Nuclear

The Case for Nuclear Power

Since 2013, eight U.S. nuclear power plants have announced plans to permanently shut down operations.

By Sharryn Dotson, Associate Editor

The Fort Calhoun Station in Nebraska was the latest nuclear plant to announce its premature closure. Photo Courtesy: Omaha Public Power District

Since 2013, eight U.S. nuclear power plants have announced plans to permanently shut down operations. The impact of those closures will be felt in the communities around them and in the pocketbooks of consumers, as grid managers and power plant operators work to replace 9,000 MWs of lost capacity.

Nuclear power accounts for 57 percent of the nation’s zero-carbon electricity, according to the U.S. Energy Information Administration.

Yet, the business of nuclear power is collapsing because the market cannot support the nation’s available capacity. A lot of low-priced natural gas-fired generation has entered the market while regional demand for power is either flat or in decline. In addition, power prices are so low that some nuclear plants can no longer cover basic operating costs. Two Illinois nuclear plants – Clinton and Quad Cities – have lost a combined $800 million over the last six years.

While the closures have brought a pall over the industry, some strides have been made to save other nuclear plants in deregulated regions. Still, more needs to be done to make sure jobs are saved, towns don’t lose a major tax base and emissions remain low, said Michael Purdie, manager of Energy and Economics at the Nuclear Energy Institute’s Policy Planning and Development Division.

Purdie said wholesale markets in the Northeast, Mid-Atlantic, Midwest and Texas place a price only on the next megawatt-hour of electricity produced in a given interval, typically five-minute intervals.

“We as an industry believe that the source of that megawatt-hour does not necessarily have the same value,” Purdie said. “You can get it from solar, wind, gas or many different sources, but nuclear produces clean baseload power at stable prices.”

A major impact of nuclear closures is felt in carbon emission levels, Purdie said. Most of the lost capacity is replaced with what is currently on the grid or new combined-cycle plants that can be quickly built. In Vermont, where Entergy shut down the 604-MW Vermont Yankee plant on Dec. 31, 2014, the capacity was replaced 1-for-1 with natural gas.

“Emissions in New England went up 7 percent year-on-year,” Purdie said. “A lot of that was due to losing Vermont Yankee.”

New England, the Mid-Atlantic and the Midwest were rocked by the polar vortex of January 2014, when power prices skyrocketed after natural gas supplies were re-routed to end users for home heating instead of power generation. Nuclear plants, however, operated at greater than 93 percent capacity factor during that time. Independent system operators and regional transmission organizations like the PJM Interconnection began reforming their capacity markets in response. PJM’s reforms in January 2015 recognized that it is not enough to simply line up generation to meet reserve margin targets, but actually maintain system reliability when it is needed most.

“PJM realized that the grid was under extreme stress during the polar vortex and that a lot of power that was supposed to be available wasn’t,” Purdie said. “Incentives and penalties weren’t strong enough to ensure reliability and performance in the most extreme events.”

Illinois is the only completely deregulated state in MISO. Illinois lawmakers were considering the Next Generation Energy Plan, which would have given nuclear plants in the state a much-needed financial boost by shifting to a zero-emission standard focused on at-risk nuclear plants. The bill would have nvested $140 million in new solar developments and rebates. However, the bill’s sponsor shelved it just as the Legislature’s spring session came to a close. As a result, Exelon announced plans to close the Clinton and Quad Cities plants by June 2018.

After Omaha Public Power District (OPPD) announced in June that it would close the 479-MW single-unit Fort Calhoun Station, NEI President and CEO Marvin Fertel said nuclear power is not being properly valued and, therefore, electricity consumers will bear the brunt.

“Leaders in state capitals and Washington must bring together policies that appropriately value all attributes of electricity generation which, if done correctly, will preserve nuclear energy facilities as part of a diversified electricity portfolio,” Fertel said.

