ML22175A203
| ML22175A203 | |
| Person / Time | |
|---|---|
| Issue date: | 06/30/2022 |
| From: | Pamela Noto Office of Nuclear Material Safety and Safeguards |
| To: | |
| Malone, Tina | |
| References | |
| NUREG/BR-0058 DFC R5 | |
| Download: ML22175A203 (15) | |
Text
1 APPENDIX L 2 REPLACEMENT ENERGY COSTS
1 TABLE OF CONTENTS 2 LIST OF TABLES .................................................................................................................... L-iv 3 ABBREVIATIONS AND ACRONYMS ..................................................................................... L-v 4 L.1 PURPOSE ...................................................................................................................... L-1 5 L.2 OVERVIEW OF ESTIMATES ........................................................................................ L-2 6 L.3 APPLICATION OF ESTIMATES ................................................................................... L-3 7 L.3.1 Industry Implementation and Operation Costs ....................................................L-3 8 L.3.2 Averted Replacement Energy Costs for Reducing the Likelihood of a 9 Severe Accident .................................................................................................L-4 10 L.4 REFERENCES ............................................................................................................... L-9 11 L-iii NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 LIST OF TABLES 2
3 Table L-1 Projected Stream of Replacement Energy Costs for a Long-Term Shutdown........ L-6 4 Table L-2 Integrated Value Associated with the Loss in Year 2023 of a Representative 5 Unit that Could Occur in Any Year of a Units Remaining Operating Life ...............L-7 6
L-iv NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 ABBREVIATIONS AND ACRONYMS 2
3 ABB ASEA Brown Boveri 4 MWh megawatt-hour 5 NRC U.S. Nuclear Regulatory Commission 6 OMB Office of Management and Budget 7 PJM PJM Interconnection 8 REC replacement energy costs 9
L-v NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 L.1 PURPOSE 2
3 This appendix provides guidance on how to apply the information in NUREG-2242, 4 Replacement Energy Cost Estimates for Nuclear Power Plants: 2020-2030, issued 5 June 2021, to estimate the replacement energy costs associated with regulatory actions that 6 may result in the temporary or permanent loss of electrical power generation from a nuclear 7 reactor. The term replacement energy cost refers to the change in wholesale power prices 8 that would result when a reactor unit is taken offline. As discussed below, the two replacement 9 energy cost attributes to be considered in a cost-benefit analysis are (1) the shutdown costs to 10 install or implement mandated safety changes and (2) the present value of averted onsite costs 11 due to changes in reactor accident frequencies. This appendix details methods and provides 12 examples of how to quantify these two attributes using the information published in 13 NUREG-2242.
L-1 NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 L.2 OVERVIEW OF ESTIMATES 2
3 Replacement energy costs were estimated for the U.S. wholesale electricity market regions over 4 the 2020 to 2030 period and reported in NUREG-2242. These cost estimates were developed 5 using two different proprietary software packages: (1) ASEA Brown Boveris (ABBs) 6 PROMOD, 1 a production cost model that simulates electricity market operations, and (2) ICFs 7 Integrated Planning Model for North America, which simulates long-term capacity expansion 8 investment decisions for the wholesale electricity market. Together, these models forecast 9 future market conditions and simulate the dispatching of generating units until the regional 10 power demand is met.
11 12 As described in NUREG-2242, U.S. electricity markets were divided into eight regions based on 13 U.S. Federal Energy Regulatory Commission planning regions. To estimate the replacement 14 energy costs for each region, a reference case in which all operational nuclear power plants are 15 available was compared to an alternative case, in which a nuclear unit in that region is taken 16 offline. For the alternative case, the loss of electrical power from an operating nuclear unit 17 results in the need for replacement power from another generating unit to meet energy demand.
18 This demand is met by dispatching a generating unit in merit order, which may cause a shift in 19 the market clearing price. 2 This change in market clearing pricethe difference between 20 reference and alternative casesrepresents the estimated replacement energy cost in dollars 21 per megawatt-hour ($/MWh) for that region.
