Senior management at Omaha Public Power District (OPPD) have recommended that the Fort Calhoun single-unit nuclear plant in Nebraska should close at the end of 2016. CEO Tim Burke made the recommendation to the company's board of directors on May 12 and the board is expected to vote on the recommendation on June 16.
"The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable," Burke said.1 OPPD board member Tom Barrett said: "You have to say enough is enough and curb the costs. That's the cold, hard facts of this business."2
The reactor has been in commercial operation since September 1973 and is licensed to operate until August 2033.1 If it is shut down later this year, it will be closed 17 years ahead of its licence expiration.
The Fort Calhoun plant has been in the wars in recent years.2 It was taken offline for refuelling in April 2011, then suffered a fire and was flooded later in 2011. The Nuclear Regulatory Commission (NRC) later found dozens of safety deficiencies and put the plant in an intense oversight program to address "significant performance and/or operational concerns."3 OPPD spent a reported US$180 million (€161m) addressing a list of 450 "restart action items" cited by the NRC.4 Workers spent more than eight million hours completing more than 69,000 tasks, OPPD said, while the NRC spent 23,000 hours on inspections and evaluations.4 The plant restarted in December 2013 and has operated under a normal level of regulatory oversight since April 2015.
Dan Yurman summarizes the dramas:5
"In 2011 the flood stricken Ft. Calhoun reactor postponed its restart to sometime in 2013. It shut down in April 2011 for a scheduled fuel outage. Rising flood waters along the Missouri River in June damaged in the plant site though the reactor and switch yard remained dry.
"The plant's management had initially resisted demands by the NRC to strengthen its flood barriers, and only installed them a short time before the rising Missouri river came within a few feet of overtopping the inflatable boom that kept water out of the reactor and turbine building and the plant switchyard.
"In the pre-dawn hours of June 27, 2011, a fork lift punctured the eight foot high, 2000 ft. long boom being used to keep the flood waters out of the plant. Plant operators started emergency diesel generators as the flood waters approached the switchyard and the plant was taken off the grid. Emergency repairs prevented significant damage to the facility.
"The plant did not restart once the flood receded. The NRC resident inspectors found numerous deficiencies in plant operations and imposed a stiff set of requirements on it. The agency said the Ft. Calhoun plant must fulfil a long list of safety requirements before the NRC would let it power back up. To speed things along, OPPD hired Exelon to operate the plant. It took until December 2013 to get a green light from the NRC to re-start the reactor to generate electricity and revenue for the utility.
"In February 2012, OPPD cancelled plans for a power uprate, also citing the multiple safety issues facing the plant."
Tim Burke has recommended to the board that some of Fort Calhoun's 478-megawatt capacity should be replaced with wind energy and gas. He said that not all of the plant's capacity must be replaced because energy efficiency measures are constraining demand. If the board adopts the recommendations, OPPD's renewable generation will make up 49% of its energy portfolio by 2020. In 2014, OPPD approved a long-term generation plan that included the phase-out some of its coal-burning plants, conversion of others to natural gas and the addition of 400 megawatts of wind power.2
In its 2015 annual report, OPPD estimated that the costs to decommission Fort Calhoun would be about US$884 million (€793m), but the utility only has about US$373 million (€335m) set aside for decommissioning.2,5
Illinois
Two other vulnerable nuclear plants are Exelon's Clinton and Quad Cities plants in Illinois. Exelon said in early May that it will close Clinton and Quad Cities in 2017 and 2018 respectively if Illinois legislators fail to legislate to shore up its profits. The two plants have lost US$800 million (€718m) in cash flow from 2009 to 2015, CEO Christopher Crane said. "Without adequate legislation, we no longer see a path to profitability and can no longer sustain ongoing losses. In order to reverse course, we would need Illinois to cover our cash costs and operating risk," he said.6
David Kolata, executive director of the consumer advocacy nonprofit Citizens Utility Board, warned that a with a proposed price floor for nuclear power "you socialize risk and privatize profit." He suggested that if a price floor is established, a price ceiling should also be established.7
Illinois Attorney General Lisa Madigan was blunt in her criticisms of Exelon and its subsidiary ComEd: "It's outrageous that Exelon and ComEd are again requesting a bailout when they are both profitable companies. This proposal would force consumers to pay more only to boost the companies' profits further. The legislature has more important matters to address than padding ComEd and Exelon's profits."8
Abraham Scarr with the Illinois Public Interest Research Group said: "ComEd and Exelon want you to believe their 'Next Generation Energy Plan' will put Illinois on the path to a clean energy future. Don't believe the hype. They claim their bill will jump start solar, but the solar industry opposes it. They claim their new rate structure helps consumers, but consumer advocates oppose it. They ask for 'equal footing' with wind and solar, without counting the $5.58 billion (€5b) Illinois ratepayers have already poured into their nuclear fleet. ... It is time to transition to a clean, renewable energy economy and do so in a way that is fair to consumers and to the communities most impacted by our energy system. But instead of rising to these challenges, the ComEd-Exelon bill seeks to forestall this transition and wring as much profit from ratepayers as possible while delivering little in return."8
Tim Judson, executive director of the Nuclear Information and Resource Service (NIRS), said: "There is just no way to justify the scale of economic intervention the industry says it needs to make uncompetitive reactors viable. In state after state where nuclear plant owners are seeking subsidies to stave off reactor closures, the cost of operating aging reactors is greater than the cost of replacing them with renewables and energy efficiency. Operating aging, uneconomical reactors can only increase the risk of nuclear accidents. States will be better off letting uneconomical reactors close, and ramping up their clean energy plans. It will be cheaper for consumers, create more jobs, limit radioactive waste, and accelerate greenhouse gas reductions."
