Should Dominion Energy re-license its four Virginia nuclear power units? The answer depends on your appraisal of solar power, energy efficiency and other alternatives.
Is there a future for nuclear power in Virginia’s long-term energy outlook?
Dominion Energy Virginia believes there is. Nuclear power currently contributes about 30% of the company’s electricity sales, and the company plans to continue generating power from its Surry and North Anna nuclear power stations for decades to come. Nuclear power, the company says, is reliable, provides fuel diversity, and does not emit carbon dioxide — a major plus as Virginia aims to reduce greenhouse gas emissions.
The utility’s 2018 Integrated Resource Plan, which peers 15 years into the future, assumes that the company will renew the licenses to operate the two nuclear-generating units at Surry and the two at North Anna. At the time of the license renewals, the units would be 60 years old. The nukes would continue to operate until they were 80 years old.
But many people think that renewing the licenses is a bad idea. While Dominion expects that refurbishing the four generating units would cost $3 billion to $4 billion, environmentalists and other skeptics suggest that the actual cost could run significantly higher. It doesn’t make sense to spend billions on nuclear power, they say, when solar energy costs less and is getting cheaper every year. While it is true that solar power is intermittent — it generates electricity only when the sun shines — the advent of low-cost batteries and the spread of electric vehicles, they claim, will make it possible to economically store surplus solar power for when it is needed.
Expect the debate to heat up when the Nuclear Regulatory Commission (NRC) begins processing Dominion’s re-licensing request for the Surry 1 plant. Dominion has filed notice of its intent to submit an application for a license renewal by the first quarter of 2019 — less than a year away. The review could take up to three years, and construction several years more.
License renewal for existing nuclear units is distinct from a proposal, also explored in the 2018 Integrated Resource Plan (IRP), to build a new nuclear unit at North Anna known as North Anna 3. Dominion has spent hundreds of millions of dollars in planning and engineering costs to keep that option alive. Estimates of the cost for building the third unit have ranged as high as $19 billion, and the IRP suggests that it would not make economic sense except in the strictest CO2-reduction regulatory scenario that would compel the shutdown of coal-generating capacity. The cost of building a third nuclear unit would be so high and fraught with so much uncertainty that opposition would be formidable no matter what the circumstances.
The re-licensing proposals are a different story. The up-front capital cost, though considerable, would be in the same ballpark as building new gas- or solar-powered generating capacity. Moreover, fuel costs would be more stable and lower over the long run than for the gas-fired facilities. Although there are no hard figures on what the impact on rate payers would be, no one disputes the fact that re-licensing Surry and North Anna would cost a fraction of building a new generating unit.
Flagships of the fleet
The two Surry units became operational in 1972 and 1973, capable of generating a total of 1,600 megawatts of electric power. In the early years the power station had some major operational issues. In 1972, two workers were fatally scalded by steam after a routine valve adjustment. And in 1986, a steam explosion due to internal erosion and over-pressurization injured eight workers, four fatally. But performance has been steady since then. Other than an incident in which a tornado touched down in the switching station, disabling power to the plant’s cooling pumps, Surry has operated largely without incident.
The two North Anna units went online in 1978 and 1980 with a combined capacity of almost 1,800 megawatts of power. The station has operated without major incident, except in 2011 when an earthquake centered nearby caused light damage and triggered an automatic shut-down of the nuclear operations.
The four nuclear units have formed the backbone of Dominion’s electric-generation portfolio. In recent years, North Anna has operated with top measures of efficiency and safety, garnering the highest ratings in inspections by the Nuclear Regulatory Commission every year but two. Surry and North Anna are consistently ranked as among “the lowest-cost producers of nuclear-generated electricity in the nation,” as reported periodically by Platts Nucleonics Week, a nuclear industry newsletter and database, says Richard Zuercher, manager-nuclear fleet communications.
While the nuclear units account for only 16% of Dominion’s nameplate capacity, they generate more than 30% of its total electricity output. That’s because they operate non-stop, twenty-four hours per day, seven days a week, almost 52 weeks a year, going offline only for planned refueling outages every 18 months or the the rare tornado, earthquake or other mishap. The 2018 IRP, as shown in the table above, assumes a capacity factor for the nukes of 96%, which compares favorably to 70% for combined-cycle gas plants, 42% for off-shore wind (assuming the company manages to build a wind farm off Virginia Beach), and 25% for solar. Thus a nuclear facility with a nameplate capacity of 1,000 megawatts generates 8.4 million megawatt hours annually compared to 6.1 million for natural gas, and 2.2 million megawatts for photovoltaic solar.
