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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Last month, as the nation's smallest nuclear power plant generated its final kilowatt-hour of electricity, a report was released that identified four other nuclear power plants that may be closed next year due to unfavorable economics.
The Omaha Public Power District (OPPD) (Omaha, Nebraska) decided to close the Fort Calhoun Nuclear Power Station this summer, citing unfavorable economics. Continuing to operate the 478-megawatt (MW) plant would be far more costly than closing it and replacing its lost generation with other options, OPPD Chief Executive Officer Tim Burke told the utility's board this summer. "The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable," Burke said. "The analysis considered market conditions, economies of scale and the proposed Clean Power Plan." For more on the closure decision, see May 24, 2016, article - Omaha Utility Continues Generation Makeover with Plan to Close Nuclear Plant.
Fort Calhoun stopped operating October 24, at the end of its nuclear fuel cycle. The utility serves about 400,000 customers in and around Omaha, Nebraska. Jodi Baker, an OPPD media specialist, said the utility will only have to replace about 44% of Fort Calhoun's output due to "a combination of declining energy usage by customers - because of more energy-efficient appliances and lighting - as well as the ability to purchase low-cost energy via the Southwest Power Pool's Integrated Marketplace."
"Replacement capacity [for Fort Calhoun] will be provided in the near term from a combination of purchased capacity, as well as continued operations of OPPD resources that were previously scheduled to [be] discontinued," she said in an emailed statement. "North Omaha Station Units 1, 2 and 3 were scheduled to cease operations in 2016, but they will now be available for operations of natural gas [as opposed to coal] through 2018."
Baker added, "Long-term capacity and energy replacement options are being evaluated through our integrated resources plan [IRP], which is scheduled for completion by early 2017."
As Fort Calhoun was shutting down, analysts at Bloomberg Intelligence released a report predicting four nuclear plants--two owned by Exelon Corporation (NYSE:EXC) (Chicago, Illinois) and two owned by FirstEnergy Corporation (NYSE:FE) (Akron, Ohio)--may be forced to close next year if their power-supply bids are rejected by the PJM Interconnection (Norristown, Pennsylvania), the regional transmission organization serving over 61 million people in 13 Eastern, Mid-Atlantic and Midwestern states and the District of Columbia.
The four plants that may be at risk for premature closure have combined generating capacity of about 5,841 MW. The plants are:
Nesbit said Exelon had identified Byron as being potentially at risk for early retirement if Illinois lawmakers did not adopt a pricing mechanism for nuclear power that compensated its owners for its zero-carbon emissions. They failed to do that in the last legislative session.
"What we're looking for is compensation for nuclear's zero-carbon properties," Nesbit said. "Nuclear is the only zero-carbon source of electricity that is not compensated for not emitting carbon dioxide (CO2). The problems with nuclear power will go away if its owners were compensated for its zero-carbon properties."
Earlier this year, after failing to win support at the Illinois legislature for a pricing plan that rewarded nuclear's carbon-free properties, Exelon announced it would close two Illinois nuclear plants: Clinton Nuclear Power Station will be closed in 2017 and Quad Cities Nuclear Power Station will be closed in 2018. For more on the closure of those plants, see June 14, 2016, article - Pepco Deal Closed, Exelon Grows and Shifts its Capital Spending Plan. Clinton is a one-unit, 1,065-MW plant that began operating in 1987, while Quad Cities is a two-unit, 1,848-MW plant that started generating electricity in 1972.
"Nuclear energy is an integral component of our country's diverse electric generation portfolio," FirstEnergy spokesperson Jennifer Young said in an emailed statement. "Our nuclear plants provide a reliable 24/7 electricity supply, clean air benefits, fuel diversity and security, and economic benefits. Despite their clear benefits, nuclear plants across the country are facing challenges driven by wholesale markets that do not recognize nuclear's total value proposition. Wholesale energy markets, such as those operated by PJM, are designed to select resources based only on lowest cost without considering value of environmental or fuel diversity/fuel security attributes."
"Nuclear plants across the country face an uncertain future as a result of these challenges," she continued. "We have already seen the shutdown of otherwise viable nuclear units that could provide clean, safe, reliable and affordable power for many years, and this trend could continue absent changes that recognize the value of nuclear."
Separate from the Bloomberg Intelligence report, a power plant asset owner told a conference in New York last month that nuclear power will come to an end in the U.S. if the industry doesn't get more government support.
