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Like Three Mile Island, Talen Energy’s nuclear plant under pressure

Allentown-based Talen Energy’s Susquehanna nuclear power plant, which opened in the early 1980s, has two reactors, each capable of generating enough electricity to power about 1 million homes.

But it’s unclear how far into the future that generation will continue, following Tuesday’s announcement that Exelon Corp. plans to close its Three Mile Island reactor near Harrisburg in 2019. The move would shutter one of Pennsylvania’s five nuclear power plants, which have been increasingly pressured by competition from cheaper natural gas and subsidized renewables such as wind and solar power.

While there are some key differences between Three Mile Island and Talen’s nuclear plant in Luzerne County, near Berwick, experts agree the headwinds that drove Three Mile Island to five consecutive years of financial losses are not isolated to one reactor. Now it may be up to state policymakers to decide whether the nuclear industry has a long-term future in Pennsylvania.

Talen on Tuesday declined to comment specifically about the news of Three Mile Island’s closure or any speculation about the future of its Susquehanna plant. Spokesman Todd Martin did say, however, that Talen wants to be a participant in future negotiations with stakeholders.

“That said, we are participating in the discussions about the value of nuclear in Pennsylvania and across the country,” Martin said.

The pressures on the nuclear industry were highlighted in a recent auction held by PJM Interconnection, the world’s largest competitive power market that procures power supply resources three years in advance to ensure power supplies will be available during extreme weather or other emergencies. Exelon announced last week that Three Mile Island — for the third year in a row — was shut out of the auction.

While it’s unknown whether Talen’s Susquehanna plant was able to sell power in the latest auction, a report from Swiss financial services firm UBS last week noted Talen appears to be one of the independent power producers suffering the most from the auction. The report also raised the question of whether the reduced price levels will be sufficient for Talen to keep operating the Susquehanna nuclear plant.

“There are real pressures on the nuclear industry and those are, in some senses, concentrated and magnified by the cheap shale gas,” said Julien Dumoulin-Smith, a UBS analyst who co-authored the report last week.

Nuclear plants also have struggled to compete from an operational cost standpoint, especially when considering Talen’s Susquehanna plant employs more than 1,000 people. By comparison, a natural gas generating power plant being built near the Susquehanna plant will need only about 25 employees when it’s operational, at which point it will be capable of supplying power to about 900,000 homes.

Dumoulin-Smith declined to discuss specific plants when reached by phone Tuesday, but he did say single-unit sites — such as Three Mile Island — are most susceptible to the challenges weighing on the entire industry.

“The question is going to be, ‘Does one of these sites need to be retired for action to be done?'” Dumoulin-Smith said.

Read full article at The Morning Call