September 11, 2020

Benefits of Retiring
Logan and Chambers
Coal-fired Power Plants
Prepared for: Starwood Energy Group Global, LLC

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Table of Contents
Executive Summary .................................................................................................................................................................... 3
Introduction ................................................................................................................................................................................ 5
Logan and Chambers Coal-fired Power Plants .......................................................................................................................... 5
Overview of CO2 Reduction Measures and Costs in PJM............................................................................................................ 7
CO2 Emission Rates and Reduction Measures in PJM ........................................................................................................... 7
Nuclear ................................................................................................................................................................................... 8
Offshore Wind ......................................................................................................................................................................... 8
Solar ........................................................................................................................................................................................ 9
Comparative Analysis of CO2 Emissions Reduction Costs .................................................................................................... 9
Logan and Chambers Retirements ........................................................................................................................................... 10
Value Proposition: Environmental and Ratepayer Impacts................................................................................................ 10
Other Benefits ...................................................................................................................................................................... 12
RGGI Benefits ................................................................................................................................................................... 12
Sites Redevelopment Opportunities .............................................................................................................................. 12
Avoidance of Externalities ............................................................................................................................................... 13
Summary Findings .................................................................................................................................................................... 13
Appendix A: Logan and Chambers Operations and Emissions ................................................................................................ 15
Appendix B: Summary of Comparative Analysis ...................................................................................................................... 16
Glossary ..................................................................................................................................................................................... 17

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Executive Summary
FTI Consulting, Inc. (“FTI”) was retained by Starwood Energy Group Global, LLC (“Starwood”) to assess the CO2 reduction
cost savings that would occur if two Starwood-owned coal-fired plants in New Jersey, Logan and Chambers — located in
Logan Township and Carneys Point Township, respectively — were to be retired (“L&C Retirements”) prior to the
expiration of their Power Purchase Agreements (“PPAs”) with Atlantic City Electric Company (“ACE” or “PPA
Counterparty”) in 2024. In addition to CO2 emissions avoidance and other benefits of the proposed retirements,
Starwood would pay the PPA Counterparty $7.5 million to retire both plants by the end of 2020, with the PPA obligations
to be fulfilled with replacement power and capacity from the PJM wholesale market for the remaining term at the same
economic cost to ACE as under the existing PPAs.
FTI’s analysis concludes that the proposed L&C Retirements would result in avoided net CO2 emissions of 3.9 million
tons, which is calculated by subtracting replacement power emissions from the estimated L&C gross emissions during
2021-2024. To put this in perspective, a reduction of 3.9 million tons of CO2 is equivalent to taking 762,419 passenger
vehicles off the road for one year in New Jersey. 1 This represents a meaningful step in progressing towards New Jersey’s
goal of cutting CO2 emission by 80 percent compared to 2006 levels. 2 Further, by achieving the net CO2 reductions
through the L&C Retirements rather than through alternative programs, New Jersey ratepayers would have cost savings
ranging from $98 million to $932 million during 2021-2024, as shown in Figure ES-1.
In addition, the L&C Retirements would provide the optionality to explore potential site redevelopment opportunities for
solar, battery, or offshore wind interconnections, which are aligned with goals set in New Jersey’s 2019 Energy Master
Plan. 3 The Starwood offer eliminates other externalities that would otherwise occur along the coal value chain, but are
not explicitly captured in the price of electricity.

Based on United States Environmental Protection Agency’s estimates, a typical passenger vehicle emits about 4.6 metric tons of CO2 per year,
https://www.epa.gov/greenvehicles/greenhouse-gas-emissions-typical-passenger-vehicle.
2
The New Jersey Global Warming Response Act of 2007 (GWRA), N.J.S.A. 26:2C-37.
3
State of New Jersey, 2019 Energy Master Plan, https://nj.gov/emp/docs/pdf/2020_NJBPU_EMP.pdf.
1

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Figure ES-1: Summary of Starwood Offer Impacts Through 2024

The ratepayer impacts are assessed by comparing the potential CO2 reduction cost savings associated with L&C
Retirements to other state-level CO2 reduction programs that incentivize the continued development and operation of
carbon-free generation resources. The alternative programs evaluated include the Zero Emission Certificate (“ZEC”)
program for nuclear generation resources, the Offshore Wind Renewable Energy Certificate (“OREC”) program, and the
Transition Renewable Energy Certificates (“TRECs”) program for solar in New Jersey. 4, 5, 6
The alternative CO2 reduction programs have shown a wide range of costs to ratepayers: $24 per ton as implied by New
Jersey ZECs, $75 per ton as implied by the New Jersey ORECs, and $240 per ton as implied by the New Jersey TRECs, as
shown in Figure ES-2. In comparison, the L&C Retirements have an estimated $2 per ton benefit (i.e., the opposite of a
cost) to ratepayers enabled by the $7.5 million payment from Starwood.7
Figure ES-1: Comparative CO2 Emission Reduction Costs

