Nuclear Regulatory Commission

While Michigan's nuclear plants are on good financial footing now, the future of the Palisades plant is in question after 2022.

Michigan nuclear plants on good financial footing, but that may change

Michigan’s three nuclear plants appear to be on solid financial footing at least through 2021 — a notable contrast from other states where nuclear power has struggled to compete with low natural gas prices.

State energy officials say Michigan’s fleet remains vital for maintaining enough energy supply in the Lower Peninsula as well as keeping air emissions within allowable levels. The state’s three plants — Palisades and Cook along Lake Michigan and Fermi 2 in southeast Michigan — generate roughly a quarter of the state’s electricity.

At this point, there hasn’t been discussion here about the need for ratepayers to prop up uneconomic nuclear plants, unlike in Illinois, where lawmakers just agreed to settle a years-long dispute over nuclear subsidies.

But by 2022, the outlook may shift. By then, the state may need to have built replacement generation for one of the three plants with the most uncertainty — the nearly 800-megawatt Palisades plant along Lake Michigan owned by Entergy. Even though Palisades has an operating license until 2031, its current power-purchase agreement with Consumers Energy expires in 2022. The company has moved to shut down or sell its nuclear plants in other states, and studies have suggested cheaper alternatives to replace Palisades.

“Nothing has been put forward to be built” if that was the case, said Valerie Brader, director of the Michigan Agency for Energy. “That (plant) has reliability implications for Michigan. We’re interested in it and need to consider it, but I don’t think we’re in a situation where we have to debate (replacing) it. We have financial support (for the plant) within that time.”

Brader said her agency had been closely watching the debate in Illinois. While Illinois lawmakers and Exelon reached a deal to keep two of the company’s plants open for the next 10 years, closing them would have affected the Midcontinent Independent System Operator’s reserve margin – and Michigan, which depends on imports during the summer. MISO has said that the region may start having trouble meeting its reserve margin requirements as early as 2018.

“Since Michigan is currently dependent on imports to meet reliability requirements, we’ve been watching with interest what’s happening in Illinois,” Brader said in an interview last month.

The state is also waiting to see precisely how crucial Palisades and DTE Energy’s Fermi 2, in particular, are for reliability. In August, the state asked MISO to study Michigan’s reliability in emergency situations, particularly if those plants were to shut down simultaneously as they did in the summer of 2012. The first phase of that study is expected to be completed in spring 2017, a MISO spokesperson said.

“Let’s assume we have the same kind of hot weather in 2018 as we did in 2012, and we see the announced (coal) retirements, would we be able to keep the grid up?” Brader said.

Decisions in coming years

Of Michigan’s three plants, Palisades is the least certain to be operating well into the future.

“Entergy .. has made a lot of announcements in the press that it wants out of the merchant nuclear business,” Brader said.

The company has recently closed or plans to sell plants in Vermont, Massachusetts and New York.

Given the 2022 date and the company’s “stated interest in getting out of that business, certainly it’s something we think a lot about,” Brader said.

Palisades is scheduled for refueling in spring 2017, which will supply the plant with fuel for 18 months and comes with “millions of dollars” in investments for its “safe, secure, and reliable operation,” according to Entergy.

“Given the financial challenges our merchant power business faces from sustained wholesale power price declines and other unfavorable market conditions, we continually evaluate our portfolio of assets and review financial projections to determine their retention, sale or closure,” spokesperson Val Gent said in an email.

Consumers Energy declined to comment on power-purchase agreements with third parties.

About 40 miles south of Palisades, the Cook plant, owned and operated by AEP and a local subsidiary, received a Certificate of Need from state regulators in 2013, showing it was the most “reasonable and prudent” source of generation for the area.

DTE Energy’s Fermi 2 plant in southeast Michigan is seeking a 20-year operating license extension that would extend its life to 2045 (after the current license expires in 2025). The utility also doesn’t plan to build its Fermi 3 plant at this point due to low natural gas prices, even though it obtained a license from regulators last year to do so.

“It gives us another good option for the future if and when we decide to build a new nuclear unit,” said DTE spokesperson Guy Cerullo.

As DTE closes several coal plants into the future, the generation will be replaced by natural gas and renewables, mostly wind, meaning its nuclear portfolio will remain the same, Cerullo said.

“Fermi 2 nuclear is extremely valuable for DTE,” he said. “It’s 1,170 megawatts supplied on a regular basis. And with carbon regulations and issues at this point with climate change, it is a very valuable source of energy in the portfolio.”

Focus on particulates

The debate over whether to support nuclear plants around the country centers on whether a higher value should be placed on nuclear energy’s lack of carbon and other emissions, an issue that has divided environmental groups.