Speaking at the S&P Global Platts' "Financing U.S. Power Conference" October 25, Bob Mancini, co-head of the power group at Carlyle Group L.P. (NYSE:CG) (New York, New York), predicted a dire future for nuclear power unless it gets paid for the carbon-free nature of its power, according to a Bloomberg news report. He suggested providing nuclear with subsidies or levying a carbon tax on fossil-fueled power plants.
Bloomberg reported Mancini as saying, "We will see the end of the nuclear industry in the coming decades" without legislation, incentives or other support to keep existing plants open or encourage the construction of new units.
So far, New York is the only state that has proposed rewarding nuclear power for its carbon-free generation. This summer, the New York Public Service Commission (Albany, New York) approved long-term financial incentives to keep three financially embattled upstate plants operating. Those three plants are the Nine Mile Point Nuclear Power Station, the R.E. Ginna Nuclear Power Plant and the James A. FitzPatrick Nuclear Power Station. Exelon owns the first two plants and has agreed to purchase the third from Entergy (NYSE:ETR) (New Orleans, Louisiana). For more on New York's plan, see August 3, 2016, article - Cash on the Barrel: New York Clean Energy Standard Includes Multibillion-Dollar Support for Nuclear Power's Carbon-Free Generation.
In recent years, aside from Fort Calhoun, several other functioning nuclear plants have been closed due to unfavorable economics. These plants include Kawaunee (in Wisconsin), Pilgrim (in Massachusetts) and Yankee Nuclear Station (in Vermont). Pacific Gas & Electric (NYSE:PCG) (San Francisco, California) recently proposed not extending the licenses of its two-unit Diablo Canyon Nuclear Power Station when they expire in 2024 and 2025. For more on that, see July 20, 2016, article - Diablo Canyon Proposal: A Turning Point for the U.S. Nuclear Industry?
"If state and federal lawmakers and regulators are so concerned about global climate change, they should be willing to compensate nuclear owners for the carbon-free characteristics of electricity produced by nuclear plants," said Britt Burt, Industrial Info's vice president of global research for Power Industry. "So far, only New York has had the courage to say, 'All of the above' includes nuclear, and we're going to pay money to make sure nuclear plants continue generating carbon-free electricity."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, 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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
The Omaha Public Power District (OPPD) (Omaha, Nebraska) decided to close the Fort Calhoun Nuclear Power Station this summer, citing unfavorable economics. Continuing to operate the 478-megawatt (MW) plant would be far more costly than closing it and replacing its lost generation with other options, OPPD Chief Executive Officer Tim Burke told the utility's board this summer. "The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable," Burke said. "The analysis considered market conditions, economies of scale and the proposed Clean Power Plan." For more on the closure decision, see May 24, 2016, article - Omaha Utility Continues Generation Makeover with Plan to Close Nuclear Plant.
Fort Calhoun stopped operating October 24, at the end of its nuclear fuel cycle. The utility serves about 400,000 customers in and around Omaha, Nebraska. Jodi Baker, an OPPD media specialist, said the utility will only have to replace about 44% of Fort Calhoun's output due to "a combination of declining energy usage by customers - because of more energy-efficient appliances and lighting - as well as the ability to purchase low-cost energy via the Southwest Power Pool's Integrated Marketplace."
"Replacement capacity [for Fort Calhoun] will be provided in the near term from a combination of purchased capacity, as well as continued operations of OPPD resources that were previously scheduled to [be] discontinued," she said in an emailed statement. "North Omaha Station Units 1, 2 and 3 were scheduled to cease operations in 2016, but they will now be available for operations of natural gas [as opposed to coal] through 2018."
Baker added, "Long-term capacity and energy replacement options are being evaluated through our integrated resources plan [IRP], which is scheduled for completion by early 2017."
As Fort Calhoun was shutting down, analysts at Bloomberg Intelligence released a report predicting four nuclear plants--two owned by Exelon Corporation (NYSE:EXC) (Chicago, Illinois) and two owned by FirstEnergy Corporation (NYSE:FE) (Akron, Ohio)--may be forced to close next year if their power-supply bids are rejected by the PJM Interconnection (Norristown, Pennsylvania), the regional transmission organization serving over 61 million people in 13 Eastern, Mid-Atlantic and Midwestern states and the District of Columbia.
