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Shifting energy The upcoming closure of two local coal plants does not signal an end to using the resource to power N.J.

Ralph LaRossa, president and COO, Public Service Enterprise Group.
Ralph LaRossa, president and COO, Public Service Enterprise Group.-(AARON HOUSTON)

If there’s a takeaway from Public Service Enterprise Group’s recent plan to shutter two coal plants, it’s that no one can control the ever-shifting economics of energy generation.

Even as President Donald Trump talks about ending what he’s referred to as a war on the coal industry, Hudson Generation Station in Jersey City and Mercer Generation Station in Hamilton are big coal operations that PSEG hasn’t suddenly had a change of heart about — they’re still slated to be shut down entirely by June after plans were set to do so late last year.

An official at Public Service Electric & Gas, the regulated utility arm of the organization, said the pressures that these plants have long faced from other energy sources are just too much.

“What you’re seeing, power generation side, is that the price of coal and the efficiency of those plants are not competitive with low-cost natural gas generators,” PSE&G President and Chief Operating Officer Ralph LaRossa said.

Given that, PSEG could not justify the significant investment required to keep operating the Hudson Generation Station and the Mercer Generation Station, plants that were first opened in the ’60s. The plants, which each have a capacity of just over 600 megawatts, have only infrequently been called on to run.

And, although it’s part of a definite shift in energy generation, the shuttering of the plants doesn’t mark the end of coal energy being used locally.

“What we in New Jersey need to be aware of is that states like Pennsylvania continue to use coal to supply energy to the grid, and we’re going to see some of that energy as part of PJM,” LaRossa explained.

What’s in store

The sun needs to be up for solar energy, just as the wind needs to blow for another green energy source.

But a utility’s grid demands doesn’t always cooperate with the elements, which is why legislation has been introduced to study possible ways to harness power and keep it on hand for when it’s needed through energy storage.

Sara Bluhm, the New Jersey Business & Industry Association’s vice president for environment and energy affairs, said that, as utilities steadily move away from traditional energy sources such as coal, which can be burned for energy whenever, energy storage could allow finicky renewable energy to still offset peak loads.

“As we keep expanding and strengthening our grid, as well as implementing renewables and diversifying the generation of energy, we’ll need to look at energy storage a way of helping us meet our energy demands when we most need it,” Bluhm said.

Under a recently introduced bill, S3064, the state’s Board of Public Utilities would do an analysis along those lines in partnership with the Laboratory for Energy Smart Systems at Rutgers University.

The bill, which has been approved by the Senate Environment and Energy Committee, would also have the utility board put potential benefits and associated costs into numbers, with a particular eye to how it could impact the state’s rate payers.

Bluhm said that’s where her business-focused organization’s support comes in.

“Business is the largest consumer in energy, so we have an interest in this as a big rate payer,” she said.

“It’s about keeping our energy affordable for business while also keeping a more diverse energy portfolio.”

PJM is a regional organization that coordinates the movement of energy across utilities in about a dozen states. But its portfolio, like any other energy-focused organization, is not exempt from industry trends.

“The thing that remains at the forefront, the theme across the nation, is the cost of natural gas and how that’s impacted the activities that all utilities are involved in,” LaRossa said. “There has been a much lower cost of commodities on the gas side, which translates to the lower cost for customers.”

LaRossa added that this trend has opened up opportunities for utilities such as PSE&G.

“It has allowed us to invest in infrastructure because, with commodity prices down and the ability to keep bills flat, we can make those investments, which are important for customers,” he said.

PSE&G is about a billion dollars into its $1.2 billion Energy Strong initiative, a multiyear program to strengthen the state’s grid in the event of another natural disaster like Superstorm Sandy.

Because of the $370 million of infrastructure investments already in place, the utility’s officials claim that, if a Sandy-like storm were to occur today, about 231,000 customers that experienced flooded substations and switching stations during that event would not lose power this time around.

Although low natural gas cost has had its benefits, PSEG still advocates for diversity among its energy generation fleet and in the larger PJM pool that PSE&G is in.

Renewable energy has a role in deepening the local energy portfolio, which consists almost entirely of nuclear and natural gas now.

“From a renewables standpoint, we need to figure out how they play in low cost of natural gas and how we ramp that up but in a cost-conscious way for the consumer,” LaRossa said.

To keep in step with developing trends in energy generation and distribution, the Garden State organization is staring west.

“Look out to California, and also Hawaii, and you’ll see an experiment in how do you keep a grid running effectively while introducing renewables all the time — it’s a Petri dish for that out there,” LaRossa said. “And we’re moving in that direction, too. What you see there is what you’ll start seeing more of in New Jersey.”

Brett Johnson

NJBIZ Business Events