Released April 06, 2012 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Progress Energy Florida (St. Petersburg, Florida), a unit of Progress Energy Incorporated (NYSE:PGN) Raleigh, North Carolina), remains committed to constructing the two-unit Levy County Nuclear Power Station, despite historically low natural gas prices and spiraling costs for new-build nuclear construction.
"Fuel diversity is important to our company and our customers," Progress Energy Florida spokesman Suzanne Grant told Industrial Info. "We don't want to put all our eggs in one basket. We have a concern that as we, and the state of Florida, become more dependent on natural gas, we are at risk for commodity price spikes. Our Balanced Solution strategy reduces risks and best positions the company and its customers."
The utility's "Balanced Solution" strategy is based on several factors, including fuel diversity, environmental impacts, potential for carbon regulation and fuel prices, she added.
During a typical year, about 51% of Progress Energy Florida's electricity is generated from natural gas, while coal accounts for 31% of electricity and nuclear about 14%, she said. However, she added, 2011 wasn't a "typical" year because the company's Crystal River Nuclear Power Station was closed for repairs. Last year, none of Progress Energy Florida's electricity came from nuclear.
Grant could not provide details on how construction of the Levy County station could change Progress Energy Florida's fuel mix. "There are a lot of balls in the air right now," she said. "We're looking at retiring our largest coal-fired units at Crystal River when Levy is constructed. But nothing has been decided yet."
The Levy County project has gone through several changes in recent years, all of which have pushed up construction costs and pushed back the start of construction.
In 2006, the project was a one-unit, 1,100-MW nuclear generator with a 2010 kickoff date and an estimated total investment value (TIV) of $2.5 billion. Two years later, the project had grown to two units totaling 2,200 MW, with a 2012 kickoff date and TIV of $15.4 billion. By 2010, the cost had grown to $17 billion and construction was scheduled to start in late 2012. Today, Progress Energy estimates it will cost between $17 billion and $22 billion to build Levy County and associated transmission, Grant said. Industrial Info Resources shows the plant's TIV at $22 billion.
Construction of the nuclear project is scheduled to begin sometime in 2013, after the utility receives its combined construction and operation license (COL) from the U.S. Nuclear Regulatory Commission (NRC) (Bethesda, Maryland), Grans said. Levy County's in-service date is sometime after 2021.
Grant emphasized that building new nuclear generation is only part of Progress Energy Florida's Balanced Strategy. In 2009, the 1,370-MW Paul L. Bartow Power Station was expanded and repowered to burn only natural gas, at a cost of about $800 million. Last week, Progress Energy Florida announced it would spend $79 million to convert the 1,000-MW Anclote Power Station to burn natural gas only. Prior to their conversions, both plants could burn either oil or natural gas. Environmental regulations, more than low gas prices, drove those conversions, she said, though hefty fuel costs savings are expected to result from the conversions.
Fuel prices, particularly for natural gas, have changed dramatically in the last few years. As recently as 2009, long-term projections put gas at more than $8 per million British thermal units (MMBtu). Today, thanks to the hydraulic fracturing revolution, gas prices are about $2.25 per MMBtu. As recently as last November, according to the Tampa Bay Times, Progress Energy Florida told state utility regulators it saw the "mid-range" of natural gas prices hitting $10 by 2028, and $12 or $13 by 2035. That contrasts sharply with other forecasts, including the one from the federal government that keep the average price below $7 as far out at 2035.
Grant was unwilling to say there was a particular threshold--$1.50 per MMBtu gas, for example, or a permanent Congressional ban on the regulation of carbon dioxide emissions--that would cause Progress Energy Florida to abandon the Levy County nuclear project. "We look at all capital projects using a wide range of scenarios," the spokeswoman said. "Based on our analysis, Levy County continues to be our best baseload option. We're planning for more than 10 years down the road. Nuclear generators could last for up to 60 years, so we're really looking for the best options over the 2021-2081 timeframe."
View Project Report - 5002696 300011298
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"Fuel diversity is important to our company and our customers," Progress Energy Florida spokesman Suzanne Grant told Industrial Info. "We don't want to put all our eggs in one basket. We have a concern that as we, and the state of Florida, become more dependent on natural gas, we are at risk for commodity price spikes. Our Balanced Solution strategy reduces risks and best positions the company and its customers."
The utility's "Balanced Solution" strategy is based on several factors, including fuel diversity, environmental impacts, potential for carbon regulation and fuel prices, she added.
During a typical year, about 51% of Progress Energy Florida's electricity is generated from natural gas, while coal accounts for 31% of electricity and nuclear about 14%, she said. However, she added, 2011 wasn't a "typical" year because the company's Crystal River Nuclear Power Station was closed for repairs. Last year, none of Progress Energy Florida's electricity came from nuclear.
Grant could not provide details on how construction of the Levy County station could change Progress Energy Florida's fuel mix. "There are a lot of balls in the air right now," she said. "We're looking at retiring our largest coal-fired units at Crystal River when Levy is constructed. But nothing has been decided yet."
The Levy County project has gone through several changes in recent years, all of which have pushed up construction costs and pushed back the start of construction.
In 2006, the project was a one-unit, 1,100-MW nuclear generator with a 2010 kickoff date and an estimated total investment value (TIV) of $2.5 billion. Two years later, the project had grown to two units totaling 2,200 MW, with a 2012 kickoff date and TIV of $15.4 billion. By 2010, the cost had grown to $17 billion and construction was scheduled to start in late 2012. Today, Progress Energy estimates it will cost between $17 billion and $22 billion to build Levy County and associated transmission, Grant said. Industrial Info Resources shows the plant's TIV at $22 billion.
Construction of the nuclear project is scheduled to begin sometime in 2013, after the utility receives its combined construction and operation license (COL) from the U.S. Nuclear Regulatory Commission (NRC) (Bethesda, Maryland), Grans said. Levy County's in-service date is sometime after 2021.
Grant emphasized that building new nuclear generation is only part of Progress Energy Florida's Balanced Strategy. In 2009, the 1,370-MW Paul L. Bartow Power Station was expanded and repowered to burn only natural gas, at a cost of about $800 million. Last week, Progress Energy Florida announced it would spend $79 million to convert the 1,000-MW Anclote Power Station to burn natural gas only. Prior to their conversions, both plants could burn either oil or natural gas. Environmental regulations, more than low gas prices, drove those conversions, she said, though hefty fuel costs savings are expected to result from the conversions.
Fuel prices, particularly for natural gas, have changed dramatically in the last few years. As recently as 2009, long-term projections put gas at more than $8 per million British thermal units (MMBtu). Today, thanks to the hydraulic fracturing revolution, gas prices are about $2.25 per MMBtu. As recently as last November, according to the Tampa Bay Times, Progress Energy Florida told state utility regulators it saw the "mid-range" of natural gas prices hitting $10 by 2028, and $12 or $13 by 2035. That contrasts sharply with other forecasts, including the one from the federal government that keep the average price below $7 as far out at 2035.
Grant was unwilling to say there was a particular threshold--$1.50 per MMBtu gas, for example, or a permanent Congressional ban on the regulation of carbon dioxide emissions--that would cause Progress Energy Florida to abandon the Levy County nuclear project. "We look at all capital projects using a wide range of scenarios," the spokeswoman said. "Based on our analysis, Levy County continues to be our best baseload option. We're planning for more than 10 years down the road. Nuclear generators could last for up to 60 years, so we're really looking for the best options over the 2021-2081 timeframe."
View Project Report - 5002696 300011298
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
