New Report Details Grid Resiliency Risks Posed by Nuclear Plant Closures

Nuclear Matters welcomes findings of a new report by noted power markets expert Dr. Lawrence Makovich outlining how continued closures of nuclear facilities will lower consumer benefits, make the PJM electricity supply less resilient especially during extreme weather events, harm the environment and raise electricity costs

WASHINGTON—Nuclear Matters welcomes the release of a new report by leading power markets expert, Dr. Lawrence Makovich, chief electric power strategist at IHS Markit, a global business information provider, outlining the severe grid resiliency, environmental and financial consequences for customers served by the PJM Interconnection Energy Market (PJM) that would likely result from uneconomic nuclear plant closures.

PJM operates the world’s largest competitive wholesale electricity market and coordinates the movement of wholesale electricity in all or part of 13 Mid-Atlantic and Midwest states, as well as the District of Columbia. The report reinforces a recent announcement by PJM regarding the critical need to value fuel security in the region. The report follows the recently announced premature closures of Exelon’s 837 MW Three Mile Island (PA) and FirstEnergy’s 908 MW Davis-Besse (OH), 1,268 MW Perry (OH) AND 1,872 mw Beaver Valley (PA) plants as well as widespread recent news on the consumer and environmental costs of premature nuclear plant retirements.

The report finds that the 19 existing nuclear power plants in PJM are a cost-effective, CO2 emission-free source of electric energy and capacity that provide inherent cost-effective diversity in the PJM power supply portfolio. The report estimates the following impacts on the 65 million customers across PJM if nothing is done to prevent uneconomic closure and subsequent replacement of PJM nuclear generating resources:

  • Less resilient PJM capacity availability, especially during extreme weather events;
  • Nine-18 percent cost increases in the average retail price of electricity for PJM customers;
  • 100 million additional metric tons of CO2 emissions released into the atmosphere each year (closure and replacement of the non–CO2-emitting PJM nuclear resources would remove 12 times the current output of PJM wind and solar resources and add emissions equal to two-thirds of the vehicles on the road in the PJM region today);
  • Annual environmental costs of $4.3 billion due to the increase in CO2 emissions;
  • A total decline in consumer annual net benefit from PJM grid-based electricity of $5-12 billion per year; This translates into a consumer net benefit per kilowatt-hour of PJM nuclear generation of about 3 cents per kWh.

Dr. Makovich concludes: “The primary finding of this analysis is that the 65 million consumers who rely on PJM grid-based power supply are better off if something is done to prevent the uneconomic closures of PJM nuclear resources because the PJM power supply portfolio is more efficient, more resilient, and environmentally responsible with the continued contribution of cost-effective nuclear resources.”

Throughout, Makovich warns that current public policy and market trends are causing market distortions that reduce power supply resilience, increase costs and offset environmental gains in PJM. Similar comparisons can be made to Germany, for example, where decisions to begin closing nuclear facilities in 2011 have significantly increased power sector CO2 emissions and helped force the official abandonment of their 2020 climate goals.

The report also reviewed consumer sentiment in regards to energy reliability and reexamined the role of nuclear energy during the 2014 “polar vortex” and 2017/2018 “bomb cyclone”, finding that:

  • In the PJM region, the extreme cold weather caused by the 2014 “polar vortex” did not reduce available nuclear capacity below its expected net dependable level, while it did reduce the available natural gas-fired capacity by 27 percent from the net dependable level;
  • In the PJM region, during the 2017/2018 “bomb cyclone”, 35 percent of installed PJM capacity consisting of natural gas–fired resources accounted for 59 percent of the total PJM capacity power outages that drove a significant forced outage rate earlier this year;
  • The bomb cyclone episode indicates that if the PJM net dependable nuclear capacity had been replaced by an equivalent amount of net dependable natural gas–fired capacity and the gas supply infrastructure had also been proportionately expanded to provide the same natural gas–fired capacity availability factor (ratio of available capacity to net dependable capacity) as experienced during the bomb cyclone, then the available capacity on 7 January 2018 would have been 5.2 GW lower. Therefore, under these conditions, PJM would have had to exercise the remaining emergency operating procedures and would likely have been pushed beyond its limits and forced to shed load during the bomb cyclone.
  • The experience of the polar vortex and the bomb cyclone demonstrate the value of current PJM power supply diversity that produces resilience from the lack of correlation between nuclear and non-nuclear power supply risk factors. The implication is clear—the fuel and technology mix of the PJM power supply portfolio will be different in the years to come due to the announced closure since the polar vortex of 5,493 MW of nuclear resources.

