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Exelon and NRG share prices fall as U.S. nuclear power firms to be hit by plunge in grid payments

Plunging Payouts on Top U.S. Power Grid Slam Coal, Nuclear,  Bloomberg Green, By Will Wade and Mark Chediak3 June 2021, 

  •  Power providers will get $50 a megawatt-day, down from $140
  •  ‘I can’t imagine how nuclear is going to be able to cover’

Coal plants, nuclear reactors and other generators will take a hit next year on the biggest U.S. power grid as payments designed to ensure the lights remain on from New Jersey to Illinois plunge 64%.

Suppliers to PJM Interconnection LLC’s grid, which serves more than 65 million people, will get $50 a megawatt-day to provide backup capacity for the year starting June 2022, according to the results of an auction released Wednesday. It’s the lowest price in 11 years.

The results are an especially harsh blow for coal plants and nuclear reactors already struggling to compete. The PJM auction is the single most important event for generators across the eastern U.S., including Calpine Corp., NRG Energy Inc. and Exelon Corp., because it dictates a big chunk of their future revenue.

It also plays a pivotal role in shaping the region’s electricity mix, determining how much the region is willing to stick with coal and natural gas plants or replace then with wind and solar.

“I can’t imagine how nuclear is going to be able to cover all their fixed costs with such a low price,” said Brianna Lazerwitz, an analyst for BloombergNEF.

Exelon shares fell as much as 2% before trading opened in New York Thursday. NRG fell 1.6%. And Vistra fell 2%.

“It’s a direct hit to the companies’ income statements,” Gayle Podurgiel, a power markets analyst at Moody’s, said in an interview. She predicted it would push more coal plants to close.

Analysts had expected the auction would hurt renewables and nuclear power, while potentially boosting coal. That’s because of new rules imposed by regulators under Former President Donald Trump were designed to blunt any advantage wind, solar and reactors gained from state subsidies.

But in the end, the rule wasn’t much of a factor, in part because the steep price decline mitigated some participants’ advantages. Plus, many bidders were granted exemptions. As a result, coal plants fared disastrously………..https://www.bloomberg.com/news/articles/2021-06-02/electricity-payouts-on-biggest-u-s-grid-fall-64-in-auction-kpfwja1a

June 7, 2021 - Posted by | business and costs, USA

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