PJM Files Cost Impact From Potential Nuclear Retirements
June 05,2019
PJM has filed an analysis of the cost and emission impacts of potential nuclear power plant retirements in Pennsylvania and Ohio.
PJM was requested by both the Pennsylvania Public Utility Commission and the Ohio Consumers’ Counsel to perform such an analysis. In response to these requests, PJM conducted several simulations of the future PJM system with various combinations of announced nuclear retirements, including sensitivities that vary the amount of new entry that occurs.
PJM simulated market results for the year 2023 under various resource mixes, including what exists today, projected conditions for the future and several combinations of potential nuclear unit retirements.
The PJM "base case" includes the announced retirements of nuclear units in Pennsylvania and Ohio: Three Mile Island (TMI), Beaver Valley 1 & 2, Davis-Besse and Perry, and also includes new generation with a planned in-service date of 2023 and an executed Interconnection Service Agreement.
"Modeling the base case, considering retirements and new entry, shows that wholesale energy market net-load payments would decrease by $1.6 billion across the PJM region compared to today’s system due to the significant entry of new, efficient resources," PJM said
PJM executed three simulations of the requested nuclear unit retirement scenarios. These scenarios assume the requested combinations of nuclear unit retirements occur and also assume that those generators in the queue that have executed an Interconnection Service Agreement and are planned to come online between 2020 and 2023 would enter the market as scheduled. The results of these simulations for the PJM region, (without including the cost of a possible subsidy) are:
• Beaver Valley 1 & 2 remain online: $210 million decrease in load payments from the base case
• Davis-Besse and Perry remain online: $277 million decrease in load payments from the base case
• Beaver Valley 1 & 2, Davis-Besse, and Perry remain online: $474 million decrease in load payments from the base case
PJM executed three additional simulations accounting for the same nuclear unit retirement scenarios and included an additional sensitivity assumption regarding the impact of subsidies on new entry. To represent what PJM believes to be the market’s likely, long-term reaction to out-of-market subsidies that retain substantial quantities of generation that would have otherwise retired, PJM discounted by 50 percent the planned natural-gas generation otherwise scheduled to come online between 2020 and 2023. PJM assumed these projects would be canceled or deferred and in any event, were assumed to not enter the market. The results of these simulations for the PJM region, (again without including the cost of a possible subsidy) are:
• Beaver Valley 1 & 2 remain online and new entry of natural gas is discounted by 50 percent: $240 million increase in load payments from the base case
• Davis-Besse and Perry remain online and new entry of natural gas is discounted by 50 percent: $164 million increase in load payments from the base case
• Beaver Valley 1 & 2, Davis-Besse and Perry remain online and new entry of natural gas is discounted by 50 percent: $91 million decrease in load payments from the base case