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

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

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

Agenda

  • Background
  • Approach Assumptions Methodology
  • Results
  • Next Steps
  • SRM-SECY-12-0110, Consideration of Economic Consequences in the NRCs Regulatory Framework

Background

  • 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 IPM- Integrated Planning Model PROMOD - Production Cost Model 8

Assumptions- Key Data Sources Key Data Sources

  • U.S. Energy Information Administration (EIA) Data Source Characteristics Annual Energy Outlook 2019 Reference Case
  • National in scope
  • North American Electric Reliability Corporation (NERC) Electricity Supply and Demand Projections,
  • Pricing information covers all lower 48 December 2018 states
  • Data and assumptions are documented in Sector Modeling Platform v6 sufficient detail to allow for national level modeling with regional/power pool level
  • National Renewable Energy Laboratory (NREL) detail Annual Technology Baseline (ATB), 2018
  • Publicly available
  • EIA Form 860M, February 2019 9

Assumptions -

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

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 Source: Derived from FERC Order No. 1000 Transmission Planning Regions. (SCRTP), and Southeastern Regional Transmission Planning (SERTP)

Assumptions - 8. Western Electricity Coordinating Council (WECC) - California Independent System Regional Definitions Operator (CAISO), ColumbiaGrid, Northern Tier Transmission Group (NTTG) and WestConnect 11

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

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 -

Natural Gas Price Forecast 13

Assumptions - Energy and Environmental Policies RGGI Key Energy and Environmental Policies Modeled ZECs CSAPR

  • Renewable Portfolio Standards (RPS) and tax credits for new solar and wind units
  • Clean energy legislation that provides price support in the Energy and form of Zero Emission Credits (ZECs) for nuclear units that RPS Environmental MATS are at risk of early closure because of declining Policies 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 14

Source: U.S. Energy Information Administration, Form 860M, February 2019.

Assumptions - Recent and Firm Generation Builds/Retirements 15

Economic Builds Economic Retirements 80 60 Capacity (GW) 40 20 0

-20

-40 Source: U.S. Energy Information Administration, Form 860M, February 2019.

120 Economic Builds Economic Retirements Assumptions - Economic 100 80 Generation Capacity (GW) 60 40 20 0

-20

-40 Builds/Retirements

-60 16

Assumptions -

Technology Cost and Performance 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.

17

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 Annual Replacement Energy Costs ($/MWh)

Observations 2020 2021 2023 2025 2030 Most Least Most Least Most Least Most Least Most Least

  • Replacement energy costs in Region Impact Impact Impact Impact Impact Impact Impact Impact Impact Impact ERCOT and ISO-NE spike in 2030 ERCOT 1.01 1.01 0.85 0.85 1.48 1.48 1.22 1.22 2.8 2.8 because Comanche Peak Nuclear Power Plant Unit 1 and Seabrook ISO-NE 2.36 1.68 3.00 2.13 2.96 2.13 3.42 2.38 6.12 4.35 Station are assumed to not be MISO 0.13 0.01 0.23 0.03 0.30 0.03 0.37 0.09 0.17 0.00 dispatched NYISO 2.04 0.92 2.14 0.98 1.73 0.72 2.19 0.80 3.77 0.00
  • The operating license for Nine PJM 1.02 0.08 0.67 0.09 0.74 0.19 0.79 0.16 1.16 0.17 Mile Point Nuclear Station Unit 1 is modeled to expire in 2030. The Southeast 0.18 0.11 0.18 0.07 0.17 0.13 0.16 0.10 0.26 0.15 impact on the NYISO annual SPP 0.92 0.46 0.86 0.47 0.00 0.00 0.00 0.00 0.00 0.00 replacement energy cost is less pronounced because it is a WECC 1.12 0.68 1.15 0.91 1.07 0.00 0.94 0.00 1.76 0.00 relatively smaller unit Note: $0/MWh costs implies that there is no nuclear plant dispatched in the region 23
  • 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 Appendices
  • 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
  • NRC Contacts Docket questions: Dawn Forder, Provide 301-415-3407, Dawn.Forder@nrc.gov Comments Technical questions: Pamela Noto, 301-415-6795, Pamela.Noto@nrc.gov 27

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

  • Scan QR code for NRC Public Meeting Feedback How Did We Do? 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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