FILE: US nuclear power plant shutdown risk fluctuates with electricity policy and prices

New York –
With a nuclear power plant prematurely retired in New York on April 30 and the fate of two other plants in Illinois in balance, the complexion of the US nuclear fleet is changing at a time when reducing CO2 emissions is a priority national.

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Currently, just over 8 GW of nuclear capacity is slated for retirement, with S&P Global Platts Analytics estimating approximately 5 GW of nuclear capacity at high risk of withdrawal before the license expires.

Assuming the high risk and advertised withdrawals were to be replaced with natural gas-fired generation with an average heat rate of 7,000 Btu / kWh, an additional 1.9 Bcf / d of energy consumed would result from replacing these generators decommissioned, or about $ 39 million. mt / year of CO2 emissions, or 2% of 2016 levels, according to Platts Analytics.

Analysts track the risk of nuclear power plant decommissioning based on electricity market conditions, the status of operating licenses, policy changes and other factors. Specifically, factories are rated from high to low risk, taking into account units that could potentially benefit from state-funded financial support or measures that price carbon emissions.

Plant closures

The 1,041 MW Indian Point Unit 3 in Buchanan, New York, about 20 miles north of New York City, was closed for good on April 30 after succumbing to political and economic pressures. Governor Andrew Cuomo and environmental groups including Riverkeeper have fought for years to shut the plant down over safety concerns, arguing that an accident so close to the global financial industry in the city would be catastrophic, among other things. concerns.

“Since becoming Attorney General, I have been deeply concerned about the safety of the Indian Point Nuclear Power Plant,” Cuomo said in a statement on April 29, adding that the plant did not belong “near the area. most densely populated in the country. “

Plant owner Entergy said Indian Point was struggling financially amid falling wholesale electricity prices, in large part due to the abundance of shale gas that drove the natural gas prices at around $ 2 / MMBtu for an extended period.

Three other nuclear power plants in upstate New York have remained open because they receive subsidies through taxpayer bills.

The New York Civil Service Commission created a clean energy standard in 2016 that states that four nuclear units in the state – Exelon Generation’s 597 MW Ginna, the 640 MW Nine Mile Point-1, 1362 MW Nine Mile Point-2, as well as Entergy’s 849 MW FitzPatrick – are eligible to receive zero-emission credit payments. Entergy in 2017 sold FitzPatrick to Exelon.

The investor-owned utility Exelon has also complained about low wholesale electricity prices which put pressure on the financial stability of some of its other nuclear power plants. The company received grants for its Quad Cities and Clinton factories in Illinois in 2016, which overturned the decision to shut them down before their licenses expired.

Exelon announced in 2020 that it will shut down its 2,347 MW power plants in Byron and 1,845 MW in Dresden, also in Illinois, in September and November 2021, as they face revenue cuts of hundreds of millions. dollars due to falling electricity prices and market rules that allow fossil fuel plants to underbid on own resources during the PJM interconnection capacity auction, the service said. public.

However, the state has public policy goals to reduce greenhouse gas emissions to mitigate climate change that would be much more difficult to achieve without the carbon-free energy provided by nuclear power plants.

The Clean Energy Jobs Act was introduced on February 10 and is broadly similar to legislation introduced in previous sessions. As in the previous bill, Illinois utilities would need to obtain 45% of their electricity from renewable sources by 2030 and 100% by 2050.

The Illinois legislature is also debating whether to grant additional off-market payments to prevent the closure of Byron and Dresden, and a report commissioned by the Illinois Environmental Protection Agency recommended that approximately $ 350 million grants over five years could keep the units in service.

Valuing nuclear attributes

There is a vigorous debate regarding the financial stability of nuclear power plants located in deregulated power markets that operate on a merchant basis, meaning that their income comes solely from the sale of electricity, capacity and ancillary services at low prices. wholesale electricity which vary according to market conditions.

Nuclear power plants in regulated markets are less exposed to wholesale electricity prices because they can cover operating costs and earn profits through customer bill increases approved by utility commissions.

The nuclear industry trade group Nuclear Energy Institute, or NEI, recently published a study by a consultant that found that the cost of operating nuclear power plants at PJM is higher than expected revenues for years to come.

“The sharp declines in energy prices in recent years have disproportionately reduced revenues for nuclear units and attempts to replace this revenues with capacity payments often fail due to the current situation.” [PJM] capacity market design, ”NEI said.

The industry group said “insufficient income” at “most” of PJM’s nuclear power plants was leading to “increased economic pressure for retirement.”

However, a separate analysis from Monitoring Analytics, the PJM market watchdog, found “that no nuclear power plant is considered at risk of retirement.”

This debate is likely to continue in the absence of political support such as state-level subsidies for nuclear power plants or a price on CO2 emissions that would benefit non-emitting nuclear units.

Melissa Lott, director of research at the Center for Global Energy Policy at Columbia University, told a March event sponsored by NEI that the administration of President Joe Biden, with its pledge to decarbonize the electricity grid of by 2035, could stimulate the development of new technologies, including advanced ones. nuclear reactors, storage systems and transmission modernization.

It is not known which of these options will develop the most, but the premise of decarbonization rests first on another idea: “we are not deactivating the carbon-free products that we already have”.

About Christopher Easley

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