Friday, May 10, 2013

Wisconsin Nuclear Plant Permanently Shutdown Despite Running Well: Did Gas Shut It?

Unlike troubled nuclear plants in California and Florida, the Kewaunee nuclear plant ran well from its first day of operation in 1974 to May 7, 2013, when it was shutdown.  For good.

The Kewaunee nuclear plant closure is extraordinary or unprecedented, because its cause was neither operating problems, a massive bill for major repairs, or old age. Kewaunee is closing simply because it costs more to run it than it makes in revenue.

Economics and the low-prices of the competitive wholesale electricity market shutdown the plant. Is Kewaunee a nuke canary, the first of other nukes shutting down due to economics alone? And did gas shut Kewaunee?

Low wholesale electric market prices are a product of gas prices that plunged below $2 in April 2012 before doubling to more than $4 in April 2013, energy efficiency, demand response programs, and surging renweable energy capacity from especially wind.  The gas price rebound will firm wholesale markets to a degree, but $4 gas remains at the low-end of the expected price range.  Energy efficiency, demand response, and increasing amounts of renewable energy, however, will continue to put downward pressure on wholesale market prices.

Kewaunee's small size--just 556 megawatts--and its status as the only Dominion plant in the area that precluded the sharing of common costs with other nukes made the plant particularly vulnerable to the current low-pricing environment.  Perhaps, Kewaunee is the weakest of the nuclear fleet and is not a harbinger of more nukes being shutdown by their inability to cover the costs of operating.  Yet some data indicate that as much as 25% of the nuclear fleet is nearing the same economic edge over which Kewaunee plunged.

Time will tell whether or not Kewaunee is a nuke canary.

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