ML20322A003

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Category 3 Public Meeting NRC Presentation Replacement Energy Cost Estimates for Nuclear Power Plants: 2020-2030
ML20322A003
Person / Time
Issue date: 11/18/2020
From: Pamela Noto
NRC/NMSS/DREFS/RASB
To:
Noto, Pamela
References
Download: ML20322A003 (29)
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Text

Replacement Energy Cost Estimates for Nuclear Power Plants: 2020-2030 Public Meeting November 18, 2020 1

Purpose

  • Present updated information on replacement energy forecasts for short-and long-term shutdowns of U.S. nuclear electricity generating units
  • Facilitate public comment on the draft NUREG for forecasting replacement energy costs 2

Logistics and Ground Rules Category 3 public meeting Questions are encouraged Please identify yourself and the organization you represent (if any) before speaking 3

Agenda

  • Background
  • Approach Assumptions Methodology
  • Results
  • Next Steps

=

Background===

  • SRM-SECY-12-0110, Consideration of Economic Consequences in the NRCs Regulatory Framework
  • NUREG/BR-0058, Regulatory Analysis Guidelines of the U.S. Nuclear Regulatory Commission 5

Background (cont.)

  • Replacement energy cost estimates are used in regulatory analyses to quantify the costs associated with reactor outages; these analyses support NRC's regulatory decisions
  • Estimates for long-term and short-term, plant-specific replacement energy costs are provided in:

NUREG/CR-6080, dated October 1993 NUREG/CR-4012, dated September 1997

  • Changes that affected replacement energy costs since the 1990s include:

Deregulation of electricity generation markets Federal Energy Regulatory Commission (FERC) rules impacting electricity transmission costs Natural gas and renewable energy pricing 6

Approach

Approach 8

IPM-Integrated Planning Model PROMOD - Production Cost Model

Assumptions-Key Data Sources 9

Key Data Sources

  • U.S. Energy Information Administration (EIA)

Annual Energy Outlook 2019 Reference Case

  • North American Electric Reliability Corporation (NERC) Electricity Supply and Demand Projections, December 2018
  • National Renewable Energy Laboratory (NREL)

Annual Technology Baseline (ATB), 2018

  • EIA Form 860M, February 2019 Data Source Characteristics
  • National in scope
  • Pricing information covers all lower 48 states
  • Data and assumptions are documented in sufficient detail to allow for national level modeling with regional/power pool level detail
  • Publicly available

Assumptions -

Key Parameters for Determining Replacement Energy Costs Regional Definitions Electricity Demand Natural Gas Prices Energy and Environmental Policies Recent and Firm Generation Builds/Retirements Technology Cost and Performance 10

Assumptions -

Regional Definitions 11 Map of Model Regions Definitions The U.S. electricity markets were grouped into eight regions based on existing planning regions:

1.

Electric Reliability Council of Texas (ERCOT) 2.

ISO New England (ISO-NE) 3.

Midcontinent Independent System Operator (MISO) 4.

New York Independent System Operator (NYISO) 5.

PJM Interconnection (PJM) 6.

Southwest Power Pool (SPP) 7.

Southeast - Florida Reliability Coordinating Council (FRCC), South Carolina Regional Transmission Planning (SCRTP), and Southeastern Regional Transmission Planning (SERTP) 8.

Western Electricity Coordinating Council (WECC) - California Independent System Operator (CAISO), ColumbiaGrid, Northern Tier Transmission Group (NTTG) and WestConnect Source: Derived from FERC Order No. 1000 Transmission Planning Regions.

Assumptions - Peak and Energy Demand 12 Source: NERC, Electricity Supply and Demand (ES&D), December 2018 CAGR - compound annual growth rate

Assumptions -

Natural Gas Price Forecast 13 Henry Hub Gas Price Forecast and Projected Gas Share Notes

  • Natural gas surpassed coal in 2016 as the fuel most used to generate electricity in the U.S.
  • EIA projects natural gas share to grow to approximately 40% by 2030 and remain between 39%

and 40% through 2050

Assumptions - Energy and Environmental Policies 14 Energy and Environmental Policies RPS ZECs RGGI CSAPR MATS Key Energy and Environmental Policies Modeled

  • Renewable Portfolio Standards (RPS) and tax credits for new solar and wind units
  • Clean energy legislation that provides price support in the form of Zero Emission Credits (ZECs) for nuclear units that are at risk of early closure because of declining profitability, including programs in Illinois, New York, and New Jersey
  • Environmental regulations approved and enacted Regional Greenhouse Gas Initiative (RGGI), Cross-State Air Pollution Rule (CSAPR), and Mercury and Air Toxic Rule (MATS)

Policies under discussion but not enacted were not modeled

Assumptions - Recent and Firm Generation Builds/Retirements 15 Source: U.S. Energy Information Administration, Form 860M, February 2019.

Assumptions - Economic Generation Builds/Retirements 16 Source: U.S. Energy Information Administration, Form 860M, February 2019.

-40

-20 0

20 40 60 80 Capacity (GW)

Economic Builds Economic Retirements

-60

-40

-20 0

20 40 60 80 100 120 Capacity (GW)

Economic Builds Economic Retirements

Assumptions -

Technology Cost and Performance 17 Source: U.S. Department of Energy (DOE) Energy Information Administration (EIA) Annual Energy Outlook (AEO) 2019 Reference Case and National Renewable Energy Laboratory (NREL), Annual Technology Baseline (ATB), 2018, 2018.

