Entergy Corporation closes the Pilgrim Nuclear Power Station in Massachusetts

[thackney]

Entergy Corporation closes the Pilgrim Nuclear Power Station in Massachusetts
https://www.eia.gov/dashboard/newengland/commentary/20190613
June 13, 2019

On May 31, 2019, Entergy Nuclear Generation Company (Entergy), a business unit of Entergy Corporation, permanently closed its 679 (summer-weighted) megawatt (MW) Pilgrim Nuclear Power Station (Pilgrim) located along the shores of Cape Cod Bay. In October 2015, Entergy announced that Pilgrim was retiring because of the relative cost of operating the plant compared with the level of wholesale power prices in New England. Pilgrim started commercial operations in 1972, and it was the tenth-oldest nuclear plant in the United States at the time of its closing.



Even with its recent economic challenges, Pilgrim operated at a high rate; Pilgrim ran at a generation-weighted average annual capacity factor of 85%, based on annual operating data for 2013-2018. Pilgrim’s monthly net generation averaged 446 thousand megawatthours between January 2001 and March 2019.



The Independent System Operator of the New England grid (ISO-NE) has said that it expects Pilgrim’s retirement will have no effect on system reliability this summer. ISO-NE cited on May 15, 2019, that sufficient resources of power should be available to meet peak consumer demand for electricity this summer, forecasted at 25,323 MW, which is similar to last summer’s peak of 25,899 MW. The addition of more than 1,000 MW of new natural gas-fired and renewable generating capacity opening this summer will offset the loss of output from Pilgrim.

The closing of Pilgrim comes about five years after the shutdown of the Vermont Yankee nuclear plant in December 2014. Vermont Yankee had 612 MW of capacity, and it encountered many of the same economic pressures that affected Pilgrim. Nuclear power remains an important part of the generation mix in New England. The 2,073.1 MW Millstone nuclear plant in Connecticut and the 1,251.4 MW Seabrook nuclear facility in New Hampshire—both based on summer-weighted capacities—remain open, meeting about 26% of daily load in the region.

Pilgrim is the eighth nuclear power plant to close in the United States since 2013. Relatively low natural gas prices and decreasing costs for renewable energy have affected the competitiveness of some older nuclear generating facilities. The situation has been more challenging for plants like Pilgrim that have only one reactor and operate in certain markets. Of the eight nuclear plants to close since 2013, all but one has been a facility with just one reactor. Most U.S. nuclear plants have two reactors, which allows for more revenue to cover both fixed and variable costs. About 6,000 MW of nuclear generating capacity has been retired since 2013, with the total U.S. fleet now rated at about 99,000 MW.

[rustynail]

"decreasing costs for renewable energy" or increasing subsidies?

[thackney]

"decreasing costs for renewable energy" or increasing subsidies?

In general, the subsidies are going down, although anything above zero is still too much.

But it is normal to have reduced costs when more of something is built.  First couple are expensive, then the price per unit goes down.

[Fishrrman]

Fishrrman almost-fearless prediction:
Fifty years from now (I won't be here), there will only a handful of operating nuclear plants in the USA -- if any remain operating at all.

[IsailedawayfromFR]

In October 2015, Entergy announced that Pilgrim was retiring because of the relative cost of operating the plant compared with the level of wholesale power prices in New England.

If this is the basis, it is most likely an incorrect analysis.

Any economic analysis that concludes negative economics must include abandonment costs.  In the case of nuclear, this is truly a staggering amount due to environmental cleanup, particularly for older facilities.  As a consequence, the most attractive point-forward economics will likely be negative for both continuing operations and abandonment now.  However, continuing operations can be considerably less negative NPV as it throws those abandonment expenses well into the future.

An example I am familiar with is an older refinery that was losing money and had no chance of being positive cashflow.  It was kept open as environmental cleanup if abandoned was extremely high, so that cost was effectively kicked down the road.

 

Relatively low natural gas prices and decreasing costs for renewable energy have affected the competitiveness of some older nuclear generating facilities

It is curious that this is the language they used, as it should say something like "supplied power costs from older nuclear generating facilities cannot compete with current supplied power costs of natural gas and renewables".
Decreasing costs of renewable energy does not necessarily mean they are yet lower than the cost to supply nuclear-generated power.

both these supposed justifications seem to smack of something other than economics are likely political.

[Joe Wooten]

If this is the basis, it is most likely an incorrect analysis.

Any economic analysis that concludes negative economics must include abandonment costs.  In the case of nuclear, this is truly a staggering amount due to environmental cleanup, particularly for older facilities.  As a consequence, the most attractive point-forward economics will likely be negative for both continuing operations and abandonment now.  However, continuing operations can be considerably less negative NPV as it throws those abandonment expenses well into the future.

An example I am familiar with is an older refinery that was losing money and had no chance of being positive cashflow.  It was kept open as environmental cleanup if abandoned was extremely high, so that cost was effectively kicked down the road.

 It is curious that this is the language they used, as it should say something like "supplied power costs from older nuclear generating facilities cannot compete with current supplied power costs of natural gas and renewables".
Decreasing costs of renewable energy does not necessarily mean they are yet lower than the cost to supply nuclear-generated power.

both these supposed justifications seem to smack of something other than economics are likely political.

As nuke plants go, Pilgrim is a small one. The biggest operating cost in a nuke is people and a 700 MW plant has approximately the same number of people on staff as a 1200 MW plant, so the per MW operations cost is higher. Another problem is that the subsidies for wind/solar, especially wind allows the "renewables" operators to pay people to take their output and still make a profit. This happens a lot from Midnight to about 8 AM when windmills have a nice steady breeze and system demand is low. This tactic negates the low operating cost of nukes and forces the nuke utilities to pay others to take their output also, which costs them millions every day. The wind operators also have another advantage because there is a federal law that requires the grid operators to take their output if it is available no matter what the system demands are. Some plants like Byron, Braidwood, and other Illinois nukes have made modifications to swing power (they are originally designed as baseload plants), which adds more cost to their output.

The political angle for nuke shutdowns are primarily in blue states where the state leadership is rabidly anti-nuke, mostly California and New York, where the politicians will give tax breaks to utilities who agree to shut down the nukes.

[IsailedawayfromFR]

As nuke plants go, Pilgrim is a small one. The biggest operating cost in a nuke is people and a 700 MW plant has approximately the same number of people on staff as a 1200 MW plant, so the per MW operations cost is higher. Another problem is that the subsidies for wind/solar, especially wind allows the "renewables" operators to pay people to take their output and still make a profit. This happens a lot from Midnight to about 8 AM when windmills have a nice steady breeze and system demand is low. This tactic negates the low operating cost of nukes and forces the nuke utilities to pay others to take their output also, which costs them millions every day. The wind operators also have another advantage because there is a federal law that requires the grid operators to take their output if it is available no matter what the system demands are. Some plants like Byron, Braidwood, and other Illinois nukes have made modifications to swing power (they are originally designed as baseload plants), which adds more cost to their output.

The political angle for nuke shutdowns are primarily in blue states where the state leadership is rabidly anti-nuke, mostly California and New York, where the politicians will give tax breaks to utilities who agree to shut down the nukes.

I knew it was not an economic decision but a political one.

So politics solely are dictating the 'non-competitiveness' of nuclear since operators of renewables can demand payment for their product where nuclear must pay others to take their product, in effect a cost and loss of revenue to them.

It is a stacked deck against nuclear and a lucrative windfall for renewables, all forcibly done by government policy