Note: The L&C Retirements direct savings are calculated by dividing the negative of Starwood’s payment of $7.5 million by the avoided net
CO2 emissions of 3.9 million tons. The NJ ZEC cost is based on NJBPU awards and is converted from $/MWh to $/ton at the 2019 average
PJM CO2 emission rates. The NJ offshore wind credit is calculated based on NJBPU’s net cost of OREC at $46.46/MWh (in 2019 dollars) with
2 percent escalation. The NJ TREC is based on NJBPU order in 2020. Both NJ OREC and TREC are converted at the PJM 2019 marginal onpeak emission rate.
https://nj.gov/bpu/newsroom/2018/approved/20181119.html
https://www.njcleanenergy.com/renewable-energy/programs/solar-renewable-energy-certificates-srec/new-jersey-solar-renewable-energy
6
https://www.nj.gov/dep/aqes/offshorewind.html#:~:text=On%20November%2019%2C%202019%20Governor,than%20double%20the%20initial%20goal
7
The L&C Retirements direct savings are calculated by dividing the negative of Starwood’s payment of $7.5 million by the avoided net CO2 emissions of 3.9 million tons.
4
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Introduction
FTI Consulting, Inc. was retained by Starwood Energy Group Global, LLC (“Starwood”) to assess the CO2 reduction cost
savings that would occur if two Starwood-owned coal plants — Logan and Chambers — located in New Jersey were to
retire by the end of 2020 (“L&C Retirements”) as originally proposed. Logan and Chambers each operates under a longterm PPA with ACE. Starwood would pay the PPA Counterparty $7.5 million to retire both plants by the end of 2020, with
the PPA obligations to be fulfilled with replacement power and capacity from the PJM wholesale market for the
remaining term and for the same economic cost to ACE as under the existing PPAs. FTI’s analysis compares the cost of
CO2 reduction associated with the proposed retirement of Logan and Chambers to the cost of achieving the same
amount of CO2 reduction under other state programs designed to reduce CO2 emissions by incentivizing the continued
development and operation of carbon-free generation resources.8 The alternative CO2 reduction programs
evaluated include:
■ Zero Emission Certificate (“ZEC”) for nuclear generation resources in New Jersey
■ Offshore Wind Renewable Energy Certificate (“OREC”) program in New Jersey
■ Transition Renewable Energy Certificates (“TRECs”) program for solar in New Jersey
The following sections of the white paper examine and compare the costs borne by ratepayers to achieve the same
amount of net CO2 reductions under each alternative, as well as the environmental, social, and economic benefits of the
L&C Retirements.
Logan and Chambers Coal-fired Power Plants
The Logan and Chambers coal-fired power plants were placed in service in 1994, interconnecting to the PJM market.
Both plants were built as “qualifying facilities” under the Public Utility Regulatory Policies Act (“PURPA”) given their
cogeneration characteristics — they sell steam and electricity to two industrial counterparties.9
Logan is located in Logan Township, Gloucester County, and has an operating capacity of 219 megawatts (“MW”). It is 100
percent owned by Starwood and has a 30-year PPA with ACE that expires in December 2024. ACE is a wholly owned
subsidiary of Exelon Corporation.
Chambers is located in Carneys Point Township, Salem County, and has an operating capacity of 262 MW. It is jointly
owned by Starwood and Atlantic Power Corp. and has a 30-year PPA with ACE that expires in March 2024. Table 1
summarizes the ownership structure and PPA terms of both plants.

This study focuses on the CO2 emissions, though L&C Retirements will also have a disproportionately high concentration of other environmental benefits such as sulfur
dioxide (SO2) and nitrogen oxide (NOx) emission reductions.
9
https://www.energy.gov/oe/services/electricity-policy-coordination-and-implementation/other-regulatory-efforts/public
8

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Table 1: Logan and Chambers Ownership and PPA Summary
Ownership
Starwood Energy
Starwood Energy
Atlantic Power Corporation

Percentage
100%
60%
40%

PPA Counterparty
Atlantic City Electric Company
Atlantic City Electric Company

Start
Dec 1994
Mar 1994

Logan
Chambers
Logan
Chambers

End
Dec 2024
Mar 2024

Term (Years)
30
30

PPA Capacity (MW)
200
184

Source: Starwood

As shown in Figure 1, in 2019, Logan and Chambers ran 25 percent and 27 percent of the time, respectively, slightly above
the minimum take obligations of 50 MW for Logan and 46 MW for Chambers, per the PPAs’ terms. Those contractual
minimum take obligations set a practical floor on the projected generation levels of both plants through to the expiration
of the PPAs and serve as the basis for a conservative assumption of future production for both plants.
Figure 1: Logan and Chambers Annual Capacity Factor During 2010-2019
100.00
90.00
Capacity Factor (%)

