Nuclear power facilities are a hot topic of debate right now. Nukes provide scalable and reliable emissions-free power but some groups worry about safety and environmental issues. The Fukushima disaster in 2011 without question highlighted some of these concerns. Despite some opposition, new units are being added to the US fleet and plans for further additions are on the table. But how will these new facilities impact the rapidly changing US power generation stack and in turn will they have an impact on gas demand?
Currently in the Southeast there are 3.3 GW of new nuclear capacity additions under construction and set to be online by 2018. Since 2013, nuclear provided 23% of the Southeast’s electricity while coal provided 33% and gas provided 44%. On a capacity basis, the Southeast, which BTU Analytics defines as Alabama, Arkansas, Florida, Georgia, Mississippi and Tennessee, has 19.3 GW of nuclear generating capacity installed. This represents 20% of the 98 GW of nuclear generating capacity within the United States. It is also worth noting that just to the north, in South Carolina, the VC Summer units 2 and 3 are being built by South Carolina Electric and Gas. Combined, these two new units will provide an additional 2,200 MW of generation capacity.
The new units in the Southeast are the Watts Bar Unit 2 in Tennessee, operated by the Tennessee Valley Authority and scheduled for operation in 2016, Vogtle 3 and 4 in Georgia operated by Georgia Power Co., scheduled to come online in 2017 and 2018, respectively. These facilities, in addition to the two units in South Carolina, are currently the only new nuclear facilities being constructed in the United States. Additionally, Florida Power & Light is going through the permitting and approval process to add 2 additional units at the Turkey Point facility. These would add an additional 2,200 MW of capacity and are tentatively scheduled to come online in 2022 and 2023. Nuclear additions are not the only changes facing the Southeast as 3.1 GW of coal generation is expected to retire this year. Coal retirements in the region are driven mainly due to MATS and another 2.9 GW will go offline through 2019 for a total of 6 GW over the next 5 years. 35% of this retiring capacity is in Georgia, 28% in Alabama, 19% in Tennessee and the remaining 15% is in Florida.
Using 2010-2013 demand and temperatures as a benchmark, BTU Analytics estimated normal demand for the region and applied a 1% annual growth rate to load in order to estimate that by 2019 the region will need an additional 77,000 MWh/d to satisfy demand. The three new nuclear units alone could provide 72,000 MWh/d at a 91% utilization rate, but the retirement of coal plants in the near term, and maintenance shut downs at nuclear facilities, will leave the door open for gas. 6 GW of coal running at a 35% capacity factor, the average for coal plants retiring, represents 551 MMcf/d of gas demand. The 5,000 MWh/d of demand beyond the new nuke capabilities represents only 37 MMcf/d of demand.
Additionally, the new units in South Carolina could generate 48,000 MWh/d which would represent 18% of daily load over the past four years within the state. Given that there is only 250 MW of coal expected to retire in the state in the coming years, the new nuclear units will be able to absorb any load growth and further declines in the utilization at coal plants.
In total, gas has the potential to grow by 587 MMcf/d in Southeast and could push peak summer power demand close to 10 Bcf/d and peak winter demand to 8.5 Bcf/d. Further price declines or the adaptation of the Clean Power Plant could boost this number. But for now, nukes will find a happy home in the base of the stack while gas is left to fill in the gaps.