Power rivals jockey to replace Mass. nuke plant

David Weldon | Nov 10, 2015




In the short-term, the decision to shut down the Pilgrim Nuclear Power Plant in Massachusetts may hurt the state's efforts to keep carbon emissions down. On the other hand, the expansion of existing natural-gas plants and other proposed projects should quickly replace any lost generation capacity. 

The plant, the only nuclear power plant in Massachusetts, announced in mid-October that it will retire by June 2019. The age of the plant has certainly not gone unnoticed. But it is the difficulty in competing with a cheaper natural gas market that is really doing Pilgrim in. Nuclear power in New England is just too expensive by comparison.

So while the announcement may have caught the general public by surprise, most watchers in the industry expected the plant was in its final stage of life. Some believe the region is also positioned to weather the transition well as new energy sources come online.

"I think the marketplace overall was certainly aware that Pilgrim could be retiring relatively soon," said Dan Dolan, president of the New England Power Generators Association. "I think the fact that it had been downgraded by the Nuclear Regulatory Commission shone a brighter spotlight on its future. The timing, nonetheless, was likely a little sooner than many folks may have expected for it."

But not sooner than Dolan expected. The announcement date was not randomly picked.

"The reason that [Pilgrim] made its announcement on the day that it did was that it was the day in which any resource that is retiring or leaving the system must make its notification before the next power capacity auction. That was the date that many folks were looking at to see if we would see a decision from Pilgrim, and of course we did," he said.

This gives the region several months for other would-be energy providers to come forward with proposals before the February auction. And interest has already been expressed from a few corners.

"There were two major announcements this summer," Dolan noted. "One was by NRG Energy, at their existing Canal Power Station in Sandwich, Massachusetts. They proposed a new 300 megawatt facility at that site, which they plan to bid in to this next capacity auction in February, and to come online in 2019."

"Also this summer, Invenergy proposed a 900 megawatt new facility in Burrillville, Rhode Island, that similarly they hope to bid into the next power capacity auction in February, and also be online by 2019," Dolan said. "To put that in perspective, the Pilgrim plant is 675 megawatts. So those two facilities just by themselves, located in the southeast of Massachusetts and northern Rhode Island (close to Plymouth), would far and away replace that capacity."

In addition, Dolan said a number of other energy facilities are jockeying for position to provide energy to the region.

"We've seen a number of other facilities that are not yet public, so we don't necessarily know the identities of the individual facilities or who is proposing them," Dolan said. "But back in the spring, over 10,000 megawatts of new plans were trying to get qualified to be able to participate in the capacity auction."

"In the next couple of weeks we'll get our next indication of how much capacity is going to be competing in something called the Informational Filing that ISO New England must make with the Regulatory Commission to identify what resources have qualified and will be bidding in to compete in the February auction," Dolan explained.

Despite all these would-be and possible suitors waiting in the wings, Massachusetts will still feel some impact from the Pilgrim plant closure. For starters, the impending retirement will upset the state's balance of nuclear-to-gas-to-alternate energy sources.

"One of the concerns that we have is that Pilgrim has been a relatively reliable, valued source of energy for a number of reasons," explained state Energy and Environmental Affairs Secretary Matthew A. Beaton. 

"When we're looking at our energy policy in the Commonwealth, we're looking at three different pillars to our energy strategy - reliability, cost, and greenhouse gas consumption," Beaton said. "These are the three things that we're trying to work toward. Pilgrim was helpful with all of those - 680 megawatts of reliable, clean, carbon-free energy is a difficult resource for us to replace immediately. It was a valued resource."

Beaton noted that due to the age of the plant, safety concerns were certainly on the minds of many - "especially local folks."

Beaton was confident the state will "find the right solution" and that "it could be a mix of resources."

Beaton and state Sen. Benjamin B. Downing, D-Pittsfield, Senate chairman of the Joint Committee on Telecommunications, Utilities and Energy, said legislation is being drafted to boost wind, hydroelectric and other sources of power. Baker and lawmakers began work on zero- and low-emission legislation long before the announcement that Pilgrim will close to replace power from retiring plants.

"One of the key elements to what we're trying to accomplish is a diversified, combo platter approach-trying to bring in the additional resources: natural gas, but also expand the traditional resource of hydroelectricity and maintain our leadership in energy efficiency," Beaton said.

"Hitting all of these elements simultaneously will help us have a diversified portfolio that lets us meet our energy challenges, and does it in the most cost effective way possible, recognizing that Massachusetts has historically been in the top five for cost of electricity. Doing all of these things right; focusing on our environmental goals; and also focusing on the cost and reliability issues - striking that right balance."

Still, natural gas prices are low in New England, as they are elsewhere, which makes it is harder for renewable and other energy suppliers to compete.

"To be honest, we continue to see more than adequate commodity in the marketplace to maintain our reliability," Dolan said. "There is no doubt that right now the system in New England is tight. And yet, even in that tight market in 2015, we've seen five of the seven lowest wholesale electricity price months since the ISO New England markets began as we know them in 2003."

"It's remarkable," Dolan said. "One month in particular - June 2015 - saw the lowest wholesale electricity price, and the lowest wholesale natural gas prices, in New England history."

 

http://www.energybiz.com/article/15/11/power-rivals-jockey-replace-mass-nuke-plant?utm_source=2015_11_11