why nuclear matters - exelon
TRANSCRIPT
1
Nuclear Plays a Key Role in a Diversified U.S. Power Mix
• Diversification of generation
resources and fuel type in the
grid is essential
• Reliable, consistent generation
output maintains system
reliability, balances demand and
supply, supports stable market
pricing
Capacity Factor by Fuel Type - 2013
2
Nuclear’s Benefits
Nuclear energy provides unmatched
benefits to the U.S. energy grid:
• 24/7 generation
• Resilient in extreme cold and
heat conditions
• Firm fuel supply
• Low operating cost
• Fuel provides protection from
price volatility
• Supports grid stability
Nuclear energy national average fuel costs were
2.4 cents per kilowatt-hour in 2012, significantly
lower than coal at 3.27 cents and natural gas at
3.4 cents. Source: NEI Knowledge Center
3
Nuclear Power is Uniquely Reliable – the January 2014 Polar Vortex is just an example
During the Polar Vortex, coal, natural gas and oil generator outages were
high due to lack of fuel and plant outages. Nuclear units have consistent
availability and secure fuel supply.
• Severe winter weather with
prolonged cold adversely
impacted PJM in January,
in particular on January 7th
• All-time high winter peak
demand of 141,312 MW
• During these peak load
conditions, PJM experienced
22% forced outages
Forbes, January 12, 2014:
“Polar Vortex – Nuclear Saves the Day”
Coal 13,700 MW
Nuclear 1,400 MW
Gas Plant Outages 9,700 MW
Natural Gas
Interruptions 9,300 MW
Other 6,100 MW
Total Forced Outages
40,200 MW
22% of PJM Capacity
4
Wind Power Cannot Match Reliability Demands on Hot Days
0
2000
4000
6000
8000
10000
12000
PJM MISO ERCOT
Megawatts
Wind Output (MW) Installed Wind Capacity (MW)
In PJM 86% of wind doesnot operate
In MISO 82% of wind does not operate
In ERCOT 84% of wind does not operate
Median Wind Output Relative to Capacity during On-Peak Hours
of the Top 10 Demand Days of 2009 - 2012
5
Effective Industry Response to Fukushima
• Improved ability to cope with extended loss of AC power
• Additional spent fuel storage pool instrumentation
• Reliable containment venting
• External hazard (seismic and flooding) re-evaluations
• Enhanced emergency planning for multi-reactor events
• Industry FLEX strategy enhances safety
o FLEX will handle those
extreme, unexpected
scenarios that are beyond the
plants’ design basis
o Focus on maintaining key
safety functions
o Each nuclear plant site
maintains backup portable
safety equipment
o Two national response centers
- Phoenix & Memphis
7 Confidential And Proprietary. For Exelon Internal Discussion Purposes Only.
• Employ ~100,000 full-time workers1
• Hire U.S. vendors for on-going capital expenditures.
Over 30 million man-hours are worked by
supplemental craft labor each year at the nation’s
100 reactors, translating to over 14,000 FTE1
• Spend over $14 billion annually on direct purchases
from over 22,500 domestic vendors in all 50 states1
• Pay on average $16 million per plant in local property
taxes annually1
• Pay on average $67 million per plant in Federal taxes
annually1
• Provide more than 2,100 GWh electricity per day2 –
enough to power 20 percent of the country
1 NEI “Nuclear Energy’s Economic Benefits – Current and Future” April 2014, and NEI 6/24/2014.
2 EIA Electric Power Monthly (May 2014) Net Generation by Nuclear
3 Davis and Hausman (2014) , Energy Institute at Haas
4 Lesser, Continental Economics and Manhattan Institute, 2012
U.S. nuclear plants support jobs and economic growth
Nuclear plants inject nearly $14 billion directly into the U.S. economy each year
8
Nuclear Plants Drive the Local Economy
Technology Average Plant
Size MW
Direct Local
Jobs
Workforce Income
$million/year
Nuclear 1,000 504 $32.49
Coal 1,000 187 $10.99
Large Hydro 1,375 156 $10.79
Concentrating
Solar
100 47 $2.62
Gas Combined
Cycle
630 34 $2.02
Solar
Photovoltaic
10 11 $0.33
Wind 75 4 $0.29
No other energy source can compete with nuclear for
contribution to local economy and prosperity
9 Confidential And Proprietary. For Exelon Internal Discussion Purposes Only.
California’s Experience
Closure of San Onofre:
• Cut California's low carbon electricity
production by 25%
• Resulted in a 28% increase in CO2
emissions in 2014
• 1500 local jobs were lost
• $400 million lost revenues and
increased costs
• 15% increase in electricity generation
costs in 2013
In Germany, the nuclear phase-out policy
and 80% renewables target resulted in:
• Subsidy charges equal 15% of total
electric bill for homeowners
• Increasing CO2 emissions
• 37 cents/kwh in Germany vs 10
cents/kwh in U.S.
Public Policy Too Often Has Unintended Consequences
10 Confidential And Proprietary. For Exelon Internal Discussion Purposes Only.
Today’s Challenge
Certain Nuclear plants are operating at large losses and are at risk of early retirement due to a variety of factors that will jeopardize our ability to reduce carbon emissions
• Natural gas production has exploded, its cost as a fuel has
declined dramatically, suppressing prices across the market.
• Lack of a coherent federal energy policy and market rules to
compensate nuclear energy for its carbon-free output and its
unrivaled 24/7 reliability.
• Billions of dollars in Federal Policies and Mandates that subsidize
certain clean electricity sources, severely distorting energy
markets.
• Load growth is down or flat since the recession. Without load
growth, mandated/subsidized renewables are taking the place of
existing nuclear energy.
Exelon is committed to doing everything possible to maintain our nuclear operations,
but we are prepared to make tough decisions if the outlook does not improve.
11
Why the Economic Challenges?
All electricity is not the same, but the market hasn’t figured that out
Different forms of electricity have different attributes
• For example, reliability, zero emissions, cost, security, even political popularity
• These attributes should have varying degrees of value to the consumer
Market Issues:
• Price signals are inadequate to support some current plants, uprates to existing
plants, or investment in new capacity except gas
• Prices are suppressed by certain RTO policies and actions, and by state & federal
mandates and subsidies
• Current markets do not recognize – or price – the valuable attributes of nuclear
power
- Zero carbon emissions
- 24/7/365 reliability and grid support
- Fuel security
Failure to address these issues will compromise resource
adequacy and reliability, expose consumers to increasing price
volatility, and frustrate efforts to reduce carbon emissions
12
Needed reforms include:
o EPA regulations that require meaningful and verifiable greenhouse gas emission
reductions
o EPA’s draft Clean Power Plan recognizes nuclear’s zero-emissions value, but
not yet effectively enough
o Market reforms that reduce speculation and that compensate baseload physical
resources that keep the lights on
o Mechanisms to attract fuel diversity and to reward firm fuel needed for reliability, at
the most reasonable cost
o PJM’s capacity performance proposal
o Elimination of federal and state policies that distort energy markets by subsidizing
less reliable energy sources, such as wind, at the expense of otherwise profitable
clean generation
Reforms are needed to assure adequate clean generation resources in the future
Solutions are needed to ensure energy policies and market design that preserve, and do not
diminish, resources needed for reliable and carbon-free generation.