New York — The Tennessee Valley Authority is expanding its production of emissions-free power generation by improving the output at its seven nuclear units, optimizing its hydropower facilities and adding 14 GW of solar power capacity, Jeff Lyash, president and CEO, said in an interview.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
TVA has reduced its greenhouse gas emissions against the 2005 benchmark by 60% and there are plans to increase that to a 70% emissions reduction by 2030, Lyash said December 13.
"We will continue to get more energy out of our nuclear fleet by improving its production. We'll optimize our hydro assets and we'll add a significant amount of solar to our generation mix,” he said.
Now is the time to add up to 14 GW of solar power, which TVA plans to do over the next two decades, "because solar prices have come down to the point where they are competitive with our avoided cost,” Lyash said.
TVA is a federally owned utility company covering 82,000 miles of territory in seven states. It serves 10 million customers. Its peak demand is about 33.5 GW and its peak generation capacity is about 38 GW.
Until 1959, TVA received a congressional appropriation, but the utility is now funded through its power sales and debt. The company owns power generation and transmission assets, selling wholesale power to about 150 local distribution companies.
Lyash was appointed by TVA's board of directors in February 2019, prior to which he served since 2015 as president and CEO of Ontario Power Generation.
Earlier in his career, Lyash was president of CB&I Power where he was responsible for engineering, procurement and construction of multi-billion-dollar power generation projects in domestic and international markets.
US nuclear power generators outside regulated markets like TVA's have struggled financially in recent years due to competition from low-cost gas-fired generation and the growth of subsidized resources.
Merchant generators "get undercut by subsidized renewables” in energy-only markets and have to compete in three-year capacity markets in the Northeast which "makes it difficult for an asset that you have to invest in for a 50-year period,” Lyash said.
"Nuclear plants are extremely competitive, just not by the rules we've defined in some of these markets,” he said.
But TVA can recognize the full value of its nuclear assets because it is an integrated resource planning based organization, Lyash said, and that is why they are looking to expand capacity and relicense their existing nuclear units.
TVA wants to extract more value from its nuclear plants through technology upgrades that can improve capacity factors from 90% to 92% or 94%. The utility is also making investments related to license renewals for all seven units to allow them to run for 80 years, Lyash said.
TVA in 2019 completed an extended power uprate project at its 3,400-MW Browns Ferry nuclear plant that allows it to produce an additional 465 MW that will run at over a 90% capacity factor.
Lyash said TVA's plans are to hold customer rates steady for the next ten years which he thinks is doable because he expects natural gas prices to remain at historically low levels for the foreseeable future and fuel mix diversity insulates the company from price fluctuations in specific commodities.
"Absent some significant regulatory change around fracking, which I don't see on the horizon, I think we are looking at least at another decade of low and pretty stable gas prices,” he said.
There is some risk around that expectation but TVA's diverse fuel mix with 60% low-fuel cost resources, 20% coal and 20% gas provides the ability to "move that mix around based on commodity price or environmental regulations,” Lyash said.
A third of the price of power from combined-cycle gas is the cost of the fuel so a little bit of upside gas price movement "doesn't produce a big price swing for us,” he said.
Having purchased uranium into the future, TVA's nuclear, hydropower and renewable generation add up to roughly 60% of their generation fleet being "not terribly sensitive to fuel cost,” and TVA thinks it can manage with minor fuel price fluctuations throughout 2020, Lyash said.
TVA is regulated by a nine-member board nominated by the US president. Board members require US Senate confirmation and serve five-year terms.
TVA could also have three open board seats in 2020. Two board seats will open at the end of the current legislative session and a third board member's term ends in May 2020, but the member can serve until the end of that congressional session.
"In 2020, we will have to work with the administration to identify and seat three board members … but we can do business as long as we have a quorum,” Lyash said.