Exelon agreed to buy the FitzPatrick nuclear plant for $110 million, keeping its doors open. Courtesy: Entergy

New York’s Clean Energy Standard

Though Illinois did not pass its emission standard, New York regulators approved its Clean Energy Standard (CES) last month. The CES requires 50 percent of New York’s electricity to come from renewable sources by 2030. It also requires all six of the state’s investor-owned utilities and other energy suppliers to buy zero-emission credits to pay for the intrinsic value of carbon-free emissions from nuclear plants. The New York State Public Service Commission estimates the CES will add less than $2 a month to the average residential customer’s bill, but the credits are estimated to be worth $965 million in the first two years.

“This is not an anti-gas movement, but one that recognizes the importance of fuel diversity as an integral part of a utility system,” said NYPSC Chair Audrey Zibelman.

The standard helped to save more than 600 jobs when Exelon announced it would buy the FitzPatrick plant in upstate New York for $110 million and keep it open. Exelon also said since the CES passed, it would reinvest $400 million to $500 million into the operations, integration and refueling expenditures of its upstate nuclear plants: Nine Mile Point 1 and 2 and Ginna, which were also at risk of closing.

“This Clean Energy Standard shows you can generate the power necessary for supporting the modern economy while combatting climate change,” Gov. Cuomo said. “Make no mistake, this is a very real threat that continues to grow by the day, and I urge all other states to join us in this fight for our very future.”

Fertel agreed that other states should follow New York’s lead.

“Gov. Cuomo and the Public Service Commission correctly acknowledge nuclear power plants as indispensable sources of emissions-free power, meriting explicit valuation by the state as a clean energy source,” Fertel said.

Bill Mohl, President of Entergy Wholesale Commodities (EWC), expressed gratitude to employees of FitzPatrick for operating the plant safely despite the uncertainties.

More Shutdowns are Looming

Unfortunately, other nuclear plants are not as lucky. Entergy said it will shut down the 680-MW Pilgrim plant in Massachusetts in May 2019. The company shut down the Vermont Yankee plant in 2014.

With those closures, Entergy is left with two merchant nuclear plants in the northern U.S. As a result, Mohl said, Entergy is looking to get out of the merchant market business and aggressively grow the regulated utility side by not buying any new nuclear assets in the deregulated regions of the Northeast and Midwest.

“Last year, we sold our combined cycle power plant in Rhode Island and we continue to pursue options for the sale of other miscellaneous merchant renewable and fossil fuel plants,” Mohl said.

Paul Dempsey, Exelon’s Communications Manager, said state and federal policymakers must find solutions that recognize nuclear’s environmental and economic benefits. The utility’s single-unit Clinton plant is set to close June 1, 2017. The dual-unit Quad Cities will close June 1, 2018. Both plants are in Illinois, where all coal-fired plants in the southern half of the state may be closed.

“The Clinton and Quad Cities plants support approximately 4,200 direct and indirect jobs and produce more than $1.2 billion in economic activity annually,” Dempsey said.

A state report found that closing the plants would increase wholesale energy costs by $439 million to $645 million each year. Conversely, keeping the plants open would save $10 billion in economic damages from higher carbon emissions over 10 years, Dempsey said.

Day & Zimmermann NPS has 27,000 employees at 26 million work hours performing maintenance, repair and upgrade work at nuclear plants, according to D&Z President Walt Sanders.

The company is looking for innovative ways to cut operational costs for its customers by saving money and operating nuclear plants safely and efficiently. Day & Zimmermann NPS developed a web-based value-add tool that allows them to find areas where savings can be achieved and then share that information with other plant sites.

“It’s a repository that allows for capturing both onetime work activity savings and repeatable work scope,” Sanders said. “We can look at the new performance results and say, ‘We executed the work for this amount, now we can set a new baseline in the upcoming cycle taking advantage of the efficiencies.'”

The single-unit Clinton plant in Illinois will close June 1, 2017. Courtesy: Exelon

Sanders hopes that by the end of the year, Day&Z can assess performance results, safety, quality and costs after outages are completed.

“We can show what we’ve been able to achieve, and then be able to celebrate when we achieve a net reduction in operating costs,” Sanders said.

Whether saving companies money or giving a nuclear plant a second chance at life, many in the U.S. nuclear industry are trying to find ways to revive this struggling industry.

Chief Editor Russell Ray contributed to this report.

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