trending Market Intelligence /marketintelligence/en/news-insights/trending/AYP_lckrCv_lVLBjrU0Idg2 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

On eve of permanent shutdown of Pilgrim nuke, impacts remain unclear

Blog

Q1 2021 Global Capital Markets Activity: SPAC IPOs, Issuance in Consumer Discretionary Sector Surge

Blog

COVID-19 Impact & Recovery: Private Equity

Blog

Utility sector progressing on gender diversity, but experts say more work needed

State and Federal Policy Roundtable – A Green Administration?


On eve of permanent shutdown of Pilgrim nuke, impacts remain unclear

SNL Image

Entergy's Pilgrim nuclear power plant in Plymouth, Mass.
Source: Entergy Corp.

Almost 47 years after coming online, Massachusetts' last operating nuclear power plant Entergy Corp.'s 683-MW Pilgrim facility in Plymouth will permanently shut down May 31.

Even though the plant, which began operating in December 1972, is licensed until 2032, Entergy announced Pilgrim's planned retirement in October 2015.

The company said the "key driver" of the decision was low wholesale electricity prices, fueled by an influx of cheap natural gas, that ate away at its revenues. Typical of single-unit nuclear facilities, Pilgrim had greater difficulty than larger nuclear facilities absorbing rising operating costs, which only worsened after several unplanned shutdowns and a safety valve issue from 2013 through 2015 increased regulatory scrutiny of the plant.

Placed into a safety category a step below "unacceptable performance" by the U.S. Nuclear Regulatory Commission in September 2015, Pilgrim did not return to normal regulatory oversight until the start of March 2019. However, the facility's control room operators on May 17 had to temporarily shut down the plant's boiling water reactor when a pump used to circulate seawater for cooling turbine steam lost power.

In a summer reliability assessment released May 15, ISO New England said Pilgrim's capacity will be replaced by 1,185 MW of new capacity coming online in 2019. Those new resources include three dual-fuel power plants that can burn either natural gas or oil, five new grid-scale solar facilities with a total nameplate capacity of about 87 MW, and a 44-MW wind farm.

An S&P Global Market Intelligence analysis from February anticipated that 1,517 MW of primarily gas-fired and solar capacity additions across New England in 2019 would replace Pilgrim's capacity.

Post-Pilgrim CO2 fears

In an email, Entergy Pilgrim spokesperson Patrick O'Brien said the nuclear plant annually avoided roughly 2 million metric tons of carbon dioxide emissions. Pilgrim supplied approximately 5% of New England's electricity needs and, as of 2016, produced 80% of Massachusetts' carbon-free power, he added.

The loss of Pilgrim's emissions-free generation has spurred fears of a potential repeat of the aftermath of the December 2014 closure of Entergy's 604-MW Vermont Yankee nuclear power plant. According to the ISO-NE, the region's carbon dioxide emissions rate increased 2.9% from 2014 to 2015 amid both the loss of Vermont Yankee and the "significant" displacement of retiring coal plants by gas-fired resources.

However, David Ismay, an attorney with the Conservation Law Foundation, noted in an interview that the increase was completely erased by 2016. While acknowledging that emissions might initially increase following Pilgrim's closure, Ismay said his foundation is confident the zero-carbon resource will be replaced with a combination of new U.S. renewables, Canadian hydropower imports, and increased demand response and energy efficiency measures. And noting the ISO-NE's expectations that the region will experience an average 1% annual load reduction in the coming years, he said the falling load will soon offset the supply lost with Pilgrim's retirement.

Referencing a recent wave of "clean" energy solicitations by New England states, including a mandate by Massachusetts to procure 2,800 MW of offshore wind, hydropower and other renewables by 2027, Ismay said the development of the 704-MW Revolution Wind Offshore and 800-MW Vineyard Offshore Wind Project to meet that mandate "will produce more electricity per year than we've gotten from Pilgrim." Further, he said the 1,200 MW of hydropower imports slated for Massachusetts will be twice as large as Pilgrim's annual generation.

However, Dean Murphy, a principal at the Brattle Group consultancy firm, said carbon-emitting gas-fired generation will replace nearly all of Pilgrim's emissions-free nuclear power for the next five to 10 years, as dispatchable fossil fuel-fired generation always does following nuclear plant retirements. The loss of Pilgrim is not going to spur more renewable generation, he said, adding that any "new renewables are going to be added with or without Pilgrim."

Murphy recalled that the Brattle Group predicted Pilgrim's closure will lead to an annual emissions hike of 2.1 million to 2.2 million metric tons of carbon dioxide as gas-fired units, with an average CO2 emissions rate of about 0.43 CO2 metric tons/MWh, replace Pilgrim's generation. This is despite the nuclear plant's under-performing capacity factor, which averaged about 86% from 2013 to 2017 as a result of unexpected shutdowns, refueling and scheduled outages, Murphy explained.

"If we do, in fact, succeed in greening the grid and replacing most or all fossils with renewables, then eventually the emissions impact of Pilgrim['s retirement] would decrease and taper off potentially ultimately to zero," Murphy said.

Pilgrim's impact on the grid

In recent years, Gordon van Welie, president and CEO of the ISO-NE, repeatedly has singled-out Pilgrim's retirement as part of a larger worrying trend of "fuel-secure" nuclear-, coal- and oil-fired generation being replaced by a new regional mix of intermittent renewable and "just-in-time" gas-supplied generating resources.

Amid ongoing market changes by the ISO-NE to ensure regional fuel security, van Welie continues to warn that the loss of Pilgrim and other resources is putting the reliability of New England's increasingly gas-dependent grid in jeopardy, especially during the coldest days of winter when pipelines are constrained by demand.

However, Anne George, the ISO-NE's vice president of external affairs, said in an interview that the grid operator is convinced the system can handle Pilgrim's closure in the near-term.

"We feel fairly confident that we've got the resources, barring any major contingencies, to operate the grid reliably in the coming summer months," she said.

The ISO-NE also is considering adding new markets that would allow resources to manage their fuel security over several days. As part of that effort, the grid operator is likely to propose a "multi-day" market that puts a price on an expected energy deficiency in advance of winter cold snaps. George said the grid operator will ask federal regulators in October to approve the changes.

"The energy markets should then be sending those price signals and resources that have secure fuel should start seeing the benefit of those new ancillary service revenues," George said.

With Pilgrim's closure, the only remaining operating nuclear power plants in New England will be Dominion Energy Inc.'s 2,101-MW Millstone in Connecticut and NextEra Energy Inc.'s 1,249-MW Seabrook in New Hampshire.

In August 2018, Entergy announced it would sell Pilgrim following the plant's shutdown and reactor defueling to Holtec International Inc. subsidiary Nuclear Asset Management Co. LLC. The deal is subject to certain closing conditions, including the NRC's approval of a license transfer. Holtec expects to initiate the plant decommissioning in 2020, in time to complete major decommissioning work in approximately eight years.