New York Shutters Indian Point Nuclear Power Plant, Builds Expensive Offshore Wind Instead

New York’s Governor Andrew Cuomo is shuttering N.Y.’s Indian Point nuclear plant by 2021 and is proposing to replace that power with 2,400 megawatts[i] of expensive offshore wind turbines that he wants constructed by 2030. New York’s renewable energy mandate requires 50 percent of the state’s electricity to come from renewable energy by that date. Indian Point, which is located about 30 miles north of New York City, produces about a quarter of the electricity used in New York City and Westchester County. Gov. Cuomo wants to shutter the plant because he believes that operating a nuclear plant so close to a major population center is a potential safety hazard.[ii]

Indian Point is just the latest deal to emerge as part of a broader trend to move away form low-cost, reliable nuclear power and towards expensive and intermittent renewables. Last year, Pacific Gas & Electric proposed to shutter the Diablo Canyon nuclear plant and replace its output with a combination of wind, solar, and energy storage. New York is now following California’s lead.

According to the New York Independent System Operator, Indian Point’s closure would have effects on reliability that would continue through 2026 unless there is adequate replacement power. Some of those reliability issues may be resolved as other “dispatchable” electricity generating resources come online over the next four years when the two nuclear units are taken off line.[iii]

Replacing 2,000 megawatts of reliable nuclear power, however, with 2,400 megawatts of offshore wind—much of which will come online 9 years after the nuclear plant is shuttered—makes little sense. Building new offshore wind is over 6 times more expensive than operating an existing nuclear plant. And even though offshore wind tends to have a slightly higher capacity factor than onshore wind, it is still less than half the capacity factor for nuclear power. In other words, the amount of energy one gets from 2,000 megawatts offshore wind is about half that compared to the output of the same 2,000 megawatts of nuclear. So, New York will have to build other capacity that is both more reliable and less expensive than offshore wind to replace Indian Point. Obviously, electricity prices will increase for the area’s residents. This should be concerning to New York’s elected officials given that New York’s electricity rates are already over 40 percent higher than the national average.

Indian Point Nuclear Units

The two units at Indian Point together provide 2,083 megawatts of power and have been operating since 1974 and 1976, respectively. Indian Point’s licenses for the two units expired in 2013 and 2015, respectively, but they are able to produce power as long as the relicensing process continues. Entergy, the plant owner, applied to the Nuclear Regulatory Commission (NRC) to extend the licenses for 20 years and the NRC was moving to grant the extensions when environmentalists protested, followed by Governor Cuomo’s announcement to shutter the plant.

Retiring an existing unit prematurely and replacing it with a new unit is expensive. Average production costs for nuclear power in the United States was 2.4 cents per kilowatt hour in 2014, while the average cost to build and operate an offshore wind plant in the United States is 15.8 cents per kilowatt hour (without subsidies)—over 6 times as much. A new offshore wind plant is also almost 3 times more expensive than a new natural gas combined cycle plant, which the Energy Information Administration estimates to be 5.7 cents per kilowatt hour.[iv]

Further, nuclear units in the United States are running at a capacity factor of 93 percent, while the average capacity factor for offshore wind is 45 percent—less than half. So an equal amount of offshore wind capacity will only replace half the output of a nuclear plant. Given that neither plant produces carbon dioxide emissions to operate, there seems to be little advantage in shuttering the nuclear plant in favor of wind power.

Cuomo’s Offshore Wind Proposal

The state is expected to release a master plan with proposals to locate offshore wind in the Atlantic Ocean by the end of 2017. A proposal now being considered is for a 90-megawatt offshore wind plant off Long Island, New York. The 15-turbine project would be built by Deepwater Wind, who completed a small offshore wind project off Rhode Island last year. The Long Island Power Authority must approve the project, which would be built 30 miles southeast of Montauk on a site leased from the federal government. The wind farm would provide about 1.6 percent of the peak electric usage by the power authority’s customers. An early outline of the plan by Deepwater indicated that the project would include two energy-storage facilities, with lithium-ion battery technology in industrial zones in Montauk and in Wainscott—a community on the East End of Long Island. While a vote on this project was to be taken last July, it has been delayed. The original date for on-line operation of the wind farm was to be 2022.

Also, in December, New York lost out in a federal auction for offshore wind development rights to Statoil—a Norwegian oil company. The New York State Energy and Research Development Authority wanted to package the federal leasing rights with regulatory approvals and an agreement to purchase the power, and re-sell it to a private developer.

That offshore wind sale occurred despite resistance from a coalition of fisherman, who filed a federal lawsuit to stop the federal Bureau of Ocean Energy Management from auctioning the offshore tracts for wind-energy development. They opposed the sale because some of the best squid and scallop fisheries are located on the Eastern Seaboard, citing that the project would harm fisheries. [v]

While a wind farm has been constructed off the coast of Block Island, Rhode Island, its situation was different from that of Long Island. The Block Island wind farm is a smaller 30-megawatt facility located in waters managed by the state of Rhode Island rather than the federal government.[vi] Its main purpose is to serve the residents of Block Island, who have been paying high prices for electricity generated by diesel generators. So, the 24 cent per kilowatt hour cost for the electricity from the Block Island offshore wind farm was not as overwhelming as it would be to locations where reliable, less expensive electricity has been the norm. [vii]

Conclusion

New York already has one of the highest electricity prices in the nation. As of September 2016, it ranked sixth among the states with average residential electricity prices at 18.38 cents per kilowatt hour43 percent higher than the average residential electricity price in the United States. Prematurely retiring an existing nuclear plant and replacing it with intermittent offshore wind energy is not only expensive for New York consumers, but it will also provide reliability problems as New York’s Independent System Operator has indicated, unless adequate reliable power is constructed in the next four years.


[i] Politico, Cuomo commits state to developing 2,400 megawatts of offshore wind, January 10, 2017, https://www.politicopro.com/energy/story/2017/01/cuomo-commits-state-to-developing-24-gigawatts-of-offshore-wind-143559

[ii] The Advocate, Entergy to shutter New York nuke plant, exit merchant power business. January 9, 2017, http://www.theadvocate.com/baton_rouge/news/business/article_89dec778-d675-11e6-96e9-fbbc12567b9d.html

[iii] Politico, Cuomo to announce closure of Indian Point, January 6, 2017, http://www.politico.com/states/new-jersey/story/2017/01/sources-cuomo-to-announce-closure-of-indian-point-108520

[iv] Energy Information Administration, http://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf

[vi] Wall Street Journal, Long Island to Get Offshore Wind Farm, July 14, 2016, http://www.wsj.com/articles/long-island-to-get-offshore-wind-farm-1468543750

[vii] Institute for Energy Research, Expensive Offshore Wind Farm Becomes Operational, December 16, 2016, http://instituteforenergyresearch.org/analysis/expensive-offshore-wind-farm-becomes-operational/

The post New York Shutters Indian Point Nuclear Power Plant, Builds Expensive Offshore Wind Instead appeared first on IER.

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