Nuclear Power Economics and Preservation. Presentation Prepared for NARUC Subcommittee on Accounting and Finance Michael Purdie March 29, 2017

Transcription

1 Nuclear Power Economics and Preservation Presentation Prepared for NARUC Subcommittee on Accounting and Finance Michael Purdie March 29, 2017

2 What is NEI? Our mission is, with member participation: - Develop policy on legislative or regulatory issues - Speak with a unified industry voice - Provide a forum to resolve issues - Provide information on the value of nuclear Governed by 53-member Board of Directors chaired by APS Don Brandt NEI President and CEO is Maria Korsnick Represents approximately 300 members in 17 countries

3 Nuclear Fleet Overview

4 Unregulated 1 Regulated 99 operating reactors at 60 sites ~100 GW installed capacity In 2016, nuclear plants provided 805 million MWh of electricity 1 Plants with revenues tied to energy and capacity products in organized wholesale markets Sources: Velocity Suite, Nuclear Energy Institute

5 U.S. Electricity Generation Fuel Shares 2015 Oil 0.7% Gas 32.7% Nuclear 19.5% Hydro 6.2% Coal 33.2% Wind 4.7% Solar 0.6% Geothermal 0.4% Biomass and Other 1.8% Source: Energy Information Administration Updated: 3/16

6 U.S. Electricity Sources Which Do Not Emit Greenhouse Gases During Operation 2015 Wind 14.9% Nuclear 62.4% Hydro 19.3% Geothermal 1.3% Solar 2.1% Source: Energy Information Administration Updated: 4/16

7 U.S. Capacity Factors by Fuel Type 2016 Fuel Type Average Capacity Factors (%) Nuclear 92.1 Geothermal 74.2 Gas (Combined Cycle) 56.0 Coal 52.7 Hydro 38.0 Wind 34.7 Solar PV 27.2 Gas (Steam Turbine) 12.2 Oil (Steam Turbine) 10.8 Source: Energy Information Administration Updated: 3/17 *EIA states the capacity factor for nuclear is 92.5% but does not include the capacity for Fort Calhoun. NEI Included Fort Calhoun s capacity for the nuclear capacity factor value.

8 Nuclear Costs

9 Snapshot of 2016 U.S. Nuclear Plant Costs ($ per MWh) Average generating costs have decreased from peak of $40.25/MWh in 2012 to $34.00/MWh in Average generating costs have decreased 6% from Capital spending down 15% from 2015, and 38% from 2012 peak. $5.45 billion in 2016 capex Generating Cost Average Generating Costs Fuel O&M Capital First Quartile Industry Average Single Unit Sites Multi- Unit Sites Total generating cost = fuel + capital + operating. Source: Electric Utility Cost Group. Source: Electric Utility Cost Group (EUCG) Updated: 3/17

10 U.S. Nuclear Plant Costs (2016 $/MWh): Year Fuel Capital Operating Total Change 16% 72% 8% 19% Change -6% -33% -8% -14% Source: Electric Utility Cost Group (EUCG) Updated: 3/17

11 Goal: To seek greater efficiency in plant operations, while maintaining excellence in safety and reliability, and drive regulatory and market changes so nuclear energy is fully recognized for its value. Three Main Focus Areas: - Maintain operational focus - Increase value - Improve efficiency Issued ~50 efficiency bulletins - Over 1,000 staff across the industry has collaborated to identify $650 million in potential savings. - 95% implementation rate.

12 Markets

13 Market Stresses In Brief Low growth (in some cases, no growth) in electricity demand Continuing surge in supply of low-cost shale gas Fuel/technology diversity is taken for granted and undervalued State and federal mandates and subsidies for renewables distort markets Transmission constraints Market design issues - Failure of markets to recognize valuable attributes - Price suppression in energy markets

14 Declining Wholesale Electricity Prices $45-75/MWh Price Range $30-50/MWh Price Range $30-42/MWh Price Range Forward Prices

15 A Former FERC Commissioner Once Said I thought it would always be 20 percent of U.S. electricity supply. I guess I was taking it for granted.

16 Economic output Jobs A Case Study on Losing a Small Nuclear Plant - Vermont Yankee - $493 million in economic activity lost - Housing prices declined 25 percent - ~600 employees with average salary of $105,000 Tax Base - Loss of $12 million in tax base Community Contributions - $150,000 in annual contributions to local community Clean Air - Natural Gas replaced Vermont Yankee s electricity 1 for 1. Carbon emissions increased in New England by 7% from 2014 to Sources: 2014 Study from UMass Donahue Institute, 2017 NEI Wall Street Briefing, NEI Nuclear Notes post from November 20, 2014, and ISO-NE.

17 Policy Priorities and Opportunities

18 Federal Policy Priorities Preserving the existing nuclear fleet Implementing an integrated used fuel management program Ensuring efficient and effective regulation Developing new nuclear reactors Ensuring American nuclear industry competitiveness Source: Nuclear Power in America and the World: Memorandum for the Trump Transition Team

19 State Policy Accomplishments New York - New York Clean Energy Standard will save New York Consumers ~$1 billion each year Illinois - Illinois Future Energy Jobs Bill preserves more than 4,000 high paying jobs in Illinois

20 State Policy Opportunities Connecticut - S.B. No. 106 Ohio Pennsylvania New Jersey

21 Options for States National Conference of State Legislatures report titled State Options to Keep Nuclear in the Energy Mix - Zero Emissions Credits - Include nuclear in Renewable Portfolio Standards - Establish separate Low Carbon Portfolio Standards - State Carbon Tax or Cap and Trade Policies - State Mandated bilateral PPAs - Advanced Cost Recovery - Tax Incentives

22 Don t assume that nuclear power will always be available

23 New and Advanced Reactors

24 By 2021, the U.S. will have added 5,500 MWs of new nuclear capacity 44 million MWhs of electricity; >all U.S. solar generation in 2015 Largest infrastructure projects in U.S. Insights from these projects apply to SMR and Advanced Reactor development Top Picture: Vogtle 3 and 4 Bottom Picture: V.C. Summer 2 and 3

25 NuScale s SMR design certification application (DCA) at NRC - Agreement with UAMPS/INL/Energy Northwest to begin commercial operations in 2026 Billions in capital already raised for Generation IV Reactors - Terrestrial Energy is poised to submit DCA to NRC by Select four sites for commercial plant by 2017 (one at INL and three east of Mississippi River) Picture of Transatomic Molten Salt Design

26 Nuclear Energy s Solid Value Proposition Safe, Reliable Electricity 24/7 Plus Supports Grid Stability Provides Price Stability Runs When Needed (Fuel on Site) Provides Clean Air Compliance Value Contributes to Fuel and Technology Diversity (Portfolio Value) Avoids Carbon Emissions Anchors the Local Community: Jobs, Tax Base

27 Michael Purdie Manager, Energy and Economic Analysis