22 23 NUREG-2242 provides estimates that capture potential seasonal variations in replacement 24 energy costs within a simulation year along with annual variations in costs in future years due to 25 a number of market forecast assumptions. 3 To account for the range of possible cost estimates, 26 most impact and least impact units were also chosen for each region based on criteria such 27 as size of the nuclear power plant, proximity to load centers, and location relative to congestion.
28 Tables 3-1 through 3-5 of NUREG-2242 summarize the annual and seasonal replacement 29 energy costs for each region; Appendix G, Detailed Replacement Energy Costs: 2020-2030, 30 tabulates detailed results for each year from 2020 to 2030 for each region. Appendix D, 31 Existing and Committed Nuclear Units, to NUREG-2242 lists the existing and committed 32 nuclear generation units, their respective capacities, planned retirements, and model regions, all 33 of this information is necessary for application of the replacement energy cost estimates. All 34 replacement energy cost estimates in NUREG-2242 are presented in nominal dollars (NRC, 35 2021).
1 ABB divested this software to Hitachi ABB Power Grids in July 2020. Subsequently, this entity changed its name to Hitachi Energy in October 2021.
2 Market clearing price refers to the price at which generation supply equals demand for the forecasted period and region. In a deregulated electricity market, as either supply or demand changes, generating units are dispatched in economic merit order, such that the least expensive units are chosen to meet energy demand and the wholesale energy price to be paid to all resources meeting demand is set by the most expensive unit dispatched. Thus, if a higher priced generator is dispatched to meet energy demand, the market clearing price increases.
3 The modeling input assumptions are from publicly available data and reports from organizations such as the Energy Information Association, the U.S. Environmental Protection Agency, and the North American Electric Reliability Corporation. NUREG-2242 discusses these assumptions and data sources.
L-2 NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 L.3 APPLICATION OF ESTIMATES 2
3 In addition to the replacement energy cost information provided in NUREG-2242, the analyst will 4 predict the duration of the outage and the number of units affected by a regulatory action. This 5 information will vary depending on the purpose and expected outcomes of the regulation being 6 analyzed. In general, the analyst should assess the impact of long-term or permanent 7 shutdowns using the annual replacement energy costs from NUREG-2242, Appendix G. For 8 outages that are expected to be of short duration and for which the timing of a planned outage 9 can be predicted, the analyst should use seasonal replacement energy costs, as they are more 10 reflective of the season during which the unit is expected to be out of service.
11 12 The replacement energy cost estimates in NUREG-2242 are based on a snapshot of the current 13 market conditions and forecasts available at the time the simulations were run. It is expected 14 that the analyst will use the most current licensing and operating information available. This 15 includes the remaining term of plant licenses, unit capacity factors, and plant-specific accident 16 frequency estimates.
17 18 L.3.1 Industry Implementation and Operation Costs 19 20 Implementation of a proposed regulatory action may result in a short-term disruption while the 21 nuclear plant makes the required safety enhancement. During such times, consumers purchase 22 electricity from the next available source to replace the energy that the nuclear plant would 23 normally provide, at a marginally higher production rate cost for the region. Similarly, routine 24 and recurring activities required by the proposed action may necessitate periodic power outages 25 that would result in recurring short-term replacement energy costs. The overall increased cost 26 to consumers in the region can be computed as the product of the increase in the annual or 27 seasonal replacement energy costs (in $/MWh) from NUREG-2242, Appendix G, the projected 28 energy generation at the time of the outage in the region where the affected unit is located, and 29 the estimated duration of the outage. Thus, the replacement energy costs for a planned 30 shutdown of a single nuclear power plant is represented by the following equation:
31 x
Equation 1 x
32 33 where regional energy generation may be obtained from a power regions load forecasts and 34 replacement energy cost information may be obtained from NUREG-2242, Appendix G. Unit 35 outage duration is estimated based on the complexity of the plant modification and industry 36 data.
