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Economic and Technical Aspects of Nuclear
Energy in Electricity Markets with
Renewables
Francesco Ganda, Nuclear Engineering
Audun Botterud,* Energy Systems
Fernando J. de Sisternes, Energy Systems
Argonne National Laboratory
*[email protected]
Low-Carbon Energy Economy Workshop
MIT, Cambridge, MA, May 26-27 2015
Background: Nuclear energy is increasingly economically
challenged in U.S. electricity markets
 Recent nuclear plant closures for economic reasons:
– San Onofre 2 and 3 in California (closed in 2013 to avoid repair costs);
– Crystal River 3 in Florida (closed in 2013 to avoid repair costs);
– Kewaunee in Wisconsin (closed in 2013, simply un-economical, according to Dominion);
– Vermont Yankee, in Vermont (closed in 2014).
 Large uprates being cancelled:
– Prairie Island, 1; LaSalle, 1 and 2; Limerick, 1 and 2.
 Exelon indicated that certain units in deregulated markets are unprofitable, and may
need to be closed:
– Byron; Clinton; Quad Cities.
 5 new reactors being built, all in regulated markets:
– 4 new builds (2 AP1000 units each at Summer, SC and Vogtle, GA);
– 1 completion of a previously halted project (TVA’s Watts Bar 2).
 Main reasons cited for economic problems
– Low natural gas prices, coupled with high efficiency combined cycle power units;
– Increased penetration of renewables, with zero marginal cost of production;
– Wind and solar, added to an already adapted system, are displacing conventional units;
– Resulting in low and highly variable electricity prices and low profit margins for nuclear units.
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Background: Renewable energy is growing fast
and natural gas prices are low
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Project objectives
• Main research goal of this project: Understand whether and how nuclear plants can
adapt to this situation, both from an economic and technical perspective.
• We are developing quantitative models to gain an understanding of the economic
competitiveness of nuclear power in deregulated markets:
• Economic;
• Technological;
• Regulatory;
• Policy;
• Power market design.
• Answers to these questions may
have the potential to inform R&D
decision making and potentially
restore nuclear power competitiveness
in the mid-to-long-term.
• Building on Argonne’s extensive market
analysis and design expertise
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Review of the current state-of-the-art in nuclear power
economics modelling
 The issue of nuclear competitiveness in de-regulated market is relatively new.
However, many institutions worldwide are starting to look at the issues:
– Nuclear competitiveness in deregulated markets with high renewable penetration
• January 5, 2015, “Response to the Illinois General Assembly Concerning House Resolution 1146 Potential
Nuclear Power Plant Closings In Illinois”.
• NEA/OECD, “Nuclear Energy and Renewables – System Effects in Low-carbon Electricity Systems”, 2012.
• International Energy Agency (IEA/OECD), 2014, “ The power of Transformation, Wind Sun and the Economics of
Flexible Power Systems”, ISBN: 978 92 64 20803 2.
• NEI, 2014, “The Impact of Exelon’s Nuclear Fleet on the Illinois Economy”.
– Flexible mode of nuclear operations
• NEA/OECD, “Technical and Economic Aspects of Load Following with Nuclear Power Plants”, June 2011.
• H. Estrada, E. Hauser, “The Impact of Load Following and Frequency Control on the Determination of Thermal
Power in Nuclear Power Plants”, International Conference Nuclear Energy for New Europe, Sep. 2009.
• EPRI, “Program on Technology Innovation: Approach to Transition Nuclear Power Plants to Flexible Power
Operations”, 3002002612, 2014 Technical Report.
• AREVA, “Load follow: nuclear power compatibility with the deployment of intermittent renewables”, 10 May 2011.
• U.S. Nuclear Regulatory Commission, “Final Safety Evaluation Report Related to Certification of the AP1000
Standard Plant Design Docket No. 52-006”, NUREG-1793 Supplement 2.
– Optimal portfolio approach to nuclear competitiveness
• M. Hundt, R. Barth et al., “Compatibility of renewable energies and nuclear power in the generation portfolio –
Technical and economical aspect”, IER Univ. Stuttgart – Feb 2010.