80.00

Logan,
55.67

70.00
60.00
50.00

Chambers,
26.56

40.00
30.00
20.00

Chambers,
51.58
Logan,
25.17

10.00
0.00

2010

2012

2014

2016

2018

Source: Starwood

Table 2 summarizes the key operating parameters for Logan and Chambers in 2019. Logan and Chambers collectively
emitted 1.67 million tons of CO2 in 2019, representing approximately 8 percent of total greenhouse gas emissions from
the power sector in New Jersey.10 Retiring both plants by the end of 2020 will cease their operations and their carbon
emissions. This is significant, especially considering that New Jersey’s average CO2 emissions in 2019 have increased
from 2018 levels, according to a PJM report.11

10
11

State of New Jersey, Department of Environmental Protection, 2018 Statewide Greenhouse Gas Emissions Inventory.
PJM, 2019 New Jersey State Infrastructure Report, page 4, https://www.pjm.com/-/media/library/reports-notices/state-specific-reports/2019/2019-new-jersey-stateinfrastructure-report.ashx?la=en.

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Table 2: Logan and Chambers Operation and Emission Profiles in 2019

Logan
Chambers
Total

Capacity
MW
219
262
481

Net Generation
MWh
482,817
554,931
1,037,748

Capacity Factor
%
25%
27%

Generation Costs
$/MWh
79
108

Heat Rate
Btu/KWh
12,290
13,700

CO2 Emission
tons
680,064
985,119
1,665,183

Source: Starwood

Overview of CO2 Reduction Measures and Costs in PJM
CO2 Emission Rates and Reduction Measures in PJM
Federal and state policies, regulations, legislation and subsidies have made significant impacts across the PJM footprint
of 13 states and the District of Columbia. CO2 emission rates in PJM have steadily declined, reaching a system average
rate of 851 pounds per megawatt hour (“lbs/MWh”) in 2019, as shown in Figure 2, compared to 1,014 lbs/MWh in 2015.
The decline in the emissions rate is a result of several factors, including the retirements of aging coal plants and the
significant growth in the contribution from renewable resources.
Figure 2: PJM Marginal and Average CO2 Emission Rates
2,000

lbs/MWh

1,500

1,647

1,657
1,374

1,539

1,540

1,000

1,374

1,337

1,268

1,254

1,171

1,014

992

948

888

851

2015

2016

2017

2018

2019

500
Marginal On-Peak

Marginal Off-Peak

System Average

Source: PJM 2015–2019 CO2, SO2 and NOX Emission Rates

Federal production tax credits and investment tax credits for renewables have acted as significant drivers of renewable
additions in PJM. State-level legislative programs in PJM states, such as Renewable Portfolio Standards (“RPS”), have
also driven renewable additions through the issuance of Renewable Energy Credits (“RECs”). States have pursued further
emissions reductions through mandated clean energy goals. To meet these goals in the power sector, some PJM states
have created incentive programs that have: (1) allowed certain nuclear plants to remain in operation by receiving an
additional revenue stream; (2) developed offshore wind targets and funding programs; and (3) set solar carve-outs within
the RPS goals.

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Nuclear
In PJM, nuclear power generation facilities are not RPS-qualifying resources and therefore are ineligible to receive RECs.
Some PJM states, such as Ohio, New Jersey and Illinois, have established ZEC procurement mechanisms to recognize the
environmental attributes of nuclear as a major source of power with no CO2 emissions, thereby preserving economically
at-risk nuclear generation facilities.
New Jersey established its ZEC program to maintain the state’s nuclear fleet. The New Jersey ZEC represents the “fuel
diversity, air quality, and other environmental attributes of one MWh of electricity generated by an eligible nuclear power
plant selected by the New Jersey Board of Public Utilities (“NJBPU”) to participate in the program.”12
In April 2019, NJBPU awarded three-year ZECs valued at up to $300 million annually to the 1,291-MW Hope Creek and
2,340-MW Salem (unit 1 and 2) nuclear generating stations.13 The initial eligibility period ran from April 18, 2019 through
May 31, 2019, plus an additional three energy years, from June 1, 2019 through May 31, 2022.14
The state’s electric distribution companies — Atlantic City Electric Company, Jersey Central Power & Light Company,
Public Service Electric and Gas Company, Rockland Electric Company, and Butler Electric Utility — are authorized to
collect a statutorily mandated rate of $0.004 per kilowatt hour from the retail customers to fund ZEC payments. Eligible
nuclear units are selected until the combined nuclear procurement reaches 40 percent of the total retail sales. As such,
the New Jersey ZEC is valued at $10 per MWh.15
Offshore Wind
New Jersey plans to procure 7.5 GW of offshore wind (“OSW”) by 2035, a goal that, if realized, would contribute to
approximately 50 percent of the state’s electricity needs.16 The NJBPU manages the Offshore Wind Renewable Energy
Certificate (“OREC”) program, which grants OSW projects the right to sell, and electric power suppliers the obligation to
buy, the ORECs generated by the OSW project. The all-in OREC prices include energy, capacity, and environmental
attributes of electricity.
In 2019, as result of the state’s first solicitation, NJBPU awarded Ørsted for the 1.1 GW Ocean Wind project, which offers a
first-year OREC price at $98.10 per MWh in 2024, when the first project is expected to be operational, and a levelized
OREC price of $116.82 per MWh. The levelized OREC cost, net of expected energy and capacity revenues, is estimated at
$46.46 per MWh.17

