conducted to determine the adequacy of the transfer. If FERC grants the waiver, it won’t influence the outcomes of any interconnection assessments.
Constellation aims for a response from FERC by June 1, anticipating that approval will allow them to participate in the upcoming capacity auction, set to kick off on June 30.
ClearView Energy Partners recently highlighted that FERC’s approval seems likely, which would position Constellation to bid 760 MW of power into PJM’s auction.
Even with this added capacity, market estimates suggest that PJM’s auction for the 2028/2029 delivery period might still face a $325/MW-day price cap under review.
Constellation has secured a 20-year contractual agreement to provide energy and capacity from Crane specifically for Microsoft’s data centers across the Mid-Atlantic and Midwest regions.