Nuclear Plants Next to Go in the Northeast
By Conway Irwin
Published: April 25, 2013
An impending wave of nuclear plant retirements in the Northeast on the heels of coal plant retirements in 2012, raises the question of whether policies should be formulated to maintain existing capacity and protect fuel source diversity in the region’s power sector, according to UBS’ Director of US Electric Utilities Julien Dumoulin-Smith.
Low gas prices and impending environmental regulations both played a role in a wave of announced coal plant retirements last year. And retirements are expected to continue as new Environmental Protection Agency rules kick in in 2015.
“The Northeast is the next major market to see material capacity retirements in this country,” said Dumoulin-Smith at the Platts Northeast Energy Markets conference in New York on Wednesday. “We’re talking about a big purge,” he said. UBS is estimating that the region will lose about 6 gigawatts of capacity.
Dumoulin-Smith predicted that nuclear plants would be next in line for closure. “If coal retirements and MATS (Mercury and Air Toxics Standards) was the story of 2012, this year and next year, nuclear will be the focal point,” he said, highlighting Dominion‘s 556 megawatt Kewaunee plant in Wisconsin, scheduled for closure this quarter.
And he warned of the potential consequences of a series of plant closures that leave the Northeast too reliant on a single fuel. “In a low gas price environment, the question is, do you want to have a policy that will uphold fuel diversity?” he said.
Most newbuilds in the Northeast are combined cycle plants, said Craig Hart, Chief Financial Officer of USPowerGen, which owns three power generation facilities in New York City. Combined cycle plants most commonly run on natural gas.
But the Northeast will also need additional solar and wind plants to meet requirements under renewable portfolio standards (RPS), according to Jonathan Stark, Managing Director of GE Financial Services.
“If you look at Pennsylvania, Massachusetts, New York and Connecticut, if they were to fulfill their renewable portfolio standards with wind and solar, which are the only two in-state renewables that could be done on a large scale, they need 8-10 gigawatts to be built,” Stark said. “Actually these [states] are not the ones that need the most renewables to meet the RPS,” he said.