The assumption of a 96% capacity factor is not unreasonable. Dominion’s six nuclear units, including two at its Millstone station in Connecticut, has exceeded 92% in recent years, achieving 93.7% in 2013 and 93.34% in 2016. In 2017, the company set an all-time high capacity factor record of 95.1%.
Under the protocols of the first 20-year license renewals, Dominion put into effect an extensive equipment-replacement management program. The company inspects and tests equipment periodically to ensure that it functions as designed, and it replaces equipment based on manufacturers’ span-of-life recommendations. In recent years, the company has installed new electric generators, new reactor vessel heads, and new and improved turbines that spin the generator to produce electricity, says Zuercher.
Over and above routine maintenance, the utility expects in the next re-licensing to replace high-voltage electric cabling in the stations and to upgrade instrumentation and controls, which may involve digital improvements to the control room. A big unknown is whether the steam generators will need to be replaced.
The electric power industry refers to “levelized cost” (also called “busbar” cost) as a yardstick to compare the cost of different power sources after accounting for capital expenditures, debt, fuel, capacity factor, maintenance and operations, and expected service life.
How would the levelized cost of electricity coming from Dominion’s re-licensed nuclear units compare to that of gas and solar?
“We don’t have firm numbers … and we cannot speculate on what the cost will be,” says Zuercher. However, he adds, “We do expect that the nuclear generation component in customers’ bills will reflect, as they do now, the value of being one of the lowest cost sources of electricity in our Virginia footprint.”
In the 2018 IRP, Dominion assumes the price of natural gas will roughly double by 2032, undercutting its competitiveness vis a vis nuclear. But Dominion officials concede that the price of natural gas is volatile and that any forecast has a potential for error. A big advantage of re-licensing the nuclear units is to maintain a diversity of power sources. The price of nuclear fuel is less prone to price swings than gas, and the fuel comprises a smaller percentage of the cost of nuclear-generated power.
“We don’t want to put all our eggs in one basket,” says Zuercher. “We want to avoid excessive reliance on any one fuel.”
Another big advantage of nuclear over natural gas is that it emits no greenhouse gases, a vital consideration in the effort to combat global warming. If Dominion failed to re-license its nuclear units, it would have to replace their 3,400 megawatts of capacity with other power sources. In the current regulatory climate, coal is out. That leaves natural gas as the only option for base-line capacity capable of operating all hours of day and night regardless of weather conditions. But natural gas emits CO2 — almost half as much as coal does for the same electricity generated, and that doesn’t count the cost of drilling, collecting, and pipelining gas to the power plant.
Downsides and alternatives
Many environmental groups and social-justice activists in Virginia oppose the re-licensing of Surry and North Anna. Bacon’s Rebellion asked to interview an expert with the Southern Environmental Law Center, but a spokesman said that “due to travel schedules” no one was available.
The Sierra Club-Virginia Chapter also said no one was available for an interview, but a spokesman did state the following:
Because the Sierra Club is unequivocally opposed to nuclear energy, we work to phase out all nuclear, nationwide, as quickly as feasible. This would include not extending the licenses for operating the Surry and North Anna nuclear units.
The national Sierra Club website cites the long-term disposal of nuclear waste, which remains lethal for 100,000 years, as a primary concern. The U.S. has yet to devise a long-term solution for storing the waste fuel. Nuclear, says the Sierra Club, is a “uniquely dangerous energy technology for humanity.”
Bacon’s Rebellion did talk to Tom Hadwin, a former executive with New York State Electric & Gas and also with Michigan-based Consumer’s Energy, who has retired in Virginia and been active in the debate over electric regulatory policy. Having studied the environmental impact of the Palisades nuclear plant in Michigan, he has more than a passing familiarity with nuclear power issues. He opposes re-licensing Dominion’s nuclear units on the grounds of the risk it poses to rate payers.