Brader said Michigan’s plants are valuable in limiting particulate-matter emissions, such as mercury, sulfur oxide and nitrogen oxide. According to the Nuclear Energy Institute, Michigan’s nuclear plants avoided nearly 27 million metric tons of carbon emissions and tens of thousands of short tons of SO2 and NO2.

Cost-benefit analyses have shown that limiting these emissions prove most effective for public health benefits, Brader said. And when modeling Clean Power Plan scenarios, Brader has said retiring Palisades “starts to make a difference when you lose that much carbon-free generation.”

“We don’t focus as much on carbon in Michigan, but (for particulates) you’re replacing non-emitting resources with something that does emit (natural gas), so we’d expect to see something there,” Brader said.

However, the administration is also concerned about a lack of options for nuclear waste.

“We have been critical of the federal government for a lack of a plan for nuclear waste,” Brader said. “It’s not necessarily that nuclear energy is a panacea, but when you’re looking at what it will be replaced with, you have to think about both sides of the equation.”

Sam Gomberg, energy analyst with the Union of Concerned Scientists, said starting to consider possible replacements in Michigan’s nuclear fleet “is a very fair question.”

“If you think about where we’ll be 10 to 15 years from now, you want to be pretty careful about the decisions you’re making and the risks you’re taking,” he said. “We’re seeing this around the country. Certainly there’s no reason to panic and start building natural gas plants, and the jury is still out on whether that’s even necessary.”

8 thoughts on “Michigan nuclear plants on good financial footing, but that may change

  1. Reputable independent sources say, the calculations that go into life-cycle carbon emission calculations are incomplete. Other sources say nuclear power is 6X more polluting than wind power and 2X more carbon polluting than PV Solar. Zero emission is a falsehood…you must use the exploration for uranium generated carbon, the mining, the transport, etc., all the way through storage of the uranium of waste and rehabilitation of uranium mines…all generate carbon. An incomplete calculation should not be used to prop up or subsidize inefficient uneconomic nuclear power plants. They should be closed down, and the subsidy used to retrain workers and produce much cleaner efficiency, wind and solar energy sources. Don’t throw good money after bad as was done reluctantly in Illinois. Illinois set a bad precedent on subsidizing a losing technology.

    • Zero emission from nuclear plant operation is not a falsehood, it is an accurate method of comparing energy sources. There is little to no carbon emitted by operating the plant, same as wind and solar.
      In order to compare the carbon footprint for the lifecycle of nuclear to that of wind and solar, you need to compare it on a per MWhr basis. In that comparison nuclear has a less or equal carbon footprint as wind and solar. The raw materials for making wind farms and solar farms also come from mining and there is much more of that required on a per MWhr basis for wind and solar than for nuclear. And why should non-polluting nuclear plants not receive the same propping up or subsidies that wind and solar receive? The answer is that wind and solar are similarly inefficient and uneconomic compared to gas and coal generated electricity, therefore they need subsidies to survive in the free market.

    • According to the IPCC itself, nuclear’s total net CO2 emissions (including all parts of the process) are several times lower than most renewable sources, including biomass, hydro, geothermal and solar. So say, the great majority of studies. Nuclear is roughly tied with wind as the lowest emitting source of all. The main point, however is that for both nuclear and (all) renewables, the total net CO2 emissions are negligible compared to those of fossil sources.

      Even if nuclear’s net emissions were not quite as low as renewables (for the sake of argument), it would NOT justify closing nukes. Again, the main point is that nuclear’s emissions are negligible compared to fossil fuels. It’s overall risks to public health and impacts on the environment are also orders of magnitude less than fossil.

      When nukes close, they are almost always replaced by fossil fuels, not renewables. And, even if one could bring an equivalent amount of renewable generation online (to offset Palisades, for example), you could have used that renewable generation to replace fossil generation instead. Essentially, an indefensible choice of fossil fuels over nuclear, no matter how you slice it.

      While fossil power generation remains prevalent, closing nuclear plants is indefensible, period. Not from an environmental perspective anyway. There is also no justification for treating nuclear and renewables differently under policy; not if the policies are justified on the basis of global warming.

  2. With regards to a quarter of electric energy be produced in Michigan, one half of that 25% is sold out of state by AEP (90% of D.C. Cook Unit 1 & 2 out of state).

    Consumers Power / CMS have locked in their ratepayers until 2022 with Power Purchase Agreement (PPA) from Entergy as the most expensive PPA in the nation. International UBS (bank) last month pointed out that it was in Entergy, CMS, and ratepayers best financial interest to shut the plant down early and break the current contract. A rate win-win-win.

    Palisades is the most embrittled reactor in the nation, putting Michigan and the entire Great Lakes basin at extreme elevated risk of catastrophic disaster if the reactor vessel is breached and shatters.

