Exelon Corp.-owned nuclear power plants in Illinois eyed for early retirement have had declining financial margins of late, according to an analysis using S&P Global Market Intelligence's plant-level production cost model.
Citing economic challenges due to the combination of prolonged periods of depressed wholesale power prices, market rules allowing "fossil fuel plants to underbid clean resources" in the PJM Interconnection capacity auction, and the lack of government support recognizing the clean energy attributes of nuclear generation, Exelon Generation Co. LLC announced Aug. 27 that it plans to retire its 2,346-MW Byron and 1,805-MW Dresden nuclear power stations in September 2021 and November 2021, respectively.
The Exelon Corp. subsidiary added that the 2,384-MW Braidwood Generating Station and 2,313-MW LaSalle County Generating Station are "also at high risk for premature closure," though the company has not yet projected any closure dates for those plants.
The two-unit Dresden plant in Grundy County, the first of the four northern Illinois plants to enter service, in the early 1970s, is licensed to operate until 2029 and 2031. Braidwood in Will County, Byron in Ogle County, and LaSalle in LaSalle County all began operating in the mid- to late 1980s and are licensed to operate until the 2040s.
These facilities had a combined net generation of 74.9 million MWh in 2019 at capacity factors upward of 95.0%.
A comparison of modeled operations and maintenance, or O&M, expenses at the nuclear plants against wholesale power prices show operating costs exceeding spot electricity values of late. For January-August 2020, modeled O&M costs were more than $24/MWh in the case of Dresden and spanned $20/MWh to $21/MWh at Braidwood, Byron and LaSalle, while the average price of around-the-clock day-ahead power at the PJM Northern Illinois hub over the same period was near $19/MWh. Recent pressure on power prices included the dampening effect of the coronavirus pandemic on demand paired with low natural gas prices.
In the three preceding full-year periods, modeled O&M expenses at the four nuclear plants similarly spanned the low $20s/MWh, while the price of power at PJM Northern Illinois initially averaged in the high $20s/MWh in 2017 and 2018 then pulled back into the low $20s/MWh in 2019.
Exelon warned in early 2019 about the future of Braidwood, Byron and Dresden, citing similar reasons. A Market Intelligence analysis then found O&M costs for the three plants at roughly between $23/MWh and $24.25/MWh, generally below wholesale power prices at the PJM Northern Illinois hub, which averaged $28.51/MWh in 2018.
Industry observers noted that Exelon's announcement to shutter Byron and Dresden could pressure Illinois lawmakers to subsidize the plants. Exelon's two other nuclear plants in Illinois — the 1,078-MW Clinton Power Station in De Witt County and the 1,819-MW Quad Cities facility in Rock Island County — are already compensated through the state's zero-emissions credit initiative. Clinton operates in the Midcontinent ISO market, and Quad Cities, based on its ownership, is split, with 75% of its capacity committed to PJM and the rest to MISO.