Off the Kuff Rotating Header Image

nuclear energy

Texas’ uncertain nuclear future

Sometimes I forget that Texas has nuclear plants.

By the standards of the U.S. nuclear energy industry, Texas’s two nuclear plants are fairly new. Neither one is more than three decades old, while many nuclear sites across the country are nearing the five-decade mark.

But as the economics of nuclear power in this country continue to slide, even the futures of the South Texas Project, near Bay City, and Comanche Peak, located 60 miles southwest of Dallas, are far from certain.

When Manan Ahuja, senior director of North American power at the research arm of credit rating agency Standard & Poor’s, recently updated his firm’s list of nuclear plants at risk of closing, he listed both Texas plants at “moderate” risk of closing as early as 2030 – despite the fact that NRG Energy recently renewed its operating license for the South Texas Project for another 20 years.

Ahuja explained that while the plants were “of a much more recent vintage,” low power prices in Texas and state regulators’ policy of not paying plants for their ability to ease power shortages at times of high demand or for generating carbon-free energy – like other states have done – left the two facilities vulnerable.

“It’s a game of chicken. Do you sit around and wait for those high prices, which could happen this summer because there’s been some (coal plant) retirements,” he said. “The prices are fairly weak, even in a fairly hot July last summer.”

Both NRG and Vistra Energy, which operates Comanche Peak, maintain the plants are economic and have no plans to close them.

“Given Comanche Peak is one of the youngest plants in the country, significant decisions on license renewal are a few years away, but the plant is currently well-positioned, and we have no plans to close the it prematurely,” a Vistra spokesman said in an email.

The situation in Texas mirrors one states across the country are grappling with, as nuclear power plants face increased pressure to reduce costs to compete with a surge of cheap natural gas and increasingly efficient wind turbines and solar plants.

I don’t know how serious that threat is, but it’s worth at least thinking about. I’ve always been of the opinion that nuclear power needs to be in the mix, as it is not carbon-generating, but it is surprisingly expensive and of course there are other risks associated with these plants. Given how prices for wind and solar are falling, and the vast potential for both in Texas, I would not advocate more nuclear power here, but neither do I want to see these existing plants mothballed or underused before their time. Whatever we can do to burn less coal is a good thing.

Some power companies like the Clean Power Plan

Not that you’d ever know it.

ERCOT

Thad Hill, in a split with many fellow power company executives, flatly opposes the lawsuits that Texas and 25 others states have filed to block the Obama administration’s Clean Power Plan.

The plan, which the Environmental Protection Agency unveiled in the summer, seeks to combat climate change by reducing carbon emissions at existing power plants. It would affect coal-fired plants most profoundly, because they emit the most carbon dioxide.

It’s no coincidence that the company Hill heads, Houston’s Calpine Corp., owns exactly zero coal plants.

While it’s intuitive that wind and solar power companies, which don’t emit greenhouse gas in generating power, support the Clean Power Plan, opinion within the traditional electricity generation sector is more nuanced.

Calpine, which operates the nation’s largest fleet of natural gas-fired generators, leads a relatively small group supporting the federal rule.

Most companies that generate power with coal oppose it, including Dallas-based Luminant, the state’s largest power generator. It also operates some gas plants and one of Texas’ two nuclear plants.

[…]

While the EPA has tightened other emissions regulations under President Barack Obama, the Clean Power Plan is the most sweeping overhaul, said Travis Miller, director of utilities research at Morningstar.

The plan is intended to reduce carbon pollution from existing power plants 32 percent from their 2005 levels by 2030.

“The Clean Power Plan is going to have ripple effects throughout the entire energy system in the U.S.,” Miller said. “Utilities need a long runway to adapt, but they’re willing to adapt.”

In the lawsuit challenging the rules put forth by the Democratic Obama administration, Republican Texas Attorney General Ken Paxton calls the plan a massive power grab by the EPA that would increase Texans’ electric bills significantly and threaten the reliability of the electric grid.

The Electric Reliability Council of Texas, which manages 90 percent of the state’s power grid, has estimated the rule could force the closures of some Texas coal plants and increase electricity prices 16 percent by 2030.

Miller agreed that the Clean Power initiative would affect Texas, though he said that Midwestern, Great Plains and Appalachian states most dependent on coal would feel the greatest effects.

Some of the changes in Texas’ power landscape are occurring anyway, because of cheap shale gas and Texas’ ranking as the largest wind power producer in the nation.

“There’s an impressive pipeline of new gas generation and new wind generation in Texas,” Miller said.

That presents market challenges to coal plants, and could move the state toward compliance with the Clean Power Plan. “Texas might not have to do all that much,” Miller said.

See here for the background. Miller’s statement is consistent with what ERCOT itself has said, and the Clean Power Plan would help conserve water, too. But this is Texas, and our leadership has to do things the hard way. Just remember, they don’t speak for everyone, not even in the power generation business.