NJBPU, https://www.bpu.state.nj.us/bpu/pdf/boardorders/2019/20190710/7-10-19-9C.pdf, pages 1-2.
Hope Creek is 100 percent owned by PSEG Nuclear LLC. Salem Unit 1 and 2 are jointly owned by PSEG Nuclear LLC (57.41 percent ownership interest) and Exelon
Generation Company LLC (42.59 percent ownership).
14
NJBPU, https://www.bpu.state.nj.us/bpu/pdf/boardorders/2019/20190710/7-10-19-9C.pdf, page 4.
15
NJBPU, https://www.nj.gov/rpa/docs/EO18080899_ZEC_Chang_Fagan_Certification_REDACTED.pdf.
16
State of New Jersey, “Governor Murphy Signs Executive Order to Increase Offshore Wind Goal to 7,500 Megawatts by 2035”
https://www.nj.gov/governor/news/news/562019/20191119b.shtml.
17
NJBPU, Docket No. Q018121289, https://www.state.nj.us/bpu/pdf/boardorders/2019/20190621/6-21-19-8D.pdf.
12
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Solar
New Jersey’s Energy Master Plan recommends that New Jersey install 12.2 GW of solar by 2030 and 17.2 GW by 2035, and
that in-state solar provide 34 percent of the state’s energy mix by 2050.18 New Jersey has administered the Solar
Renewable Energy Certificate (“SREC”) program since 2004, which has transitioned to the Transition Renewable Energy
Certificates (“TRECs”) program in 2020.
New Jersey’s RPS requires load-serving entities to procure 50 percent of the electricity from renewable sources by 2030,
with a solar carve-out of 5.1 percent by 2021. The SREC program allows solar projects to generate an SREC for each MWh
of solar power produced. Load-serving entities must purchase enough SRECs to meet their solar carve-out requirement
either through direct purchases or trading of SRECs. In 2019, the SREC program incentivized record-setting solar
installations of 447 DC MW.19
In 2020, upon attaining the 5.1 percent milestone goal, NJBPU directed the closing out of the SREC program and the
creation of a transition incentive program, which is composed of fixed-price, factorized TRECs. New Jersey offers a fixed
compensation of $152 per TREC (one MWh of production of utility-scale solar) for each year of an eligible project’s 15year Transition Incentive Qualification Life, which is 15 years following the commencement of commercial operations.20
After the 15 years, projects may be eligible for a New Jersey Class I REC, incurring potential additional ratepayer costs.21
Comparative Analysis of CO2 Emissions Reduction Costs
In summary, states have used a range of programs to reduce CO2 emissions. The CO2 emissions reduction costs have
shown a wide range of costs of reducing the same amount of CO2 as would result from the retirements: $24 per ton for
New Jersey ZEC, $75 per ton for the New Jersey ORECs, and $240 per ton for the New Jersey TRECs, as shown in Figure 3.
Table 3 summarizes the alternative CO2 reduction program costs.
In comparison, to achieve the same reductions, the Logan and Chambers retirements have an estimated $2 per ton
benefit (i.e., the opposite of a cost) to ratepayers enabled by the $7.5 million payment from Starwood, in addition to
avoided CO2 emission reduction costs ranging from $24 per ton to $240 per ton, based on the costs of alternative
programs that are currently in place in New Jersey.

State of New Jersey, 2019 New Jersey Energy Master Plan, page 124 and Figure 16, https://www.nj.gov/emp/docs/pdf/2020_NJBPU_EMP.pdf.
NJBPU, “NJBPU Announces Record-Setting Year for Solar Installations in New Jersey,”
https://www.state.nj.us/bpu/pdf/2019%20Solar%20Record%20Press%20Release_FINAL_032020.pdf.
20
NJBPU, Docket No. QO19010068, https://www.bpu.state.nj.us/bpu/pdf/boardorders/2020/20200309/3-9-20-8H.pdf.
21
PJM-EIS describes the New Jersey Class I REC category as follows: “Renewable sources include solar technologies, photovoltaic technologies, wind energy, fuel cells
powered by renewable fuels, geothermal technologies, wave or tidal action, methane gas from landfills, or a biomass facility, provided that the biomass is cultivated and
harvested in a sustainable manner. As a result of S.B. 1925, Class I renewable energy also includes hydroelectric facilities of 3 MW or less that are located in NJ and placed in
service after July 23, 2012 (the effective date of S.B. 1925).” https://www.pjm-eis.com/program-information/new-jersey.aspx.
18
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Figure 3: Comparative CO2 Emission Reduction Costs

