Fort Calhoun reactor may shut by year-end
Houston, 31 May (Argus) — The Omaha Public Power District (OPPD) board is expected to vote in June to close the 478MW Fort Calhoun nuclear plant in Nebraska at the end of the year, 17 years before its license expires as the reactor becomes another victim of low natural gas prices.
As the smallest US reactor, Fort Calhoun has struggled since the 2014 debut of the day-ahead market in the Southwest Power Pool (SPP).
The market requires facilities like Fort Calhoun to accept the market-clearing price, a price that has been “well below the operating cost of Fort Calhoun,” thanks to low natural gas prices and expanding wind generation in SPP, said Moody’s Investors Service.
Moody’s calculated Fort Calhoun’s 2015 operating and maintenance expenses at $32.39MWh, 65pc above SPP South’s around-the-clock power price of $19.59MWh.
OPPD began reviewing Fort Calhoun’s future in April.
“The economic analysis clearly shows that continued operation of Fort Calhoun Nuclear Station is not financially sustainable,” said OPPD president Tim Burke. The analysis considered market conditions, economy of scale and the Obama administration’s proposed Clean Power Plan.
Spot prices in May on Natural Gas Pipeline at Gage County, Nebraska, have averaged $1.85/mmBtu, down 32pc from May 2015. Gas in July and August last year averaged $2.75/mmBtu, down by 29pc from the summer of 2014. Gas prices determine wholesale power prices in deregulated markets.
Fort Calhoun faces the same economic pressure as other small, single-unit US reactors that find it hard to make money in competitive wholesale markets. Nuclear plants require a large workforce, costly security measures and are subject to strict regulatory oversight. That puts them at a disadvantage in a low gas-price environment when overall power demand is stagnant and wind and solar generation are booming.
Nuclear power was profitable when gas prices soared in the mid-2000s. As gas prices have fallen because of abundant production from shale regions, the situation reversed.
Five US reactors, three facing costly repair bills, have shut in recent years, citing inadequate wholesale power prices driven down by cheap gas. At least three other reactors are scheduled to close before their licenses expire.
Exelon, the largest operator of US reactors, recently reiterated that it may shut the 1,078MW Clinton nuclear station in June 2017 if the company is unable to convince Illinois lawmakers to support the Illinois nuclear fleet financially through a low-carbon portfolio standard. Barclays’ analysts said Exelon’s 1,918MW Quad Cities plant and its 2,346MW Byron plant are also at risk to be closed given current market conditions. Owners of reactors in New York and New England are also considering plant closures.
OPPD owns generating capability of 3,232MW and its system peak load is 2,291MW.