Exelon warns of a "dramatic increase in carbon emissions" if Quad Cities and Clinton are closed9, but it ain't necessarily so. Both coal and nuclear are on the chopping-block in Illinois. Bloomberg reported on May 2016: "Following a four-year drop in electricity demand, power companies there announced the closing of coal and nuclear plants that account for more than 10 percent of generating capacity. The shutdowns come amid a fourfold increase in cheap wind from neighboring states and growing competition from generators burning low-cost natural gas. Exelon Corp., the operator of 11 nuclear reactors in Illinois, and Dynegy Inc., which has 10 coal-fired plants in the state, are asking lawmakers to bail out their money-losing assets to prevent further job-cutting, closures and, in Exelon's case, preserve carbon-free electricity production."10
Dynegy said on May 3 that it would shut coal units with a capacity of 1,835 megawatts over the next year, with an additional 500 megawatts under review.10
"You've got free wind power coming from the west and cheap gas coming from the east and that's not a good place to be for coal and nuclear power plants," said Travis Miller, an analyst with investment research firm Morningstar Inc.10
Growing list of reactor closures and looming closures
The average age of the U.S. nuclear fleet is 35 years.11 That's the equivalent of about 70 human years so it's no surprise that a growing number of reactors are falling off the perch:
- Dominion's Kewaunee in Wisconsin and Entergy's Vermont Yankee have closed for economic reasons since 2013. Both plants were licensed to keep operating into the 2030s.
- Southern California Edison permanently shut down the last two operating reactors at the San Onofre plant in California in 2013, after steam generators replaced in a US$700 (€628m) million upgrade failed, only a couple of years after their installation.
- In February 2013 Duke Energy announced that the Crystal River nuclear plant in Florida would be permanently shut down, following a botched attempt to repair the concrete containment dome.
- Entergy's FitzPatrick plant in New York will be closed in 2017, and Entergy's Pilgrim plant in Massachusetts is slated to be closed in 2019, but could close sooner.
- Exelon's Oyster Creek plant in New Jersey is scheduled to be permanently shut down by December 2019.
Responding to the Fort Calhoun news, Matt Crozat from the Nuclear Energy Institute said: "This announcement reflects the fact that several nuclear power plants around the country are vulnerable to weak market conditions, particularly smaller facilities in competitive markets."5 Marvin Fertel from the same organization said on May 19 that 15‒20 reactors in the U.S. are at risk of being shut over the next 5‒10 years due to economic challenges such as low power prices, and competition from gas and renewables.12 He said that small, single-unit plants (such as Fort Calhoun) are the most vulnerable.
It can now be said with certainty that new build (five reactors are under construction) will be outpaced by closures this decade in the U.S., and it's highly likely that the pattern will repeat itself in the 2020s. BP's recently-released 'Energy Outlook: 2016 Edition' projects a 13% decline in nuclear power generation in North America from 2014‒2035 (and a 29% fall in the EU).13
Summit
On May 19, the Department of Energy (DoE) hosted an invitation-only summit to discuss nuclear power's precarious situation.14 It was promoted as an action-oriented forum, the live webcast was popular and the hashtag (#ActforNuclear) trended.15
Secretary of Energy Ernest Moniz told the summit that "the importance of incentivizing continued operation is very clear, but the solutions are less clear." He said that the DoE's Quadrennial Energy Review is assessing the future of the existing nuclear fleet and how nuclear plant operators might be supported. But Marvin Fertel from the Nuclear Energy Institute seemed underwhelmed with the prospect of another report: "A report on it doesn't do anything unless the RTOs [regional transmission organizations] and FERC [the Federal Energy Regulatory Commission] do something with it."12
Tim Judson from NIRS characterizes the challenges facing the industry differently: "The energy markets are not the problem facing the nuclear industry – it's that the costs of operating aging reactors are rising so dramatically, while the costs of clean energy are falling. There is no doubt that the US needs a comprehensive and sensible energy policy to mitigate the climate crisis. It's just that nuclear is part of the problem, not the solution."