Note: The L&C Retirements savings are calculated by dividing the negative of Starwood’s $7.5 million payment by the avoided CO2
emissions of 3.9 million tons. The NJ ZEC cost is based on NJBPU ZEC awards and is converted from $/MWh to $/ton based on 2019 average
PJM CO2 emission rates. NJ offshore wind credit is calculated based on NJBPU’s net cost of OREC at $46.46 (in 2019 dollars) with 2 percent
escalation. The NJ TREC is based on NJBPU order in 2020. The NJ SREC is based on the New Jersey SREC Trading Statistics Energy Year
2020 (July 2019 – June 2020). The NJ OREC, TREC, and SREC are converted from $/MWh to $/ton at the PJM 2019 marginal on-peak
emission rate.

Table 3: New Jersey CO2 Reduction Programs Costs
CO2 Reduction Programs
Term
Estimated Costs ($ million)
Estimated Production (GWh)

NJ ZEC
2019-2021
$900
90,000

NJ OREC
2024-2045
$6,199
97,096

NJ SREC
EY 2020
$725
3,429

NJ TREC
EY 2021
$521
3,429

Note: The NJ ZEC costs are based on $300 million per year for three years, which could potentially be re-applied for another three years.
The NJ OREC costs account for the awarded contract, not including the ongoing and future solicitations. The NJ SREC costs are based on
traded SRECS in Energy Year 2020 (July 2019 – June 2020). The NJ TREC program costs for EY 2021 are estimated assuming the same
volume as NJ SERC for EY 2020.

Logan and Chambers Retirements
Value Proposition: Environmental and Ratepayer Impacts
In addition to the avoidance of CO2 emissions and other intangible benefits of retirement, Starwood would pay $7.5
million in total to the PPA Counterparty to retire both plants by the end of 2020, while the PPA obligations would
continue to be fulfilled with replacement power and capacity from the PJM wholesale market for the remaining term and
for the same economic cost to ACE as under the existing PPAs. The value proposition of Starwood’s offer can be
summarized through the following environmental and economic metrics:
■ Elimination of 5.3 million tons of gross CO2 emissions from 2021 to 2024 (line 2 in Table 4). The gross CO2
emissions for Logan and Chambers through the expiration of their respective PPAs are calculated assuming that
both plants operate at the contractual minimum take levels of their respective PPAs and using 2019 monthly
emission rates as a proxy for their go-forward emission rates.22
■ Avoided net CO2 emissions of 3.9 million tons (line 4 in Table 4), which are the gross CO2 emissions of 5.3 million
tons, net of the emissions of PJM replacement power, assumed at PJM 2019 average monthly CO2 emission rates.
To put this in perspective, reduction of 3.9 million tons of CO2 is equivalent to taking 762,419 passenger vehicles

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off the road for one year in New Jersey.23 This represents a meaningful step in progressing towards New Jersey’s
goal of cutting CO2 emissions by 80 percent compared to 2006 levels.24
■ Avoided CO2 emissions costs range from $91 million to $925 million (line 6 in Table 4). This is calculated by
multiplying the avoided net CO2 emissions of 3.9 million tons by the respective CO2 reduction costs in $/ton for
New Jersey ZEC, OREC and TREC (line 5 in Table 4) to derive the total costs for each alternative to achieve the
same amount of CO2 reduction.
■ $7.5 million incremental ratepayer benefit created by Starwood’s proposed payment to the PPA Counterparty
to be passed on to ratepayers (line 7 in Table 4). For the same amount of CO2 reduction, Starwood’s offer of L&C
Retirements and payment of $7.5 million would translate into an estimated benefit of approximately $2 per ton of
avoided CO2 emissions.25
■ Estimated ratepayer cost savings of $25 to $242 per ton for L&C Retirements. Retiring Logan and Chambers
by the end of 2020 would lead to 3.9 million net tons of avoided CO2 emissions through 2024 (line 5 in Table 4).
Offsetting the same level of CO2 emissions using other programs would cost New Jersey ratepayers $91 million to
$925 million (line 6 in Table 4). When considering the benefit payment of $7.5 million that would go back to
ratepayers (line 7 in Table 4), the full opportunity cost of achieving the reductions through the retirements versus
the alternative programs would be $98 million to $932 million (line 8 in Table 4), or $25 to $242 per ton (line 9 in
Table 4).
The projected ratepayer cost savings as summarized in Table 4 are conservative, due to the following key assumptions
applied in the analysis.
■ Generation at minimum take levels of the PPAs for both plants. If either power plant is dispatched during peak
periods in excess of these minimum levels — as has been observed historically — and ends up running at higher
capacity factors, the CO2 emissions will be higher than estimated.
■ Flat emission rate for PJM replacement power. In reality, the PJM system-average CO2 emission rates have
shown a steady decline year-over-year from 2015 to 2019, as shown in Figure 2 — a trend that is likely to persist
due to continued addition of renewables and retirement of coal resources. If we assume a declining emission rate
for PJM replacement power in the analysis, the avoided CO2 emission will be higher, because the offset associated
with emissions from replacement power will be lower.
■ No operations after the PPAs’ expiration. Our analysis assumed that both plants will not operate beyond the
PPAs’ expiration dates, although both plants are permitted to operate until the end of their useful lives — which
could be at least an additional 10 years after 2024. The recent operating performance of the plants suggests the
plants could continue to operate reliably. Assuming a longer period of operations would increase avoided CO2
emissions and ratepayer savings.