37 38 Example:
39 40 Estimate the range of replacement energy costs for a planned 1-day extension of a planned 41 nuclear power unit outage occurring on April 15, 2023. The unit in this example is located in the 42 PJM Interconnection (PJM) power region. Table G-5 of NUREG-2242 shows that the 43 replacement energy cost estimates for PJM in spring 2023 are $0.55 per MWh and $0.12 per 44 MWh for the most impact and least impact units, respectively. The April 2023 PJM monthly net 45 energy forecast is 55,864 megawatts (PJM, 2020, Table E-2). The replacement energy costs 46 are calculated as follows:
47 NUREG/BR-0058, Rev. 5, App. L, Rev. 0 L-3
1 Forecast PJM April 15, 2023, daily load:
2 3 55,864 x 24 = 1,340,736 4
5 High daily replacement energy cost estimate:
6 7 1,340,736 x 0.55 = $737,405 8
9 Low daily replacement energy cost estimate:
10 11 1,340,736 x 0.12 = $160,888 12 13 L.3.2 Averted Replacement Energy Costs for Reducing the Likelihood of a 14 Severe Accident 15 16 If a proposed regulatory action is expected to reduce the likelihood of a severe accident, 17 long-term replacement energy costs should be calculated as part of the onsite property costs 18 attribute. 4 These risk-based costs reflect the expected loss due to an accident, the probability 19 that such an accident could occur at any time over the remaining facility life, and the effects of 20 discounting those potential future losses to the present value.
21 22 The averted replacement energy cost associated with a proposed regulatory action is calculated 23 as the expected change in the probability of a severe accident due to a regulatory action 24 multiplied by the integrated value of the loss of a representative unit in any year of a reactors 25 remaining operating life:
26
= x x Equation 2 27 28 where:
29 30 = total present value of expected averted replacement energy costs from a 31 regulatory action 32 33 = number of units affected by a regulatory action 34 35 = estimated change in accident frequency (events/unit-year) 36 37 = average integrated value associated with the loss of a representative unit that 38 could occur in any year of a units remaining operating life 39 40 Thus, when the quantity is multiplied by the annual accident frequency , the result is the 41 expected loss over the units life, discounted to the present value. Calculating requires that 42 unit-specific lifetime costs for potential permanent shutdowns are calculated for each year 43 following the implementation of a regulation. The stream of potential future costs following a 4 Regulatory actions that the analyst may encounter include addressing severe accident mitigation alternatives under the National Environmental Policy Act.
L-4 NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 hypothetical permanent shutdown is calculated starting at the year in which the regulation is 2 assumed to be implemented until the end of the units licensing term.
3 4 For each accident year (in which a permanent shutdown could occur), a stream of future 5 replacement energy costs is calculated. Then the replacement energy cost estimates (in 6 $/MWh) from NUREG-2242, Appendix G, are multiplied by the projected regional generation (in 7 MWh). Thus, for any future year, , following the loss of a unit, the annual replacement energy 8 cost (REC) is represented by Equation 3:
9
= x x Equation 3 10 11 where the annual generation term includes any projected energy growth.
12 13 The discount factor (DF) is computed using Equation 4:
14 1
= Equation 4 (1 + )
15 16 where:
17 18 = discount rate (e.g., 7 percent) 19 = number of years that the cost is incurred 20 21 These costs are then summed over the units remaining licensing term to estimate the expected 22 replacement energy costs that would be incurred if an accident happened in a given year. This 23 same process is repeated for each successive accident year in which an accident could 24 potentially occur, until the end of the units licensing term. Summing up the shutdown 25 replacement energy costs for each future year of operation provides the integrated replacement 26 energy costs, which are then divided by the remaining operation years under the licensing term 27 to provide the average integrated replacement energy costs, , for Equation 2.
28 29 This process represents a double integration of cost streams because (1) loss of a unit in any 30 given year would result in replacement energy costs for all remaining years of the reactors 31 licensing term, and (2) a reactor unit loss could occur in any remaining year of planned 32 operation.
