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Indian Point Nuclear Plant Closure Impacts

In January 2017, Entergy and New York State came to an agreement on the Indian Point Nuclear Plant Closure plan by 2021.  This is New York State’s ‘have your cake and eat it too’ moment as this news comes on the heals of Constitution gas pipeline’s permits being denied in Q2 2016 followed by the ’50 by 30′ plan whereby the State will meet 50% of generation with renewables by 2030.  While many states are taking action to fight climate change and wind and solar seem to be what the constituents want to see, constituents don’t seem to be paying attention to generation utilization rates, reliability, and the role natural gas plays as a backstop to intermittent renewable resources.  So what would it take to backfill the over 2,000 MW of capacity from Indian Point?

If we look at power generation utilization rates by region as shown above where NY falls in Appalachia we can see 1) the extremely high utilization rate of 97% that nukes run at, 2) gas runs at a much lower utilization of 51% meanwhile 3) solar and wind utilization rates are extremely low due to intermittency at 4% and 26% respectively.  There is a Hydro Quebec Hertel-New York project that the NYISO 2016 Gold Book has bringing 1,000 MW online in 2019.  If we make the generous assumption that Hydro Quebec can backfill 1,000 MW from Indian Point, then what capacity additions would it take to backfill with gas, solar, and wind?  Based on the utilization factors above, that would require additions of 25,000 MW of solar, or almost 4,000 MW of wind or about 2,000 MW of gas plants.  New York has approximately 1,700 MW of installed wind capacity in 2015 so the state would need to add 2.5 times current capacity to backfill 1,000 MW with all wind.  Meanwhile, between gas plant development in PJM and NYISO, meeting 2,000 MW of capacity by 2021 is well within reach.

If we look closer at gas plants and pipeline flows into the Hudson River Valley in New York, gas plants have access to plenty of existing pipelines however access to gas in the winter is the key issue.  See the map below showing pipelines surrounding the New York Hudson Valley.

And if we look at pipeline flows we see there is about 4.5 Bcf/d of volume flowing into the New York Hudson Valley on a peak winter day with this number dropping to about 2.7 Bcf/d in summer 2016.  Increased supply from Constitution would result in increased supply in winter which would be a benefit for all consumers including gas-fired power plants needed to backfill Indian Point.

Ironically, recently some plants in the demand area of the Appalachian market are converting coal plants to dual-fuel gas generation and as a result, are running gas April through October when gas pipeline capacity is available and gas prices are lower relative to winter and then switching over to burn coal November through March when gas prices are relatively high as pipeline capacity is scarce.  Back to the ‘have your cake and eat it too’ so New York state is blocking a natural gas pipeline, retiring an emissions-free nuclear plant and the market response is burn more coal. All this for the benefit of the environment.  To hear other great steps in the progress of man – join BTU Analytics tomorrow in Houston for our annual conference – What Lies Ahead 2017.

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Andrew is the CEO at BTU Analytics, LLC and has worked in the energy and technology industries for over 20 years. Prior to BTU Analytics, he was the Senior Commercial Director of North American Natural Gas at Platts-Bentek Energy where he led the natural gas analytics team. Andrew’s past experience includes positions at Amoco Production Company and Constellation Energy. He holds a Masters in Energy and Environmental Analysis from Boston University and a Bachelors in Geology from Colorado College.

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