6 Nuclear Plants That Could Be Next To Shut Down
Davis Besse Nuclear Power Station near Toledo, Ohio (Photo credit: Wikipedia)
Nuclear isn’t dead, according to Morningstar analysts, but cheap natural gas has shuttered some plants and left others at risk.
[The Morningstar analysts do believe one aspect of nuclear power is dead: new-built nuclear in the West. Read about it here.]
“In the last year, U.S. utilities have closed or announced plans to close five nuclear reactors in addition to the canceled development plans,” according to Morningstar’s Utilities Observer report for November, “leading to speculation that prolonged low gas prices could drive more plant closures given the high maintenance capital investment requirements.”
“Despite slimmer margins for nuclear operators in a low natural-gas price environment, we think this speculation is unwarranted outside of some select situations.”
But what are those select situations?
Below is a list of operating nuclear plants that Morningstar analysts believe are most exposed to the possibility of closure. The list does not include disabled plants, like Fort Calhoun in Nebraska, that are offline and may never reopen. And it does not include plants already scheduled for closure, like Exelon’s Oyster Creek plant in New Jersey.
1. Indian Point: Less than 50 miles north of Manhattan, the reactors at Entergy’s Indian Point Energy Center face a tough political fight for relicensing. One license has expired, and that reactor is operating under an allowance from the Nuclear Regulatory Commission. Another license is due to expire in 2015. New York Gov. Andrew Cuomo opposes relicensing. Outgoing New York Mayor Michael Bloomberg has defended the plant, based on the impact closure could have on New Yorkers’ electric bills. Mayor-elect Bill DeBlasio has called for a gradual decommissioning as alternative power sources come online, which isn’t how the process works. Ultimately, the decision rests not with local officials, but with the NRC.
2. Ginna Nuclear Generating Station: On the south shore of Lake Ontario near Rochester, NY, Ginna is a single-reactor plant that faces fresh competition from wind turbines, falling power prices, and, like Indian Point, a political climate hostile to nuclear reactors. “Upstate New York off-peak power prices have fallen to $32 per megawatt hour as of mid-2013 from $55/MWh in 2008,” according to Morningstar. Ginna is owned jointly by Exelon and Électricité de France.
3. James A. Fitzpatrick Nuclear Power Plant: Another plant on the south shore of Lake Ontario in New York, FitzPatrick faces the same challenges as Ginna, but it’s also an older boiling-water reactor that may need upgrades. “Fitzpatrick’s operating license expires in 2034, but its revenue-sharing agreement with the New York Power Authority expires in December 2014, and unfavorable contract renewal negotiations could lead Entergy to shut the plant.”
4. Three Mile Island: Most of the shale gas boom in America is happening in the Marcellus region of Western Pennsylvania, according to the Energy Information Agency, which means Exelon’s infamous Three Mile Island plant now has to compete with an abundance of gas never before seen in its lifetime. Several large, high-efficiency gas power plants are planned for the region.
5. Davis Besse Nuclear Power Station: FirstEnergy’s plant near Toledo is not far from the Marcellus Shale formation and all that cheap natural ga. After Indian Point, it’s the next power plant up for license renewal— in 2017. “We expect strong opposition from some parties,” says Morningstar. “It has a tarnished reputation after an extended outage in 2002-04 due to corrosion in the reactor vessel head and several smaller issues since then.”
6. Pilgrim Nuclear Generating Station: Entergy’s Pilgrim plant in Plymouth, Mass., just survived a contentious license renewal process and was granted a new lease on life through 2032. But it may not survive the energy economy in which it now must compete. “Entergy is not obligated to operate it for that long and could exit if power prices sink much further,” Morningstar says. The old boiling water reactor is more expensive to operate than newer designs.
Reactors recently closed or scheduled for closure:
- Vermont Yankee, Vermont
- San Onofre, California
- Kewaunee, Wisconsin
- Crystal River, Florida
- Oyster Creek, New Jersey
Most existing nuclear plants will survive because they provide power without producing carbon emissions, Morningstar says, because coal will suffer with greenhouse gas regulations, and because power prices should recover from their current trough. But most of all, because of nuclear’s low variable cost.
“No emissions, coal closures, and improving power prices are certainly favorable aspects of nuclear stations but the low variable cost is far and away the primary reason that most are not at risk of closure despite a difficult market environment,” said analyst Mark Barnett.
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