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Nuclear power expansion for DTE in Michigan is long-range strategy option

Despite the Trump administration’s opposition to using the federal regulatory process to improve the quality of breathable air by mandating a reduction in carbon emissions, top executives of Consumers Energy Co. and DTE Energy Co. say they plan to continue to invest in renewable energy and replace 25 aging, inefficient and dirty coal-fired power plants over the next decade.

But Consumers and DTE have slightly different strategies when it comes to how they will replace the shuttered plants going forward. Both tell me they will invest millions in natural gas, renewables like wind and solar and energy efficiency programs over the next decade.

The difference appears to be that DTE wants to keep open the option of expanding nuclear energy generation — DTE’s Fermi 2 supplies 18 percent of its current electricity production — while Consumers has no future plans for nuclear after Entergy closes its Palisades nuclear power plant in Covert Township in the fall of 2018, pending Michigan Public Service Commission approval.

“We are not currently planning to build or purchase energy from nuclear plants. Our long-term supply strategy is to continue to develop low-emissions energy options with an emphasis on renewable energy, natural gas, and energy efficiency,” Brian Wheeler, a spokesman with Consumers, said in a statement to Crain’s.

On the other hand, Gerry Anderson, DTE’s chairman, president and CEO, told me recently that the state’s largest utility will hold onto its “cards” for the nuclear energy option. And why not? DTE spent $100 million in the six-year regulatory process to garner the Fermi 3 nuclear plant license.

“We applied for Fermi 3 back in 2008 when oil was $120 per barrel, then the economic crunch hit and technology made it possible to increase shale gas (production) at lower costs,” said Anderson, adding that costs for such renewable energy sources as wind and solar also dropped substantially.

It is clear to energy and environmental experts that DTE had once planned to build and open a nuclear generating plant by as early as 2023.

Now, says Anderson, “We are looking at replacing our coal plants with natural gas and maybe in the mid-2020s” will take another look at nuclear again.

So after six long years, DTE was finally awarded a license in late 2015 from the Nuclear Regulatory Commission to build Fermi 3. If built, it would be on the same site as the currently operating 1,170-megawatt Fermi 2 on the shores of Lake Erie near Monroe, about 30 miles south of Detroit.

Fermi 2 is also next to closed-down Fermi 1, an experimental breeder reactor that partially (1 percent) melted down in 1966. This event was 13 years before the even worse near-catastrophe meltdown at Three Mile Island in Pennsylvania.

Back in 2008, the estimated price for the 1,560-megawatt Fermi 3 plant was $9.6 billion, a figure that environmental lawyer Howard Learner expects will top more than $10 billion now.

Learner, like many environmentalists in Michigan, is asking the question: Why is DTE still considering nuclear?

“DTE has already sunk $100 million into this new nuclear plant that is economically uncompetitive in the Midwest and is highly unlikely to ever be built,” Learner, executive director of Chicago-based Environmental Law & Policy Center, said in an interview with Crain’s.

“DTE’s board of directors would be slammed by Wall Street if the utility moved forward with the Fermi 3 nuclear plant in light of the lessons learned from the ongoing nuclear plant financial debacle in two other states (Georgia and South Carolina),” Learner said.

If DTE has $10 billion to invest, Learner and other environmentalists suggest the company spend it on wind turbines, solar panels and renewable energy projects that have greater return on investment or don’t threaten humans and animals with radiation poisoning.

“DTE should instead invest more in modern cost-effective energy efficiency and clean solar energy and storage technologies, which will create jobs and deliver more benefits to customers and the environment with much less risk,” Learner said.

Consumers and DTE have already met the state mandate that they generate 10 percent of their electric sales by 2015 from renewable energy sources. They also plan to meet a new 2016 energy bill mandate to extended that goal to 15 percent by 2021.

Based on a number of factors, including the economic downturn, newer technology and energy-efficiency programs, Michiganians are also using less electricity per person than a decade ago. EIA data show total power use in the U.S. declined 1.1 percent between 2008 and 2015 as electricity sales within Michigan fell 1 percent in 2016 and more than 7 percent since 2005.

Despite having higher-than-average electricity prices per kilowatt hour, EIA said, Michigan now ranks 31st in average per capita energy consumption at 291 million BTU per capita. Louisiana uses the most at 921 BTU per capita and New York the least at 190. Neighboring Midwestern states are Indiana (444), Ohio (329) and Illinois (314).

Learner also points out that DTE’s electricity sales have declined since 2013 even as the economy as grown, similar to Commonwealth Edison in Illinois.

For example, DTE’s electricity sales declined 1.7 percent from 2013 to 2016 as it added 100,000 customers and Michigan’s gross domestic product increased by 13.5 percent, Learner said. ComEd also had declining electricity sales, down 1.8 percent after adding 121,973 new customers and Illinois GDP growing by 11.5 percent.

“The forecast for DTE and overall Midwest is flat/declining electricity sales as energy efficiency takes hold – more energy efficienct appliances, LED lighting, more efficient HVAC, pumps and motors, all of which saves business and residential consumers money on their utility bills – and as solar energy and energy storage grows in the market,” Learner said.

DTE electric sales flat

Irene Dimitry, DTE’s vice president of business planning and development, confirmed DTE’s electricity sales have been flat for some time and are projected to remain flat in the coming few years.

Still, DTE views increased nuclear energy as a valuable future baseload option, especially when more of its coal-fired plants go offline.

Read full article at Crain’s Detroit