Appendix A provides annual generation, capacity factor, and emissions of Logan and Chambers, as well as the replacement power from PJM.
Based on United States Environmental Protection Agency’s estimates, a typical passenger vehicle emits about 4.6 metric tons of CO2 per year.
24
The New Jersey Global Warming Response Act of 2007 (GWRA), N.J.S.A. 26:2C-37.
25
The L&C Retirements direct savings are calculated by dividing the negative of Starwood’s payment of $7.5 million by the avoided net CO2 emissions of 3.9 million tons.
22
23

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Table 4: Ratepayer Savings of the Starwood Offer
Logan and Chambers Retirements
CO2 Reduction Costs Savings (2021-2024)
[1] Logan and Chambers Generation

MWh

3,442,426

[2] Logan and Chambers Gross CO2 Emissions

ton

5,321,857

[3] Replacement Power CO2 Emissions

ton

1,464,017

[4] Avoided Net CO2 Emissions

ton

3,857,839
Alternative Reduction Programs
NJ ZEC

NJ OREC

NJ TREC

[5] CO2 Emissions Reduction Alternative Program Costs

$/ton

23.5

74.7

239.7

[6] CO2 Emissions Reduction Alternative Program Costs

$ million

90.7

288.4

924.9

[7] L&C Retirements Proposed Starwood Payment

$ million

7.5

7.5

7.5

[8] L&C Retirements Total Ratepayer Savings

$ million

98.2

295.9

932.4

[9] L&C Retirements Total Ratepayer Savings

$/ton

25.4

76.7

241.7

Note: The total generation, CO2 emissions, and savings are for the period of January 2021 to December 2024 for Logan and to March 2024
for Chambers. The generation levels are based on estimates provided by Starwood and reflect minimum take levels of the PPAs. The CO2
emissions are based on 2019 monthly emission rates. The avoided CO2 emissions are the total CO2 emissions net of replacement power
emissions, which are assumed at PJM 2019 average monthly CO2 emission rates. The CO2 emissions costs are based on $/ton costs
presented in Figure 3. The total CO2 emissions savings and total ratepayer savings are undiscounted nominal amounts during 2021-2024.
Total ratepayer savings in $/ton is calculated by dividing total ratepayer savings (line 8) by avoided CO2 emissions (line 4).

Other Benefits
Starwood’s offer to retire Logan and Chambers directly supports New Jersey’s plan to transition to 100 percent clean
energy by 2050 and to reduce state greenhouse gas emissions 80 percent below 2006 levels by 2050.26 Retiring both coal
plants early is economically and environmentally aligned with the interests of New Jersey ratepayers and its economy.
These benefits could be further explained in the context of New Jersey’s rejoining of the Regional Greenhouse Gas
Initiative (“RGGI”), the intangible benefits of repurposing the sites for potential renewable energy infrastructure
development, and the avoidance of externalities associated with the coal value chain.27
RGGI Benefits
On June 17, 2019, New Jersey rejoined RGGI, a market-based program of the New England and Mid-Atlantic states to
reduce greenhouse gas emissions from the power sector. Based on the “Investment of RGGI Proceeds in 2018” report, the
benefits from RGGI investments included energy efficiency, clean and renewable energy, direct bill assistance and
greenhouse gas abatement. RGGI investments in 2018 are estimated to return $2 billion in lifetime energy bill savings and
avoid 4.6 million tons of CO2 emissions. Logan and Chambers are among the 36 power plants in New Jersey that are
currently regulated under RGGI.28 The June 3, 2020 RGGI auction for the 2018-2020 compliance period cleared at $5.75
per ton.29 However, as legacy PURPA assets, Logan and Chambers are subject to CO2 costs that are capped at $2 per ton
for MWhs generated under the PPAs.30
Sites Redevelopment Opportunities
L&C Retirements will open doors for potential redevelopment opportunities for renewables and/or battery storage
projects, especially in light of New Jersey’s mandates of 2.5 GW battery storage by 2035.31 Logan’s waterfront site
provides the potential for use as an offshore wind interconnection hub, staging area and/or manufacturing support