In order to predict the impact of future uneconomic nuclear plant closures, the report employs a backcasting assessment. The assessment specifically reviews supply and demand interactions at a monthly frequency for 2013-2016, in a base case that removes the Oyster Creek nuclear power plant given its pending closure. The analysis compares this base case outcome to a scenario in which all remaining 18 PJM nuclear power plants are uneconomically closed and replaced with the fuel and technology mix in the current PJM supply pipeline.  The assessment shows that nuclear closure and replacement results in higher production costs, higher retail power price levels as well as a greater reliance on natural-gas fired generation sources that increases PJM’s exposure to natural gas price variation.

“The premature closure of nuclear facilities alongside the prospect of additional scheduled closures in the near future highlights the frightening disparities between public policy, the future of our energy grid and ultimately the needs of 65 million people,” said Nuclear Matters Advocacy Council Member and former Senator Judd Gregg (R-NH). “The fact is, the need for a diverse, resilient, reliable and cost-effective energy supply will remain essential, particularly when extreme weather hits – as we’ve seen again and again over the last several years. This report adds to a growing chorus of experts and in-depth studies which underline the environmental and resilience value of nuclear energy in this country, specifically in the vital PJM region. Whether it’s in New England, Ohio, Pennsylvania, or elsewhere, the time for policymakers and regulators to take steps to avoid further damage to our energy supply – and the millions who depend on it – is well overdue.”

“The fact is that taking carbon-free power offline, like our existing nuclear plants, will force an increase in carbon pollution from other sources as we make up the difference,” said Nuclear Matters Advocacy Council Member and former Environmental Protection Agency Administrator Carol M. Browner. “This report estimates that taking these plants offline will generate an increase of 100 million additional metric tons of carbon pollution – a number that should concern anyone interested in mitigating the impacts of climate change. If we are serious about reducing carbon pollution and addressing climate change, we need to preserve the carbon-free power generation from our existing nuclear plants and to advance the development of clean, renewable sources of energy like wind and solar.”

About the Report

“Ensuring resilient and efficient PJM electricity supply: The value of cost-effective nuclear resources in the PJM power supply portfolio” was prepared for Nuclear Matters by Lawrence Makovich. Dr. Makovich is vice president and chief power strategist at IHS Markit and a former lecturer on managerial economics at Northeastern University’s Graduate School of Business and former senior fellow at the Mossavar-Rahmani Center for Business and Government at the John F. Kennedy School of Government, Harvard University. The report utilizes proprietary models of the interaction between regional power system demand and supply, as well as IHS Markit’s extensive research on the PJM electricity supply. The research for this report was supported by Nuclear Matters. It is coauthored by Benjamin Levitt, associate director, IHS Markit. The authors are exclusively responsible for all analysis and conclusions.

About Nuclear Matters

Nuclear Matters® is a national coalition that works to inform the public and policymakers about the clear benefits of nuclear energy. The coalition supports solutions that properly value nuclear energy as a reliable, affordable, safe and carbon-free electricity resource that is essential to America’s energy future.

Nuclear Matters engages stakeholders and energy consumers around the country to educate and activate them in support of current and future nuclear energy use and to promote solutions that will help to preserve this essential energy resource.

Source: Nuclear Matters

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