Hadwin’s first point is that Dominion’s re-licensing cost estimates, like so many estimates given by the nuclear industry, are likely low. Dominion affirmed and reconfirmed to Bacon’s Rebellion that re-licensing the four nuclear units will cost about $3 billion. But in a Sept. 7, 2017, Barclay’s CEO Energy-Power Conference, notes Hadwin, a slide deck used by Dominion CEO Thomas Farrell put the number at “up to ~$4 billion.”
And that’s today’s estimate, says Hadwin. What will the estimate be 10 years from now when it’s time to re-build the first of the four units? Even Dominion concedes that it is uncertain whether the steam generators will need to be replaced. “Whatever the number is now, it’s likely to be quite a lot higher when the money is spent.”
(“We have high confidence in the cost to prepare our nuclear units for an additional 20 years of operation,” says Dominion spokesman Zuercher. “This is based on a good understanding of our equipment and its performance history.”)
Another drawback, says Hadwin, is that the expected life of the re-licensed plant is only 20 years, compared to 40 years for other sources of generating capacity. Amortization of the capital cost over 20 years rather than 40 years would have a big impact on rate payers.
Hadwin argues that Virginia should invest instead in energy-efficiency measures. Citing an American Council for an Energy-Efficient Economy study based on 2015 data, he says major U.S. investor-owned electric utilities shaved 0.89% off retail electricity sales on average through energy-efficiency measures. The pace setter, Eversource in Massachusetts, saved 3.19%. Dominion, tied for second to last, saved only 0.11%.
“We’ve got a 14-year lead time,” he says. “If you started saving 100 megawatts per year through energy efficiency, which can be easily done because we haven’t done much in Virginia, you’ll replace Surry 1 or 2 by the time their licenses need to be renewed at a cost of 2 to 3 cents per kilowatt hour. The nuclear units will cost four to five times that.”
Another alternative is solar energy. Solar farms can produce electricity at lower cost than nuclear, and the problem of intermittent production is solvable. Dominion’s Bath County facility is the largest pumped-storage facility in the world. It was built to store the energy from excess nuclear power production at night and release it during periods of peak electricity demand during the day. Without the nukes, says Hadwin, the pumped-storage facility could be used in reverse — to store excess solar power generated during the day and release it in the early evening.
Over the next 14 years other storage options will become more viable. The cost of battery storage, used today mainly to make brief, fine-tuned adjustments to grid voltage and frequency, could fall low enough that massive banks of batteries could be used to store excess solar production for several hours until it is needed in the evening.
Also, electric vehicles will become a large part of the automobile fleet within another 14 years, Hadwin says. Car batteries will suck up solar-generated electric power during the day and feed them back into the grid in the evening.
If nuclear power were truly such a bargain, Hadwin adds, Virginians should ask themselves why electric utilities are shutting them down in states where they aren’t guaranteed a return on investment. Nuclear power often can’t compete in a deregulated market. Five nuclear units have shut down since 2013, according to Beyond Nuclear, and of the 100 licensed to operate today, 17 have announced plans, absent state bailouts, to let their licenses expire or otherwise close.
“Would Dominion refurbish [its] units if the risks and costs of the projects weren’t being borne by the ratepayers?” asks Hadwin. “The merchant generators are saying no.”
“There are lots of options, and lots of opinions, and lots of alternatives. We’ll probably end up doing a mix of things,” he says. “The future grid is all about diversity and flexibility. …. These things need to be analyzed, and they need to discussed” instead of simply assuming that one solution — re-licensing the nukes — is the only way to go.
How’s that working out?
Hadwin, the Sierra Club, and various activist groups in Virginia are calling for a radical overhaul of Virginia’s energy strategy in the pursuit of a low-carbon future. The common elements include: (1) eliminating coal, (2) phasing out nuclear power, (3) capping natural gas capacity and blocking new pipelines that would import more gas, and (4) making an all-out commitment to renewable energy and energy efficiency. Until the economics of off-shore wind can be shown to be viable, in Virginia renewable energy effectively means solar energy.
One country in the world has pursued an energy policy very similar to this. Germany has committed to the massive development of solar and offshore wind even as, after the Fukushima nuclear disaster, it began phasing out its nuclear power stations.
A New York Times headline from late last year sums up the results: “Germany’s Shift to Green Power Stalls, Despite Huge Investments.” Since 2000, Germany has spent about $222 billion on renewable energy subsidies with the aim of generating 27% of its electricity with renewables by 2020 and 45% by 2030. However, the decision to mothball its 17 nuclear power stations by 2020 forced German utilities to fall back on coal-fired power, with the result that the country has seen no CO2 reductions since 2010.