33 34 Example:
35 36 The following example illustrates how replacement energy costs would be computed and 37 applied for a proposed future regulatory action beginning in 2023 that reduces the likelihood of a 38 permanent shutdown of a nuclear power unit. All costs are discounted using a discount rate of 39 7 percent (OMB, 2003). The example projects costs are listed to 2045, the last year of the 40 assumed units licensing term. The estimates in NUREG-2242 are computed until 2030, so the 41 replacement energy costs for those years after 2030 are assumed to be the same as those for 42 2030.
43 44 PJM forecasts the 2023 annual generation for the PJM region to be 788,453,000 gigawatt-hours 45 and projects an average net energy growth of 0.3 percent over the next 15 years (PJM, 2020).
46 From NUREG-2242, Table G-5, the annual replacement energy costs in 2023 for the PJM 47 model region are 0.74 and 0.19 for the most impact and least impact cases, respectively. For NUREG/BR-0058, Rev. 5, App. L, Rev. 0 L-5
1 the most impact case, the annual replacement energy cost for the affected unit in 2023 is 2 calculated as follows:
3 4 788,453,000 x $0.74 / = $583,455,220 5
6 This estimate represents a single year of replacement energy costs. To calculate the 7 replacement energy costs for a unit in permanent or long-term shutdown, this calculation is 8 repeated for each future year of the units expected remaining operating life and summed as 9 shown in Table L-1. 5 10 11 Table L-1 Projected Stream of Replacement Energy Costs for a Long-Term Shutdown 12 Annual PJM REC Regional Annual RECa Energy ($/MWh) (2023 dollars)
Discount Year Growth Factor Most Least (0.3%/year) Most Impact Least Impact Impact Impact 2023 1 1.000 0.74 0.19 $583,455,220 $149,806,070 2024 0.934579 1.003 0.77 0.17 $569,093,585 $125,644,038 2025 0.873439 1.006 0.79 0.16 $547,314,825 $110,848,572 2026 0.816298 1.009 0.87 0.16 $564,997,503 $103,907,587 2027 0.762895 1.012 0.94 0.16 $572,232,190 $97,401,224 2028 0.712986 1.015 1.01 0.16 $576,345,571 $91,302,269 2029 0.666342 1.018 1.09 0.17 $583,049,249 $90,934,286 2030 0.622750 1.021 1.16 0.17 $581,639,492 $85,240,270 2031 0.582009 1.024 1.16 0.17 $545,219,075 $79,902,796 2032 0.543934 1.027 1.16 0.17 $511,079,189 $74,899,536 2033 0.508349 1.030 1.16 0.17 $479,077,034 $70,209,565 2034 0.475093 1.033 1.16 0.17 $449,078,753 $65,813,266 2035 0.444012 1.037 1.16 0.17 $420,958,868 $61,692,248 2036 0.414964 1.040 1.16 0.17 $394,599,762 $57,829,275 2037 0.387817 1.043 1.16 0.17 $369,891,178 $54,208,190 2038 0.362446 1.046 1.16 0.17 $346,729,768 $50,813,845 2039 0.338735 1.049 1.16 0.17 $325,018,652 $47,632,044 2040 0.316574 1.052 1.16 0.17 $304,667,017 $44,649,477 2041 0.295864 1.055 1.16 0.17 $285,589,736 $41,853,668 2042 0.276508 1.059 1.16 0.17 $267,707,014 $39,232,925 2043 0.258419 1.062 1.16 0.17 $250,944,052 $36,776,283 2044 0.241513 1.065 1.16 0.17 $235,230,733 $34,473,469 2045 0.225713 1.068 1.16 0.17 $220,501,332 $32,314,850 Total $9,984,419,799 $1,647,385,755 13 a This value is the product of the affected unit annual replacement energy cost, the discount factor, the energy 14 growth, the annual REC rate, and the annual regional generation.
15 5
The analyst may truncate this analysis to a period less than the remaining license term if there is a technical basis for forecasting that the regional electricity production would recover in a shorter period of time.
