Milestone: Nuclear plant closing because of low natgas prices
Dominion Resources plans to shut its Kewaunee plant in Wisconsin next year, the first U.S. nuclear plant to fall victim to the steep drop in power prices as rising natural gas production makes some plants uncompetitive.
After claiming hundreds of coal-fired plants, the boom in U.S. shale gas output is now starting to grind down the nuclear industry, with smaller older plants like the 566-megawatt Kewaunee plant first to be affected.
The surge in U.S. shale gas has upended the domestic power market, and this year combined with flagging demand due to the struggling economy to send prices to near 10-year lows. For the nuclear industry, it means the Dominion plant…will be the first U.S. reactor to shut since the late 1990s.
The closing, which did not catch many in the industry by surprise, highlights the struggle of the U.S. “nuclear renaissance…”
Natural gas’ share of total U.S. generation has increased to 30 percent this year from about 20 percent in 2006, while the percentage from nuclear has held steady at about 20 percent.
Power prices in the PJM grid, the nation’s biggest power grid, for the first nine months of 2012 were down almost 30 percent from the same period last year and the lowest since 2002.
While nuclear plants can still produce power more cheaply than natural gas, analysts say future capital investments, which could run into the hundreds of millions or more at existing reactors, might prompt operators to shut some units.
“A number of nuclear units won’t run their 60-year licensed lives if current gas price forecasts prove accurate,” said Peter Bradford, a former member of the U.S. Nuclear Regulatory Commission…
“The determining factor is likely to come at the point at which they need to decide on a major capital investment.”
Anyone who measures the construction cost of a modern nuclear power plant – built in the United States – in millions of dollars instead of billions, is smoking the seeds. Medical marijuana or otherwise.
Escalating costs – for all the reasons that come easily to mind – are the essential factor that turned my support for nuclear power generation in directions like solar power generation. A process which is gradually diminishing in cost.
That natural gas is booming in availability and prices continue to drop or stabilize at historically low levels – is a great reason to hasten conversion of existing coal-fired plants to NatGas and to concentrate on NatGas-based new construction.