Protecting existing nuclear power plants from premature retirement is the top priority for the Nuclear Energy Institute (NEI) during 2016, NEI President and CEO Marvin Fertel told a Wall Street audience on Feb. 11.
Domestic nuclear operators have announced plans for retirement of 6,300 MW of atomic generation in the past three years and most of the retiring units were running well, Fertel said during his last major briefing for the financial community.
Fertel, who has headed the nuclear power trade group since 2009, recently announced plans for retirement at the end of 2016.
There is a risk that power sector could lose “more good-performing, non-emitting” nuclear units, Fertel told the financial crowd.
“There is nothing we can do about low natural gas prices” or weak electricity demand, Fertel said.
Instead, NEI will work on not only legislative and capacity market changes to benefit baseload nuclear, but also cutting the cost of nuclear plant operation.
The domestic nuclear industry has set a goal of achieving a 30% reduction in cost, Fertel said. “Why 30%? To drive innovative thinking, not just tinkering at the margin,” Fertel said.
The goal is to achieve significant and sustainable cost reductions by 2018 and beyond, Fertel added.
That would amount to a $12/MWh cost reduction for a typical nuclear power plant, the NEI chief said.
Generation from existing average nuclear plants amounts to $36.27/MWh, Fertel said. The price is somewhat lower for plants with multiple nuclear reactors and somewhat higher for single-unit nuclear plants. Meanwhile, various studies put the cost of new combined-cycle natural gas in the $70s-to-$80s/MWh range, Fertel said.
Average generating costs have decreased from peak of $39.70/MWh in 2012 to $36.27/MWh in 2014. Operating costs increased from $18.59/MWh in 2002 to $20.92/MWh in 2014. But operating costs have declined 4% from their peak in 2011, the NEI official said.
The trade group hopes to spread the word on best practices at nuclear units nationally via “efficiency bulletins” to NEI members, Fertel said.
NEI chief recaps recent progress, setbacks for nuclear power
The domestic nuclear energy industry expects to be “substantially complete” with Fukushima-related safety investments by the end of 2016, the NEI official said.
There are positive developments, Fertel said. For starters, the Nuclear Regulatory Commission (NRC) has given the Tennessee Valley Authority (TVA) to start operation of the Watts Bar 2 nuclear facility in Tennessee.
In addition, construction of four new units by groups led by Southern (NYSE:SO) and SCANA (NYSE:SCG) is well underway and scheduled to enter commercial operation by mid-2020.
A half-dozen combined construction and operating license (COL) applications for new nuclear plants are currently under review before NRC. Also NuScale Power expects to file design certification for its small modular reactor (SMR) in the 4th quarter, Fertel said.
On the down side, the current U.S. nuclear fleet is getting older. There are 40 reactors that are now more than 40-years-old. Approximately 31,000 MW of nuclear capacity will reach 60 years between 2029 and 2035.
In November 2015, Dominion (NYSE:D) announced intent to file second license renewal application for Surry nuclear plant in Virginia.
The head of the nuclear trade group said he was pleased to see states considering options to recognize the benefits of existing nuclear reactors. This includes Ohio’s consideration of a PPA for the FirstEnergy (NYSE:FE) Davis-Besse plant; New York’s consideration of a Reliability Support Services Agreement for the Exelon (NYSE:EXC)-run Ginna plant. In addition, Exelon continues to seek a low-carbon portfolio standard in Illinois that would include nuclear energy.
Some capacity market reforms being undertaken in the PJM Interconnect (PJM), Midcontinent ISO (MISO) and elsewhere offer glimmers of hope, Fertel said. But an ISO New England (ISO-NE) proposal to include nuclear in the winter reliability program was denied by the Federal Energy Regulatory Commission (FERC).
Energy market rules are important for nuclear power because energy markets account for 80%-to-90% of revenue for baseload resources, Fertel said. Fertel also praised efforts to “right size” the employee headcount at NRC under Project Aim.
On the Environmental Protection Agency (EPA) Clean Power Plan, Fertel said that people should remember that the bottom line is to reduce carbon emissions and not necessarily to build wind and solar projects.
Fertel also believes that nuclear power “is becoming an easier sell” to environmental groups. Two former EPA administrators, one from both political parties, are now active players in the advocacy group Nuclear Matters, Fertel said.