New Study Examining Natural Gas Growth and Solar Development in PJM

New research finds natural gas expansion in PJM market has not crowded out distributed solar, highlighting nuanced interactions across markets, prices, and policy frameworks.

A new peer-reviewed article published in WIREs Energy & Environment provides fresh empirical insight into how the rapid growth of natural gas–fired power generation has interacted with distributed solar photovoltaic (PV) development in the PJM Interconnection.

Titled “Estimating the impacts of natural gas power generation growth on solar electricity development: PJM's evolving resource mix and ramping capability,” the study examines PJM’s changing resource mix over the period 2008–2018, a decade marked by accelerated deployment of both distributed solar PV and natural gas generation across the United States.

Using a rigorous dynamic panel data framework and a system-generalized method of moments (system-GMM) estimation approach, the analysis accounts for market dynamics, policy evolution, business cycles, and forecasting uncertainty, while controlling for jurisdiction-level and time-specific effects. An instrumental variable strategy is applied to address endogeneity concerns.

The findings challenge common assumptions: growth in natural gas capacity does not crowd out distributed solar PV in PJM’s capacity market. However, the study uncovers substantial heterogeneity across jurisdictions, particularly in how solar PV deployment responds to electricity price signals. Notably, no statistically significant relationship is found between distributed solar development and nuclear, coal, hydro generation, or overall electricity consumption.

The article underscores the critical role of state renewable portfolio standards, net energy metering policies, PJM market design, demand conditions, cost drivers, and emerging non-wire alternatives such as energy storage in shaping solar PV outcomes—offering valuable insights for planners, policymakers, and grid modernization efforts.