Exelon (NYSE:EXC) apparently isn’t going to rush its potential nuclear plant retirement decisions in Illinois as the nation’s largest nuclear operator said Sept. 10 that all of its nuclear plants in the PJM Interconnection cleared in the transition capacity auction for the 2017-to-2018 planning year.
With that development, Exelon said it will defer any decisions about the future operations of its Quad Cities and Byron nuclear plants for one year.
As a result, the company plans to continue operating its Quad Cities nuclear power plant through at least May 2018. The Byron plant is already obligated to operate through May 2019.
Exelon intends to bid Quad Cities, Byron, Three Mile Island and all eligible nuclear plants into the 2019-to-2020 PJM capacity auction next year, the company said in a statement. The decision to defer retirement decisions comes after “rigorous analysis” of the present and future economics of the plants, taking into consideration the constructive market trends stemming from the PJM capacity auction reforms, Exelon said.
“While Quad Cities and Byron remain economically challenged, we are encouraged by the results of the recent capacity auctions,” said Exelon President and CEO Chris Crane.
“The new market reforms help to recognize the unique value of always-on nuclear power, while preserving the reliability of our electric system,” Crane said. “However, these plants are long-lived assets with decades of useful life left, and today’s decision is only a short-term reprieve. Policy reforms are still needed to level the playing field for all forms of clean energy and best position the state of Illinois to meet EPA’s new carbon reduction rules.”
Exelon has been pushing for the Illinois legislature to adopt a clean energy portfolio standard that would recognize the non-CO2 emitting value of baseload nuclear power.
Exelon again stated that Illinois will have a tough time complying with the U.S. Environmental Protection Agency Clean Power Plan if any of the in-state nuclear units must prematurely retire.
The Illinois Environmental Protection Agency determined that the loss of two nuclear plants would increase emissions by about 24 million short tons, more than doubling the emissions reductions required under the federal EPA’s carbon reduction rules and making it twice as costly to comply, Exelon said.
The auction results for the 2017-18 planning year take effect in June 2017. The transition auction was the second of two held by PJM to supplement its prior base capacity auctions for the 2016-17 and 2017-18 planning years with the new capacity performance product, which is designed to strengthen electric grid reliability.
Byron’s two pressurized-water reactors (PWRs) are located about 17 miles southwest of Rockford, Ill. Byron has a total combined generating capacity of more than 2,200 MW.
Quad Cities is a two-unit boiling water reactor (BWR) station located in Cordova, Ill. Each unit has a nameplate capacity of roughly 1,000 MW.
Future remains unclear for Clinton nuclear plant
Unlike Quad Cities and Byron, Exelon’s Clinton nuclear plant operates in the Midcontinent ISO (MISO) territory and did not benefit from the PJM auction results. While a MISO capacity auction held earlier this year helped reduce Clinton’s economic losses, the plant remains economically challenged and is at risk of premature retirement if conditions do not improve.
Clinton has a single BWR with a nameplate capacity of roughly 1,100 MW. It is located in Clinton, Ill.
Grid operator PJM holds a capacity auction annually to ensure enough power generation resources are available to meet demand in its region covering all or part of 13 states and the District of Columbia. Although capacity revenue in a single year is an important consideration in a plant’s long-term viability, it is just one of several factors Exelon uses to make decisions about its plants’ future operations.