L-6 NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 From Table L-1, the total present value of replacement energy costs for a permanent loss of the 2 example unit for a 23-year license term starting in 2023 ranges from approximately $1.65 billion 3 to $9.98 billion based on a 7-percent discount rate. Because an accident could occur in any 4 future year of unit operation, this calculation is performed on an annual basis through the final 5 year of licensed operation. In effect, this cost estimate represents a double integration of cost 6 streams because (1) a reactor loss in any given year would lead to replacement energy costs 7 for all remaining years of planned operation, and (2) a reactor loss could occur with some small 8 probability in any year of operation. Table L-2 shows the results from performing this estimate 9 over the remaining operating life of the example unit (e.g., 2023-2045).
10 11 Table L-2 Integrated Value Associated with the Loss in Year 2023 of a Representative 12 Unit that Could Occur in Any Year of a Units Remaining Operating Life 13 Cumulative Replacement Years of Energy Costs Accident Service (2023 million dollars)
Year Remaining Most Impact Least Impact 2023 23 9,984 1,647 2024 22 9,401 1,498 2025 21 8,832 1,372 2026 20 8,285 1,261 2027 19 7,720 1,157 2028 18 7,147 1,060 2029 17 6,571 968 2030 16 5,988 878 2031 15 5,406 792 2032 14 4,861 712 2033 13 4,350 637 2034 12 3,871 567 2035 11 3,422 501 2036 10 3,001 440 2037 9 2,606 382 2038 8 2,236 328 2039 7 1,890 277 2040 6 1,565 229 2041 5 1,260 185 2042 4 974 143 2043 3 707 104 2044 2 456 67 2045 1 221 32 Total 100,753 15,238 14 NUREG/BR-0058, Rev. 5, App. L, Rev. 0 L-7
1 The cumulative replacement energy costs are $100.8 billion and $15.2 billion in 2 2023 dollar-years 6 for the most impact and least impact cases, respectively. These costs 3 represent the range of expected values of in Equation 2 for the permanent shutdown of a 4 nuclear power reactor unit licensed to operate until 2045 in the PJM region. This value is 5 multiplied by F (probability/reactor-year) to determine the value of averted costs of avoiding a 6 reactor accident for this single reactor unit. For units that are not analyzed in NUREG-2242, 7 Table 2-1, the arithmetic average of the most impact and least impact estimates should be used 8 to compute the expected averted replacement energy costs. Thus, for this example, the 9 average averted replacement energy cost is calculated, in billions of dollars (B), as follows:
10
$100.8 + $15.2 11 = $58.0 2
12 13 If a future regulatory action affecting the example unit is introduced in 2023 and is estimated to 14 result in a decrease in the probability of a reactor unit loss of 1x10-6 per reactor-year, the 15 present value of the average averted replacement energy costs for this reactor unit from 16 Equation 2 is calculated as follows:
17 18 = (1 x 106 ) x ($58.0 x 109 ) = $58,000 19 20 This value represents the expected net present value (in 2023 dollars) of averted replacement 21 energy costs from reducing the annual reactor accident probability by 1x10-6 per reactor-year at 22 a single reactor unit from a future regulatory action implemented in 2023. The range of values, 23 $15,200 to $100,800, may be used as lower and upper bounds on this estimate.
6 This estimate is given in dollar-years because that unit represents an integral of lifetime replacement energy costs summed over all potential years of reactor losses.
L-8 NUREG/BR-0058, Rev. 5, App. L, Rev. 0
1 L.4 REFERENCES 2
3 Office of Management and Budget (OMB), Regulatory Analysis, Circular No. A-4, 4 September 17, 2003. Accessed March 21, 2022, at https://www.whitehouse.gov/wp-5 content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf.
6 7 PJM Resource Adequacy Planning Department, PJM Load Forecast Report: January 2021.
8 Accessed February 1, 2022, at https://www.pjm.com/-/media/library/reports-notices/load-9 forecast/2021-load-report.ashx.
10 11 NRC, Replacement Energy Cost Estimates for Nuclear Power Plants: 2020-2030, 12 NUREG-2242, June 2021. Agencywide Documents Access and Management System 13 Accession No. ML21174A176.
14 15 L-9