PERSPECTIVE
WORLD-GENERATION MAY/JUNE 2015 V.27 #2
10
and, again, roughly one-quarter of that was
gas-fired capacity that could not get gas.
Through it all, the nuclear units per-
formed admirably – on average running at
capacity factors in the mid-90 percent range.
We expect that from them, of course, and
the point here is not that one source of elec-
tricity is necessarily better than another. The
point is that fuel and technology diversity is
the bedrock of a reliable, resilient system,
and premature shutdown of nuclear units
compromises that portfolio value.
In April, at FERC’s conference on the
Polar Vortex, a PJM executive suggested
that the RTO might be coming back to
FERC with changes to reflect the value of
fuel assurance.
According to analysis conducted by
PJM for the Illinois Commerce Commission,
if Byron, Quad Cities and Clinton retired
prematurely, locational marginal prices
would likely increase between $2.70 and
$3.80 per megawatt-hour in the ComEd
zone, and between $0.90 and $1.50 per
megawatt-hour in PJM, depending on the
different scenarios and sensitivities ana-
lyzed. In addition, load payments would
increase between $307 million and $437 mil-
lion in the ComEd zone, and between $752
million and $1.3 billion in PJM. That is one
year’s impact. Remember that these plants
have several decades’ useful life left in them.
PJM also confirmed in its analysis that the
system would be “unreliable” in 2019 under
all retirement scenarios studied, with “signif-
icant thermal and voltage violations” that
would require “substantial time to correct.”
These impacts generally comport with
our own analyses of nuclear power stations
at risk. In Illinois, losing all five reactors at
risk would eliminate 2,500 direct jobs –
those people working at the plants. Total job
losses, direct and indirect , in the first year
would be 9,000. The direct economic value
lost in the first year would be $2.4 billion.
Add to this another $1.2 billion in indirect
economic value in Illinois. That would be the
value created in the counties and state from
having the plants there, and those losses rip-
ple through time, year upon year.
We have also analyzed the economic
impacts of losing other nuclear plants at
risk. The Davis-Besse plant in Ohio gener-
ated nearly $500 million in direct economic
value in 2014 and total direct and indirect
economic value of $1.1 billion in Ohio. In
addition, the facility represents 700 jobs at
the station, which creates an additional
4,600 jobs in other industries.
In upstate New York, Ginna produces
approximately $230 million in direct eco-
nomic value, and total economic value to the
state – direct and indirect – of $365 million.
In addition, Ginna provides 700 direct jobs
and an additional 800 indirect jobs in the
state. This does not include taxes paid to
county, state and federal governments.
Exelon’s nuclear operations in Illinois gener-
ate nearly $1.1 billion in federal taxes every
year, and about $290 million in state taxes.
EPA PROPOSAL
EPA’s proposal is designed to reduce
carbon emissions by 30 percent from 2005
levels by 2030, and that goal simply cannot
be achieved without preserving the nucle-
ar power plants that provide approximately
20 percent of America’s electricity, and 63
percent of America’s carbon-free electrici-
ty. EPA’s proposal recognizes this fact, and
attempts to provide states with an incen-
tive to preserve existing nuclear generat-
ing capacity.
TRIPLE CARBON FREE
Nuclear energy provides three times
more carbon-free electricity than hydropow-
er and nearly five times more than wind
energy. Without nuclear power plants oper-
ating in 31 states, carbon emissions from
the U.S. electric sector would be approxi-
mately 25 percent higher.
For perspective, the five reactors at risk
in Illinois, by themselves, produced approx-
imately 40 billion kilowatt-hours of carbon-
free electricity in 2013 – four times total
U.S. solar electricity production, and rough-
ly one-fourth as much electricity as
America’s entire wind generation.
EPA also recognized that maintaining
the existing nuclear fleet is a cost-effective
carbon abatement strategy. In its proposed
rule, EPA estimated that the cost of keep-
ing “at risk” nuclear plants operating is $12
to $17 per metric ton of CO2 abated – lower
than EPA’s estimate that adding renewable
capacity costs $10-$40 per metric ton of
CO2 abated; increasing natural gas com-
bined cycle power plant utilization rates to
70 percent costs $30 per metric ton of CO2
abated; and implementing demand-side
management programs costs $16-$24 per
metric of CO2 abated. In addition, we
believe that power uprates and license
renewals should be considered new capaci-
ty and count toward compliance, as an
incentive to preserve and expand existing
nuclear generating capacity.
Nuclear generation in 2014 was 1.2 per-
cent higher than 2013. According to our
estimates, the fleet operated at an all-time
record capacity factor – 91.9 percent. We
have five reactors under construction.
Unit 2 at the Tennessee Valley
Authority’s Watts Bar station will be the
first to reach commercial operation. Watts
Bar 2, an 1100-megawatt reactor, will be
TVA’s seventh nuclear plant. TVA halted
construction at Watts Bar 2 in 1985, with
about $1.7 billion invested and the plant
about 80 percent complete.
TVA estimates Watts Bar 2 will be com-
pleted between September 2015 and June
2016, with a most likely completion date of
December 2015, at an expected cost
between $4 billion and $4.5 billion.
TVA’s nuclear ambitions extend beyond
Watts Bar 2. The company also plans to
apply to the NRC for an early site permit –
the first step in the licensing process – to
build a small modular reactor at its Clinch
River site in Tennessee. Also, we will con-
tinue to develop a pipeline of new projects –
options that can be exercised in the future
when needed.
Last year, the NRC completed its safety
review of GE-Hitachi’s advanced ESBWR
design, and certified that design as ready
for market. It is the reactor of choice for
Dominion and DTE Energy. DTE recently
completed the final hearing on its license
for Fermi Unit 3, the last step before NRC
issues the combined construction/
operating license.
(continued page 27)
NUCLEAR ENERGY EXPANDS
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