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facility. If PJM interconnection capacity at the project nodes is released as a result of the proposed retirements, it may
allow offshore wind projects new interconnection points into New Jersey. The potential for use as an offshore wind
interconnection hub directly aligns with New Jersey’s goal of having 7.5 GW of OSW in operations by 2035.32
Avoidance of Externalities
According to the “Full Cost Accounting for the Life Cycle of Coal” study published by Epstein et al. in 2011, “each stage in
the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple
hazards for health and the environment.”33 The study estimated that the externalities, when normalized to a $/MWh of
electricity basis, are equivalent to $178.4 per MWh, ranging from $94.2 per MWh to $268.9 per MWh.34 Assuming a
conversion rate of 1.105 ton of CO2 per MWh of electricity, the externalities’ costs average $161 per ton.35 These are
potential costs to society that are not explicitly captured in the price of electricity.

The New Jersey Global Warming Response Act of 2007 (GWRA), N.J.S.A. 26:2C-37.
https://www.rggi.org/
28
The Regional Greenhouse Gas Initiative, “The Investment of RGGI Proceeds in 2018,”
https://www.rggi.org/sites/default/files/Uploads/Proceeds/RGGI_Proceeds_Report_2018.pdf.
29
See Regional Greenhouse Gas Initiative, “Auction Results,” https://www.rggi.org/auctions/auction-results (Accessed August 12, 2020).
30
Based on information provided by Starwood.
31
State of New Jersey, 2019 New Jersey Energy Master Plan, page 13.
32
State of New Jersey, 2019 New Jersey Energy Master Plan, https://nj.gov/emp/docs/pdf/2020_NJBPU_EMP.pdf.
33
Paul R. Epstein, Jonathan J. Buonocore, Kevin Eckerle, Michael Hendryx, Benjamin M. Stout III, Richard Heinberg, Richard W. Clapp, Beverly May, Nancy L. Reinhart, Melissa
M. Ahern, Samir K. Doshi, and Leslie Glustrom. 2011. Full cost accounting for the life cycle of coal in “Ecological Economics Reviews.” Robert Costanza, Karin Limburg & Ida
Kubiszewski, Eds. Ann. N.Y. Acad. Sci. 1219: 73–98.
34
The externalities include land disturbance, methane emissions from mines, carcinogens, public health burden of communities in Appalachia, fatalities in the public due to
coal transport, emissions of air pollutants from combustion, lost productivity from mercury emissions, excess mental retardation cases from mercury emissions, excess
cardiovascular disease from mercury emissions, climate damage from combustion emissions of CO2, N2O and black carbon.
35
Conversion is derived from EPA resources. https://www.eia.gov/tools/faqs/faq.php?id=74&t=11.
26
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Summary Findings
Our comparative analysis of Starwood’s proposal to retire Logan and Chambers by the end of 2020 shows compelling
attributes in terms of environmental benefits, ratepayer impacts, economic opportunities, and avoidances of
externalities, as shown in Figure 4.
■ L&C Retirements would eliminate 5.3 million tons of CO2 emissions at the sources of the power plants during 20212024. This directly supports the state’s goal of cutting CO2 emissions by 80 percent compared to 2006 levels.
■ After factoring in the estimated emissions due to the replacement power from the PJM wholesale market, L&C
Retirements would avoid net CO2 emissions of 3.9 million tons by 2024, assuming a flat emission rate at the 2019
PJM system level for the replacement power. This is equivalent to taking 762,419 passenger vehicles off the road
for one year in New Jersey.
■ New Jersey ratepayers would benefit from cost savings ranging from $98 million to $932 million by achieving the
net CO2 reduction of 3.9 million tons under Starwood’s proposal rather than under alternative programs such as
ZEC, OREC, and TRECs.
■ Retiring the coal plants opens the opportunity to explore potential site redevelopment opportunities for solar,
battery, or offshore wind interconnections, which are aligned with goals set in New Jersey’s 2019 Energy Master
Plan.36
■ The Starwood offer eliminates other potential externalities that could occur along the coal value chain, but are
not explicitly captured in the cost of electricity.
Figure 4: Summary of Starwood Offer Impacts

Source: FTI analysis

36

State of New Jersey, 2019 Energy Master Plan, https://nj.gov/emp/docs/pdf/2020_NJBPU_EMP.pdf.