• Rothwell G. and Ganda F., 2014, “Electricity Generating Portfolios with Small Modular Reactors”.
– Environmental Policy
• J. B. Bushnell et al. “Strategic Policy Choice in State-Level Regulation: The EPA's Clean Power Plan”, Dec 19th
2014.
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Technical and regulatory limits of nuclear flexibility
 Load-following operations have been practiced extensively in France and Germany
 Main impact of load following on the economics is through a reduced capacity factor (the
impact of load following on the average French unit capacity factor was 1.2% in 2011).
 Very little impact was observed on accelerated aging of components, so only slight
increase in maintenance cost.
 Main modes of operations:
– Base load
– Primary/secondary frequency control
(not allowed by the U.S. NRC)
–
∆𝑃𝑃
𝑃𝑃0
=
1 ∆𝑓𝑓
𝑆𝑆 𝑓𝑓0
𝑆𝑆 ≅ 0.04 𝑓𝑓𝑓𝑓𝑓𝑓 𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛𝑛 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝
Primary less than ±2% of rated P.
Secondary less than ±5% of rated P.
– Load Following
1-2 large power changes in 24 hours
Ramps of 1%-5%/min of rated P.
Down to 50% (or even 30%) of rated P.
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Nuclear competitiveness currently debated in Illinois
 Four Illinois Agencies analyze potential impacts of nuclear closing
– Consequences for rates, transmission, reliability, environment, economy
 Potential policies to avoid pre-mature nuclear closing are proposed:
– Relying purely on the market and external initiatives to make corrections
– Establishment of a CO2 Cap and Trade Program
– Imposition of a Carbon Tax
– Low Carbon Portfolio Standard
• Considered by Illinois General Assembly (SB 1585)
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Quad Cities I: Historical price analysis
•
•
Calculations based on day-ahead (DA) or real-time (RT) energy prices
Hourly prices for node “4 QUAD C18 KV QC-1” in PJM market
 Main price trends
2014
– Lower average prices
– Higher volatility in prices
– More negative prices
 Significant flexibility value
– $25mill in profit increase in 2014
by not producing electricity
during negative real-time prices
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Energy/reserve prices and revenue sufficiency for
thermal generators with increasing wind power
 Impact of wind on energy/reserve prices and profitability of new generators
– Impact of scarcity pricing (SP) rules is important
Energy
0% wind
10% wind
20% wind
30% wind
No Scarcity Pricing
29.4
27.5
24.4
21.0
Scarcity Pricing
40.3
41.0
34.5
31.8
0% wind
10% wind
20% wind
30% wind
No Scarcity Pricing
0.0
0.6
5.5
7.5
Scarcity Pricing
10.8
14.1
16.7
18.4
Reserves
Levin and Botterud, IEEE Trans. Power Systems, 30 (3): 1644-1653, 2015.
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Arizona (APS) solar PV integration study: Main results
Low PV
(9%)
High PV
(17%)
High PV (17%)
(Flexible Nuclear)
Maximum balancing reserve up (MW)
278
556
556
Average balancing reserve up (MW)
171
241
241
CPS2 score (must be >90)
95.8
92.6
92.6
895.1
823.1
790.0
Balancing reserve cost ($/MWh-PV)
1.61
3.56
1.11
DA forecast error cost ($/MWh-PV)
0.27
0.21
0.63
Total PV integration cost ($/MWh-PV)
1.88
3.77
1.74
2.9%
17.8%
3.4%
Balancing reserves and CPS2
Total annual operating cost
Total system cost (M$/year)
Integration cost
Renewable curtailment
Renewable curtailment (% ren. energy)
J. Wu, A. Botterud, A. Mills, Z. Zhou, B-M. Hodge, M. Heaney, “Integrating Solar PV in Utility System Operations: Analytical
Framework and Arizona Case Study,” Energy, 85: 1-9, 2015.
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Arizona (APS) solar PV integration study: Dispatch
Low PV
High PV
(flexible
nuclear)
J. Wu, A. Botterud, A. Mills, Z. Zhou, B-M. Hodge, M. Heaney, “Integrating Solar PV in Utility System Operations: Analytical
Framework and Arizona Case Study,” Energy, in press, Mar. 2015.
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