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Economically, closure of Vermont Nuclear Plant points to the coming transformation of USA’s electricity system

piggy-bank--nuke-sadEven optimistic projections of the cost of building new nuclear reactors leaves them four times as costly as energy efficiency and twice as costly as wind and gas. Many analysts believe that solar power will be significantly less costly than nuclear in the next decade. Moreover, nuclear power never lives up to the optimistic cost projections of its boosters. Reactors under construction in the U.S. and Europe are way behind schedule and over budget.

sun-championThe problem with new reactor construction costs is well known, but the really stunning development is the problem that nuclear power has in terms of operating costs

the “dinosaurs” in the electricity sector have enough political clout to slow or prevent the change in the environment. Nuclear power is a major obstacle, demonstrated by its steadfast opposition to and an all-out attack on renewables and efficiency. Shuttering old, uneconomic reactors like Vermont Yankee is important not only because it removes an economic obstacle to change, but also because it shows the political will to transform America’s electricity system.

Why Closing Vermont Yankee Won’t Raise New England’s Power Bills Forbes Staff , Contributor Mark Cooper 31 Dec 14  Mr. Cooper is a senior fellow for economic analysis at Vermont Law School’s Institute for Energy and the Environment. Critics of the closing of the Vermont Yankee nuclear reactor have forecast a 40 percent jump in New England winter heating bills as a result of the shutdown. The facts suggest they have it wrong in more ways than one.

Last year New England electricity prices were about 36 percent higher than the U.S. average. Ten years ago they were about 36 percent above the U.S. average. The Energy Information Administration (EIA) price increase projected for New England in 2015 is 3 percent (compared to a national average of 2.5 percent). Having Vermont Yankee online did not help New England achieve lower winter electricity prices and closing it won’t make an appreciable difference.

But for those who genuinely are worried about electricity sector prices in New England, it is time to take a new approach. Contrary to the claims of some nuclear advocates, closing Vermont Yankee is an important step in the right direction and it teaches an important lesson for the bigger picture of electricity sector policy making.

New England needs to reduce its dependence on gas, but nuclear power is not the answer. In fact, a recent analysis of the New England system by a staff analyst at the Maine PUC found that if policy makers take price risk and carbon emissions into account, nuclear power would not be included in the optimum portfolio and gas would make up less than one-sixth of the portfolio. This is consistent with recent reports from many financial analysts (Citi, McKinsey and Company, Credit Suisse), which concluded that efficiency and renewables can meet the need for electricity over the next several decades. Above all it is consistent with the UBS observation that “large-scale power generation, however, will be the dinosaur of the future energy system: Too big, too inflexible, (and) not even relevant for backup power in the long run.”

High winter heating bills in New England are not an excuse to keep aging nuclear reactors like Vermont Yankee online or to build new reactors. As I showed in my recent comments filed in the EPA “Clean Power” rulemaking, power from nuclear reactors, old or new, cannot compete with the alternatives available on the basis of economic cost, both in terms of long-term costs (construction) or short-term costs (operating).

Even optimistic projections of the cost of building new nuclear reactors leaves them four times as costly as energy efficiency and twice as costly as wind and gas. Many analysts believe that solar power will be significantly less costly than nuclear in the next decade. Moreover, nuclear power never lives up to the optimistic cost projections of its boosters. Reactors under construction in the U.S. and Europe are way behind schedule and over budget.

The problem with new reactor construction costs is well known, but the really stunning development is the problem that nuclear power has in terms of operating costs. ……..

Peak prices have been plummeting in other areas of the nation because of the “merit order effect.” Grid operators use the resources with the lowest operating costs to meet demand. Renewables like wind have very low operating costs, which means they are dispatched and back out the most inefficient gas peaking plants………

Rather than relying solely on the supply-side to meet increases in demand, the 21st century electricity system marshals a much broader range of tools. The ability to use demand response has increased dramatically with improvements in information and control technologies, particularly when it is integrated with diversified, distributed supply. The Regulatory Assistance Project, based in New England, has identified a dozen policies that can lower the peak and increase the system-wide load factor dramatically.

The cost of storage is plummeting, too,………

The transformation of the electricity sector into an intelligent, flexible 21st century system requires new physical and institutional infrastructure. Unlike real dinosaurs, the “dinosaurs” in the electricity sector have enough political clout to slow or prevent the change in the environment. Nuclear power is a major obstacle, demonstrated by its steadfast opposition to and an all-out attack on renewables and efficiency. Shuttering old, uneconomic reactors like Vermont Yankee is important not only because it removes an economic obstacle to change, but also because it shows the political will to transform America’s electricity system. http://www.forbes.com/sites/energysource/2014/12/31/why-closing-vermont-yankee-wont-raise-new-englands-power-bills/2/

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January 2, 2015 - Posted by | business and costs, ENERGY, USA

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