Planned FirstEnergy closures ‘devastating’ for clean energy

Source: Sam Mintz, E&E News reporter • Posted: Thursday, April 5, 2018

A week after FirstEnergy Corp. announced it is planning early retirements for three nuclear plants in Ohio and Pennsylvania, most of the ensuing conversation has centered on economics and electric grid resilience.

But the move also has the potential to be a massive blow for clean energy efforts in the region and the fight against climate change.

The struggling utility company said last week that it plans to shutter the Davis-Besse and Perry nuclear plants in Ohio and the Beaver Valley plant in Pennsylvania in the next few years, well before their operating licenses would expire.

The announcement preceded a formal plea for help to the Department of Energy as well as a bankruptcy notice by the company’s power plant subsidiary, which has seen profits from its coal and nuclear plants dwindle in the face of dropping renewable and natural gas prices (see related story).

Combined, the three nuclear plants have more than 4,000 megawatts of generating capacity and produce about two-thirds of the electricity produced by FirstEnergy and enough to power millions of homes. The two Ohio plants make up 14 percent of that state’s power generation, according to a Brattle Group report from last year.

If the company follows through on its plans to shut them down, that could all be gone by 2021 — likely to be replaced by natural gas or even some coal-fired generation.

“This takes a huge step backwards. [The plants] are massive contributors to clean energy,” said Ryan Fitzpatrick, deputy director for the clean energy program at the centrist think tank Third Way.

Kathleen Barrón, a senior vice president at nuclear-heavy utility Exelon, one of FirstEnergy’s competitors, said having so much carbon-free energy leave the system so quickly is “devastating” for clean energy goals. Her company last year announced plans to retire its Three Mile Island plant in Pennsylvania in 2019.

The FirstEnergy closures, she said, would erase “decades of work that states have put into clean generation and billions of dollars of money that customers have put into making progress on decarbonization. It’s all wiped out in one announcement.”

With renewable production already growing essentially as quickly as it can, the lost nuclear generation in the region would likely be replaced by mostly natural gas. It’s also possible that coal — despite its shrinking footprint there and elsewhere — could be used to make up some of the gap.

The generation from retired nuclear plants is typically replaced through increased generation from existing fossil fuel facilities or the construction of new ones, Fitzpatrick said.

A spokesman for PJM Interconnection, the grid operator that oversees 13 Eastern states including Ohio and Pennsylvania, said that if the nuclear units are deactivated, existing resources could fill the capacity need.

“In the short term, on a day-to-day basis, under the current economics and likely future conditions, the energy would be replaced by natural-gas-fired generation,” said Ray Dotter.

The independent market monitor for PJM reported earlier in March that natural gas projects make up 60.3 percent of the planned generation construction in PJM’s territory, while wind projects account for only 18.4 percent.

“We’re very impressed and very grateful that renewables are on an upswing, but even if they could eventually replace these plants, that’s a lot of work to literally accomplish nothing in terms of climate, to get right back to where we already are today,” Fitzpatrick said.

FirstEnergy’s arguments for policies at the federal level have primarily asked for compensation for its contributions to electric grid resilience, including an ill-fated proposal by the Department of Energy last year and a more recent request for emergency action by the company to the same agency.

The argument that essentially nuclear plants provide attributes necessary to keep the lights on also has resulted in nuclear power’s repeated pairing with coal-fired generation, which has less support among clean energy advocates (Greenwire, Nov. 14, 2017).

The request to DOE, like the directive before it that was dashed by FERC, focused its attention on plants that are able to keep a certain amount of fuel on-site, which automatically links coal and nuclear.

“They’re arguing for attributes that we don’t see as the primary attributes of some of these generators,” Fitzpatrick said. “They’re not arguing on behalf of the low-carbon attributes.”

Exelon’s Barrón said nuclear owners find themselves caught in a tricky spot.

On the one hand, they are competing against renewable sources, which have support from policies at both the federal and state level. On the other hand, they are dealing with emitting plants, including coal and natural gas, which face few consequences for their pollution.

“The reality is that this combination of policies result in market prices at the nuclear sites that do not support the cost of operation — not because they’re not well-run, but because they’re being asked to compete against units that are getting compensation out of market,” she said.

Energy Secretary Rick Perry has not yet responded to FirstEnergy’s request for an emergency order directing PJM to negotiate with FirstEnergy to keep the plants running.

There is also always a possibility that state policy could come to the rescue — Exelon was able to save its plants in New York and Illinois by successfully advocating for “zero-emissions credits” in both states, although both rescues have been challenged in court.

But similar policy proposals in Ohio and Pennsylvania have met with stronger political resistance. In Ohio, the Legislature has failed to advance proposals from the company similar to those in Illinois and New York, which would likely not have the support of Gov. John Kasich (R) even if they were to be passed.