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Appendix A: Logan and Chambers Operations and Emissions
Starwood Global - Economic Analysis
Logan and Chambers Retirement

2021

2022

2023

2024

Total

Notes

Logan
Production
Capacity Factor
Emissions Rate
Annual Emissions

MWh
%
lb/MWh
tons

497,054
25.9%
2,820
700,919

497,054
25.9%
2,820
700,919

497,054 497,054 1,988,216
25.9%
25.9%
25.9%
2,820
2,820
2,820
700,919 700,919 2,803,675

Annual generation during 1/1/2021 - 12/31/2024, provided by Starwood
Calculated based on 219 MW capacity
Monthly emissions are based on 2019 actual monthly emission / net generation
Production * emission rates / 2,000 (lbs/ton), calculated at monthly level

Chambers
Production
Capacity Factor
Emissions Rate
Annual Emissions

MWh
%
lb/MWh
tons

442,529
19.3%
3,488
771,756

442,529
19.3%
3,488
771,756

442,529 126,623 1,454,210
19.3%
22.4%
19.5%
3,488
3,205
3,463
771,756 202,915 2,518,182

Annual generation during 1/1/2021 - 3/31/2024 provided by Starwood
Calculated based on 262 MW capacity
Monthly emissions are based on 2019 actual monthly emission / net generation
Production * emission rates / 2,000 (lbs/ton), calculated at monthly level

Total
Production
Capacity Factor
Emissions Rate
Annual Emissions

MWh
%
lb/MWh
tons

Less: Replacement Capacity
Production
Emissions Rate
Annual Emissions

MWh
lb/MWh
tons

Net Emissions Impact

tons

939,583
939,583
939,583 623,677 3,442,426
22.30%
22.30%
22.30% 25.10%
22.8%
3,135
3,135
3,135
2,898
3,092
1,472,675 1,472,675 1,472,675 903,833 5,321,857

Logan and Chambers total production
Calculated at 219 MW for Logan and 262 MW for Chambers
Logan and Chambers total emission divided by total production
Logan and Chambers total emission

939,583
850
399,090

939,583
850
399,090

939,583
850
399,090

623,677
855
266,748

3,442,426
851
1,464,017

Logan and Chambers total production to be replaced
Based on 2019 PJM system average monthly CO2 emission rates
Production * Emission Rates / 2,000 (lbs/ton), calculated at monthly level

1,073,585

1,073,585

1,073,585

637,085

3,857,839

Logan and Chambers total emission net of replacement total emissions

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Appendix B: Summary of Comparative Analysis
Starwood Global - Economic Analysis
Comparative Analysis
Implied Costs
NJ ZEC
NJ OREC
NJ TREC
NJ SREC
NJ ZEC
NJ OREC
NJ TREC
NJ SREC

Notes
$/MWh
$/MWh
$/MWh
$/MWh
$/ton
$/ton
$/ton
$/ton

10.0
47.4
152.0
211.5
23.5
74.7
296.5
333.6

NJBPU
NJBPU’s net cost of OREC at $46.46 (in 2019 dollar), escalated by 2 percent
NJBPU
NJ SREC weighted average price for Energy Year 2020 (July 2019 - June 2020)
NJ ZEC costs are converted from $/MWh to $/ton based on 2019 average PJM CO2 emission rates.
NJ OREC cost is converted at the PJM 2019 marginal off-peak emission rate.
NJ TREC is converted at the PJM 2019 marginal on-peak emission rate.
NJ SREC is converted at the PJM 2019 marginal on-peak emission rate.

NJ ZEC
Period
ZEC Price
Nuclear Production
Cost to Ratepayers

$/MWh
MWh
$ million

2019-2021
10.0
90,000,000
$900

NJBPU
Estimated 3-year total costs, divided by ZEC price
Estimated at $300 million per year based on NJBPU award

$/MWh
MWh
$ million

2024-2045
47.4
97,096,239
$6,199

NJBPU’s net cost of OREC at $46.46 (in 2019 dollar), escalated by 2 percent
MWh to be delivered under the awarded contract, not including ongoing & future solicitations
Net OREC escalated at 2 percent per year

$/MWh
MWh
$ million

Energy Year 2021
152
3,428,564
$521

NJBPU
NJBPU
Assumed same level as NJ SRECs in Energy Year 2020.
Total estimated costs for Energy Year 2021.

$/MWh
MWh
$ million

Energy Year 2020
211.5
3,428,564
$725

NJ SREC weighted average price for Energy Year 2020 (July 2019 - June 2020)
Total traded SRECs in Energy Year 2020
Total SREC costs for Energy Year 2020

NJ OREC
Period
OREC Price
OSW Production
Cost to Ratepayers
NJ TREC
Period
TREC Price
TREC Volumne
Cost to Ratepayers
NJ SREC
Period
SREC Price
SREC Volume
Cost to Ratepayers

 PUBLISHED 09/11/2020 – Benefits of Retiring Logan and Chambers Coal-fired Power Plants

Glossary
Lbs/MWh: pounds per megawatt hour
MWh: megawatt hour
NJBPU: New Jersey Board of Public Utilities
OREC: Offshore Wind Renewable Energy Certificate
PPA: Purchase Power Agreement
PURPA: Public Utility Regulatory Policies Act
REC: Renewable Energy Credit
RGGI: Regional Greenhouse Gas Initiative
RPS: Renewable Portfolio Standard
SREC: Solar Renewable Energy Certificate
TREC: Transition Renewable Energy Certificate
ZEC: Zero Emission Certificate

17