Overcoming
Challenges
to Operating
Reactors
By J. Scott Peterson, Nuclear Energy
Institute.
J. Scott Peterson
Mr. Peterson directs the Nuclear Energy
Institute’s communications activities,
including media relations, coalition
management, advertising, editorial and
creative services,
public opinion
research and industry
communications.
At NEI, Mr. Peterson
also has served as
senior director for
communications.
He has led major
branding programs to
promote the benefits
of nuclear energy.
Mr. Peterson also
has directed public
affairs programs that
support enactment of
federal legislation,
including the Energy Policy Act of
2005 and congressional approval of the
nation’s nuclear fuel repository site,
and recognition of nuclear energy in
international climate change policy.
Mr. Peterson received a bachelor’s
degree in journalism from the University
of North Carolina at Chapel Hill.
Additionally, he has completed the
Reactor Technology Program for Utility
Executives at the Massachusetts Institute
of Technology.
An interview by Newal Agnihotri,
Editor of Nuclear Plant Journal, at
the American Nuclear Society Utility
Working Conference in Amelia Island,
Florida on August 13, 2014.
1. How can we alleviate the merchant
plant situation to turn that challenge into
an opportunity?
That will be challenging, but it’s
possible given time and changes in some
of the market rules on a state or regional
level. Looking at the factors that are
in play in these markets, every state is
different, and there are different dynamics
in each of the Regional Transformation
Organizations (RTOs).
Different states have varied pressures,
in part because they have different rules
and different renewable mandates. About
half of the states have renewable mandates
of up to 30 percent of that state’s electricity
generation.
In addition, there are pressures from
low-priced natural gas. The more gas we
bring out of the ground,
the more pressure that
puts on utilities with
reactors in competitive
markets. The only
real chokepoint for
natural gas is the
delivery system. For
example, in January
2014, with the polar
vortex, we saw some
of the disruptions
in the gas supply
that can happen for
electricity generation.
When you had the
coldest temperatures
in January, natural gas
that normally goes to electricity production
got diverted for home heating and other
uses. So, while you have firm delivery
of natural gas for electric generation on
a normal day, when you hit the extremes,
particularly in winter, you’re going to have
chokepoints when you can’t get the gas you
need, so you have to switch to oil at those
power plants that can make that switch.
In the PJM market in Mid-Atlantic states,
they came very, very close to the point
where they were going to have blackouts.
And In South Carolina, they actually took
customers offline for a number of hours
because most heat down there is electric
heat. And so, when you had record
temperatures through the Tennessee Valley
and into the Carolinas and you had coal
plants and gas plants that were coming
offline because of the cold temperatures,
they simply couldn’t meet the electricity
demand that they had because of the frigid
temperatures.
We’ve learned from the polar vortex
experience that our reserve margins in
many regions are really, really low when
you have extreme weather. In the next
10 years, most of the reserve margins
in almost all markets will be below the
minimum requirements, unless you start
adding generation to the grid.
So, you have the pressures of low-
priced natural gas, mandates for renewable
electricity, plus the production tax
incentives for wind and solar that may
allow them to come in under the market
price and then use that production tax
credit to lift up their profitability. They’re
undercutting the market, in some cases
at very large volumes. In some markets,
reactors face the triple threat of renewables,
low-priced natural gas and low-priced coal.
And that’s simply too many economic
pressures even for a very efficient, well-
operating plant to take in an open market.
That was the situation with Dominion’s
Kewaunee nuclear energy facility and the
company simply had no choice but to shut
down. If you could move that plant to a
number of other states, it would still be
operating today.
Once you shut down a nuclear plant,
you don’t bring it back. And in the case
of Kewaunee, this is an interesting case
study. Wisconsin is now looking for 700
megawatts, which is almost the exact rating
of Kewaunee, to bring on to the system in
two or three years because now they have a
deficiency of power generation. So, we’re
making shortsighted decisions based on
short-term price signals and now those
organizations that run the markets are
starting to look at how they price some of
the attributes of nuclear energy differently
because they aren’t yet recognized or are
priced too low.
One example of that is capacity
auctions in the regional markets. There are
two prices established in those markets-- a
capacity price that companies get simply
to have the power plant there and available
to produce electricity when needed and an
energy price for the output. The capacity
prices typically have been very low and
are set by natural gas plants. What PJM is
doing now, and we expect some movement
on this in September 2014, is looking at
energy capacity prices differently, to say:
okay, what’s really going to be available
when we need it in the most extreme
periods. So, they’re taking the lessons
learned from the polar vortex and applying
them to their markets to ensure that
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NuclearPlantJournal.com Nuclear Plant Journal, September-October 2014