As Judson wrote in Nuclear Monitor #808, the Clean Power Plan released by President Obama last August gave the nuclear industry only a small fraction of the incentives it was seeking.16
A May 11‒12 conference was hosted by the OECD Nuclear Energy Agency (NEA) in Paris to address nuclear power's economic problems.17 As with the U.S. DoE conference, the NEA conference seems to have been heavy on gloom and short on solutions. NEA director general William Magwood said: "In the flux of great change, it can be difficult to finance even modest projects. Nuclear power plants are not modest projects; with total costs ranging from about €6 billion to €12 billion and total project times reaching up to a decade, building a nuclear power plant is one of the most complex of all industrial sector undertakings. Therefore, as one might expect, financing nuclear power plants can often present significant challenges."
Magwood added: "I am ready to stand here today and declare that the markets are broken; they don't work and don't do what they are supposed to do. The time has come to recognise that we have a situation where large utilities are losing money and are almost on the verge of bankruptcy.17
Magwood also questioned the economics of small modular reactors, noting that vendors will need to sell "dozens, scores if not hundreds to make it work". He added: "And if you're selling them to more than one country, are you going to have to go through the entire regulatory process every time you go to a country. If you do that, you may end up making them uneconomic just by the fact that you have to spend huge amounts of money to get the licence."17
References:
1. World Nuclear News, 13 May 2016, 'Closure recommended for Nebraska nuclear plant', www.world-nuclear-news.org/C-Closure-recommended-for-Nebraska-nuclear-pl...
2. Cole Epley, 13 May 2016, 'OPPD's Fort Calhoun nuclear plant has become too expensive to run, company says', www.omaha.com/money/oppd-s-fort-calhoun-nuclear-plant-has-become-too-exp...
3. www.nrc.gov/info-finder/reactors/fcs.html
www.nrc.gov/site-help/search.html?site=news#gsc.sort&gsc.tab=0&gsc.q=For...
4. Algis Laukaitis, 17 Dec 2013, 'NRC gives OPPD the go ahead to restart Fort Calhoun Nuclear Station', http://journalstar.com/news/state-and-regional/nebraska/nrc-gives-oppd-t...
5. Dan Yurman, 21 May 2016, 'Surrender at Ft. Calhoun', http://neutronbytes.com/2016/05/21/surrender-at-ft-calhoun/
6. Suzanne Herel, 6 May 2016, 'Absent Legislation, Exelon to Close Clinton, Quad Cities Nukes', www.rtoinsider.com/exelon-illinois-clinton-quad-cities-nuclear-25970/
7. Julian Spector, 27 May 2016, 'Nuclear Power Fights for a Spot in Illinois' Clean Energy Future', www.citylab.com/politics/2016/05/illinois-exelon-nuclear-power-plants-re...
8. 24 May 2016, 'Illinoisans Sound Off On Exelon/ComEd Bill As Report Unveils Dangers At Their Local Nuclear Sites', www.progressillinois.com/news/content/2016/05/24/illinoisans-sound-over-...
9. Exelon, Media Release, 25 May 2016, 'Exelon Announces Outcome of 2019-2020 PJM Capacity Auction', www.businesswire.com/news/home/20160525005357/en/Exelon-Announces-Outcom...
10. Bloomberg, 26 May 2016, 'Where Free Wind Meets Cheap Gas in U.S., Power Dynamics Changing', www.bloomberg.com/news/articles/2016-05-25/where-free-wind-meets-cheap-g...
11. Richard Martin, 20 May 2016, 'Nuclear Shutdowns Could Ramp Up U.S. Carbon Emissions', www.technologyreview.com/s/601533/nuclear-shutdowns-could-ramp-up-us-car...
12. Steven Dolley / Platts, 19 May 2016, 'Fifteen to 20 nuclear units in US 'at risk' of shutdown: industry official', www.platts.com/latest-news/electric-power/washington/fifteen-to-20-nucle...
13. BP Energy Outlook: 2016 Edition, www.bp.com/content/dam/bp/pdf/energy-economics/energy-outlook-2016/bp-en...
14. https://gain.inl.gov/SitePages/DOE%20Congressional%20Event.aspx
15. Rod Adams, 20 May 2016, 'Addressing Economic Challenges Facing Nuclear Power Plants', www.forbes.com/sites/rodadams/2016/05/20/addressing-economic-challenges-...
16. Tim Judson, 18 Aug 2015, 'US EPA takes nuclear out of the Clean Power Plan', Nuclear Monitor #808, www.wiseinternational.org/nuclear-monitor/808/us-epa-takes-nuclear-out-c...
17. World Nuclear News, 11 May 2016, 'NEA head highlights challenges facing nuclear power', www.world-nuclear-news.org/NP-NEA-head-highlights-challenges-facing-nucl...