Meanwhile, energiewende, the term used for the transformation of Germany’s energy economy, has radically altered electricity flows, creating enormous stresses on the power grid. Both Germany’s solar panels and its offshore wind farms are subject to weather-related disruptions for long periods. The Energy Transition blog describes how these disruptions create transmission-line bottlenecks that Germany has addressed only in part by rerouting electricity through the grids of neighboring countries and throwing their grid strategies into turmoil.
The German wholesale market design does not take into account the existence of … physical bottlenecks. A number of highly energy intensive industries are located in the South of Germany. And as nuclear plants are phased out in the Southern states, more and more electricity needs to be transferred from the North to the South of Germany.
Congestion-related transmission costs as high as €400 million a year have contributed to higher energy costs. Now, according to Clean Energy Wire, Germany’s electricity prices are among the highest in Europe — 29.42 eurocents per kilowatt hour. At current exchange rates, that translates into about 36 cents per kilowatt hour in dollars. That compares to about 10.5 cents per kilowatt hour in Virginia.
Is it different this time?
But Virginia is not Germany. Geography, climate, industries and settlement patterns differ.
Germany embarked upon its energiewende a decade ago, installing an older generation of technology. As Dominion deploys solar on a large scale, solar panels will be more efficient and lower cost than those that Germany deployed a decade ago. Another advantage is that Virginia is part of PJM Interconnection, arguably the forward-looking and efficient regional transmission organization in the country, if not the world, which means it can offset electricity shortfalls by importing power from wind, gas and solar merchants in a 14-state region with a roughly 20% electricity surplus. Finally, in theory, Virginia could learn from the successes and failures of Germany and other nations and states, such as California, that have pursued aggressive green agendas.
On the other hand, there is little prospect of Virginia developing a viable offshore wind capacity for a decade at the earliest. Wind is a natural complement to solar because it can deliver electricity even when the sun isn’t shining. If Virginia depended exclusively upon solar for its renewable power, it would be highly vulnerable to prolonged periods of cloudy weather and especially to snow storms that cover solar panels. As seen in the chart below, published in Dominion’s 2018 IRP, output of its Virginia and North Carolina solar facilities fell almost to zero when blanketed by a June 2018 snow storm. Solar production took two days to recover fully.
Such capacity crashes are not a problem when solar accounts for one or two percent of the utility’s power supply. It could be a very big problem if solar accounts for 30%, which is the maximum renewable output that PJM says it can handle, or 45%, which is the renewable goal that Germany has set.
The road ahead
“Nuclear power is the workhorse of our energy fleet and it is here to stay,” says David Botkins, spokesman for Dominion Energy. “Nothing provides … reliable, 24×7, carbon-free, low-cost energy like nuclear. It employs hundreds of people, is the largest single tax-payer in the communities where they are located, and helps educate students in STEM education through the outreach efforts of our visitor centers team. Relicensure is a no-brainer. “
“Our energy system is undergoing a profound change,” responds Hadwin. “The rapid decline in the cost of renewables and other new technologies is undermining conventional methods of generation. We are also adopting smaller, more decentralized sources of generation. The old concept of massive baseload units used to follow changes in demand is being replaced by many flexible methods of having demand adjusted to match changes in supply. … The wisdom of extending the license is not a foregone conclusion and should be fully studied before ratepayers are burdened with the cost.”
In a white paper, “The Uncertain Future of Nuclear Power in the Southeast,” David Hoppock and Sarah Adair with Duke University’s Nicholas Institute for Environmental Policy Solutions note that re-licensing decisions “come at a time of significant uncertainty regarding future electricity demand and the pace and scale of technological change and a time of increasing natural gas dependence.”
The time to start thinking about these issues is now, the authors say. State utility commissions can establish proceedings that request preliminary cost estimates for the operation of older nuclear units as well as information about technical and licensing challenges. State energy plans can express policy preferences on whether or not aging nuclear facilities are safe and economical to operate, how their zero-carbon emissions fit into long-range environmental goals, and what capacity would replace them if they were retired.
Whether nukes are part of the Old Dominion’s energy future or not, the stakes are huge. If Virginians wait until options have narrowed a decade from now, they very well may wish they started the debate earlier.
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