The four plants that may be at risk for premature closure have combined generating capacity of about 5,841 MW. The plants are:
- Byron Nuclear Power Station, a 2,300-MW plant located in Illinois and owned by a unit of Exelon
- Three Mile Island Nuclear Generating Station, an 811-MW plant located in Pennsylvania and owned by Exelon
- Beaver Valley Nuclear Power Station, a 1,829-MW plant located in Pennsylvania and owned by a unit of FirstEnergy Corporation (NYSE:FE) (Akron, Ohio)
- Davis-Besse Nuclear Power Station, a 901-MW plant located in Ohio and owned by a unit of FirstEnergy
Nesbit said Exelon had identified Byron as being potentially at risk for early retirement if Illinois lawmakers did not adopt a pricing mechanism for nuclear power that compensated its owners for its zero-carbon emissions. They failed to do that in the last legislative session.
"What we're looking for is compensation for nuclear's zero-carbon properties," Nesbit said. "Nuclear is the only zero-carbon source of electricity that is not compensated for not emitting carbon dioxide (CO2). The problems with nuclear power will go away if its owners were compensated for its zero-carbon properties."
Earlier this year, after failing to win support at the Illinois legislature for a pricing plan that rewarded nuclear's carbon-free properties, Exelon announced it would close two Illinois nuclear plants: Clinton Nuclear Power Station will be closed in 2017 and Quad Cities Nuclear Power Station will be closed in 2018. For more on the closure of those plants, see June 14, 2016, article - Pepco Deal Closed, Exelon Grows and Shifts its Capital Spending Plan. Clinton is a one-unit, 1,065-MW plant that began operating in 1987, while Quad Cities is a two-unit, 1,848-MW plant that started generating electricity in 1972.
"Nuclear energy is an integral component of our country's diverse electric generation portfolio," FirstEnergy spokesperson Jennifer Young said in an emailed statement. "Our nuclear plants provide a reliable 24/7 electricity supply, clean air benefits, fuel diversity and security, and economic benefits. Despite their clear benefits, nuclear plants across the country are facing challenges driven by wholesale markets that do not recognize nuclear's total value proposition. Wholesale energy markets, such as those operated by PJM, are designed to select resources based only on lowest cost without considering value of environmental or fuel diversity/fuel security attributes."
"Nuclear plants across the country face an uncertain future as a result of these challenges," she continued. "We have already seen the shutdown of otherwise viable nuclear units that could provide clean, safe, reliable and affordable power for many years, and this trend could continue absent changes that recognize the value of nuclear."
Separate from the Bloomberg Intelligence report, a power plant asset owner told a conference in New York last month that nuclear power will come to an end in the U.S. if the industry doesn't get more government support.
Speaking at the S&P Global Platts' "Financing U.S. Power Conference" October 25, Bob Mancini, co-head of the power group at Carlyle Group L.P. (NYSE:CG) (New York, New York), predicted a dire future for nuclear power unless it gets paid for the carbon-free nature of its power, according to a Bloomberg news report. He suggested providing nuclear with subsidies or levying a carbon tax on fossil-fueled power plants.
Bloomberg reported Mancini as saying, "We will see the end of the nuclear industry in the coming decades" without legislation, incentives or other support to keep existing plants open or encourage the construction of new units.
So far, New York is the only state that has proposed rewarding nuclear power for its carbon-free generation. This summer, the New York Public Service Commission (Albany, New York) approved long-term financial incentives to keep three financially embattled upstate plants operating. Those three plants are the Nine Mile Point Nuclear Power Station, the R.E. Ginna Nuclear Power Plant and the James A. FitzPatrick Nuclear Power Station. Exelon owns the first two plants and has agreed to purchase the third from Entergy (NYSE:ETR) (New Orleans, Louisiana). For more on New York's plan, see August 3, 2016, article - Cash on the Barrel: New York Clean Energy Standard Includes Multibillion-Dollar Support for Nuclear Power's Carbon-Free Generation.
In recent years, aside from Fort Calhoun, several other functioning nuclear plants have been closed due to unfavorable economics. These plants include Kawaunee (in Wisconsin), Pilgrim (in Massachusetts) and Yankee Nuclear Station (in Vermont). Pacific Gas & Electric (NYSE:PCG) (San Francisco, California) recently proposed not extending the licenses of its two-unit Diablo Canyon Nuclear Power Station when they expire in 2024 and 2025. For more on that, see July 20, 2016, article - Diablo Canyon Proposal: A Turning Point for the U.S. Nuclear Industry?
"If state and federal lawmakers and regulators are so concerned about global climate change, they should be willing to compensate nuclear owners for the carbon-free characteristics of electricity produced by nuclear plants," said Britt Burt, Industrial Info's vice president of global research for Power Industry. "So far, only New York has had the courage to say, 'All of the above' includes nuclear, and we're going to pay money to make sure nuclear plants continue generating carbon-free electricity."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, 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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