Methodology - Power Sector Models 18

Methodology - Approach to Selecting Nuclear Outage Units for Alternative Cases

  • Replacement energy costs were calculated by region
  • For regions with multiple nuclear units the replacement energy cost was calculated as a range between the cost of the unit with the highest impact (Most Critical Unit) and the unit with the lowest impact (Least Critical Unit)
  • Units were selected as most or least critical based on:

Location relative to congestion in the region Size of the generating unit Proximity to load centers 19

Methodology - Cost Calculations

  • Calculated replacement energy cost for a region is the difference in annual average energy price between the Reference Case and each Alternative case
  • Accounted for the effect of seasonal variations in energy prices by providing seasonal replacement energy cost. Seasons were defined as:

Winter: December (of prior year), January, February Spring: March, April, May Summer: June, July, August Fall: September, October, November

  • Seasonal values were calculated as the change in average energy price between the Reference Case and each Alternative Case for the months within the season 20

Limitations of Model and Methodology

  • These projections are not predictions of what will happen, but rather modeled projections of what may happen
  • Energy market projections are subject to uncertainty
  • Assumes if the cost of generation is greater than the revenue produced the unit is not dispatched
  • The NUREG does not consider:

Spikes in prices and volatility as a result of unexpected outages or errors in forecasts Extreme events Impact of future regulations Effect of economic and other disruptions due to events such as pandemics

Results 22

Annual Market Price Impact and Replacement Energy Costs 23 Region Annual Replacement Energy Costs ($/MWh) 2020 2021 2023 2025 2030 Most Impact Least Impact Most Impact Least Impact Most Impact Least Impact Most Impact Least Impact Most Impact Least Impact ERCOT 1.01 1.01 0.85 0.85 1.48 1.48 1.22 1.22 2.8 2.8 ISO-NE 2.36 1.68 3.00 2.13 2.96 2.13 3.42 2.38 6.12 4.35 MISO 0.13 0.01 0.23 0.03 0.30 0.03 0.37 0.09 0.17 0.00 NYISO 2.04 0.92 2.14 0.98 1.73 0.72 2.19 0.80 3.77 0.00 PJM 1.02 0.08 0.67 0.09 0.74 0.19 0.79 0.16 1.16 0.17 Southeast 0.18 0.11 0.18 0.07 0.17 0.13 0.16 0.10 0.26 0.15 SPP 0.92 0.46 0.86 0.47 0.00 0.00 0.00 0.00 0.00 0.00 WECC 1.12 0.68 1.15 0.91 1.07 0.00 0.94 0.00 1.76 0.00 Observations

  • Replacement energy costs in ERCOT and ISO-NE spike in 2030 because Comanche Peak Nuclear Power Plant Unit 1 and Seabrook Station are assumed to not be dispatched
  • The operating license for Nine Mile Point Nuclear Station Unit 1 is modeled to expire in 2030. The impact on the NYISO annual replacement energy cost is less pronounced because it is a relatively smaller unit Note: $0/MWh costs implies that there is no nuclear plant dispatched in the region

Appendices

  • Appendix A - Overview of IPM
  • Appendix B - Overview of PROMOD
  • Appendix C - Selection of nuclear power plants for alternative cases (New England)
  • Appendix D - Existing and committed nuclear units
  • Appendix E - Determination of regional definitions for replacement cost calculations
  • Appendix F - Summary of assumptions
  • Appendix G - Detailed replacement energy costs:

2020-2030

  • Appendix H - Studies and sources of data reviewed for assumptions development 24

QUESTIONS 25

Next Steps

  • Consider feedback from this public meeting
  • Develop and publish the final NUREG with Commission approval
  • Develop an appendix to NUREG/BR-0058, Rev. 5 to provide guidance for applying the replacement energy cost estimates
  • Issue the appendix for public comment/public meeting
  • Consider public comments and finalize the appendix
  • Submit final appendix to Commission for review and approval 26

How to Provide Comments

  • NRC Contacts Docket questions: Dawn Forder, 301-415-3407, Dawn.Forder@nrc.gov Technical questions: Pamela Noto, 301-415-6795, Pamela.Noto@nrc.gov 27

How Did We Do?

There are several ways you can provide your feedback on this meeting:

  • Scan QR code for NRC Public Meeting Feedback Form Meeting ID # 20201293
  • Go to the Public Meeting Schedule and click on the Meeting Feedback link.

References

  • DOE EIA Annual Energy Outlook (AEO) 2019 Reference Case, 2019.
  • EIA, 2019. Form 860M.
  • EPA, 2019. Power Sector Modeling Platform v6.
  • FERC, 2012. Order No. 1000 Transmission Planning and Cost Allocation by Transmission Owning and Operating Utilities.
  • NERC, 2018. Electricity Supply and Demand (ES&D).
  • NRC, 1993. NUREG/CR-6080, Replacement Energy, Capacity, and Reliability Costs for Permanent Nuclear Reactor Shutdowns. Available at ML20076F500.
  • NRC, 1997. NUREG/CR-4012, Replacement Energy Costs for Nuclear Electricity-Generating Units in the United States: 1997-2001. Available at ML20073J435.
  • NRC, 2013. SRM-SECY-12-0110, Consideration of Economic Consequences within the U.S. Nuclear Regulatory Commissions Regulatory Framework. Available at ML13079A055.
  • NRC, 2014. SECY-14-0002, Plan for Updating the U.S. Nuclear Regulatory Commissions Cost-Benefit Guidance. Available at ML13274A495 (package)
  • NRC, 2020. NUREG/BR-0058, Regulatory Analysis Guidelines of the U.S. NRC.

Available at ML19261A277 (package).

  • NRC, 2020. NUREG-2242, Replacement Energy Costs, predecisional draft for comment. Available at ML20304A556.
  • NREL, 2018. Annual Technology Baseline (ATB), 2018.
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