    Last month economic analysis indicated that both Fermi 2 and Palisades were at extreme economic risk because the cost of Operation and Maintenance (O&M) alone were more expensive than Overnight Pricing from readily available and surplus energy supplies. The devil is in the details, and Midwest Energy News needs to dig deeper than the fluff piece offered above.

    The economic boondoggle bailout of the Quad Cities and Clinton will soon gouge Illinois ratepayers.
    Shame on Illinois legislators who have intervened with this anti competitive bailout to the great detriment of the public.

    • Translation, clear air and global warming mean nothing to you. In the case of nuclear, anyway. I’m guessing you may be one to use those arguments as an excuse to support renewables (and their large subsidies and mandates), but those arguments magically vanish if the subject turns to nuclear.

      Michigan has surplus power generation you say (in reference to the exported nuclear generation)?? Fine, close coal plants. Thought we cared about public health and global warming. Clean air and lack of emissions are of tangible value, and nuclear deserves credit for them, just like renewables. (And yet, people are squawking over small nuclear subsidies but have no problem with much larger renewables subsidies.)

      If the Illinois plants closed, they would have been mostly replaced by coal generation. How is keeping the nukes running, and using their generation in place of polluting/CO2-emitting coal, a “detriment to the public”. Just because it may be a fraction of a cent/kW-hr more expensive. Are you kidding me??

  3. Wind and Solar power just don’t provide the megawatts today that our nuclear friends do. Given a choice of emissions or very little emissions for the same megawatt, I pick nuclear. Palisades is here and now power and that’s good for the country in that it provides reliable power in the interim between today’s and tomorrow’s power. Providing stable and safe electricity to Michigan for over forty years should count for something.

  4. Solar and Wind cannot compete with nuclear capacity factors, period. The complete carbon picture for nuclear has been studied in Canada recently, and it came in even lower than anticipated (lower than wind, I believe). In the South, people need AC ten months out of the year. In the North, they need heating. Everyone else falls in the milder range, so it varies. If climate matters, then nuclear matters more than the gas and renewables combo (and let’s face it, if you build renewables you’re committing to gas). The concepts of grid storage and batteries are not being realized to make a difference right now. I believe Shellenberger recently pointed out during the ANS conference that there is about 23 minutes of grid level storage in CA, which means there is nothing. I don’t know about you, but there is no way on this earth we will use less energy moving forward, so the idea of energy conservation doesn’t really cut it. We’re more techy everyday. I want abundant, secure, dense, high capacity, minimal emissions electricity. Nuclear wins.

  5. Unfortunately, wind and solar are unreliable, especially here in Michigan. I think it is interesting (ie hypocritical) that subsidies for nuclear is called a “ball out” but subsidies for wind and solar are an “investment.” They do the same thing! Prop up an uneconomical energy source! Additionally, when the production tax credits (subsidies) for wind and solar are threaten to be cancelled ALL building of wind/solar farms stops immediately. These production sources cannot survive without assistance. Wind, solar, and single unit reactors are not competitive (dual reactors like Cook are) without gov’t assistance.

    With regard to the carbon life cycle analysis, yes there is great variability here but all (solar, nuclear, wind) are many many times better than coal or natural gas. How about we focus on the worst, coal and natural gas, first? No one is really complaining about natural gas plants being built everywhere.

    Second with regard to life cycle analysis, it all depends on where you draw your boundaries. Just for production, nuclear is a zero emission source like wind and solar. If you want to look at a cradle to grave, renewables actually get in trouble. Nuclear emits LESS emissions than solar, surprisingly (check out the study by the IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation 2011). Few people know that it takes immense amount of energy to mine, refine, and purify silicon enough for PV technology (making the single or polycrystal silicon is the most energy intensive step). Additionally, when you consider a nuclear plant will last 60-80 years with zero emission energy production, while solar will last 20-30 years (with continual decreases in performance due to “wear and tear” of constant sun and harsh weather exposures, while nuclear remains constant day or night), it pushed solar above nuclear in carbon emissions.

    Third, many of the life cycle analysis still use 40 year lifespan of a nuclear power plant. Most have license for 60 years now and some are looking to apply for 80 years. This is not adjusted in the old and outdated life cycle analyses.

    Fourth, life cycle analyses do not consider GenIV nuclear reactors that are being designed to consume the nuclear waste. These reactors are looking to use the nuclear waste that is just sitting around to produce electricity. This means no mining, enrichment, or transportation (if built next to current nuclear power plants). This further decreases the carbon emission per kWh produced because these reactors are able to pull out excessive amounts of energy from waste, while significantly reducing the amount of waste and toxicity of the waste. Many companies such as TerraPower, Transatomic, Flibe, and Terrestrial Energy are designing such reactors. And these reactors aren’t imaginary, we had them in the 60’s and Russia has a huge one running now and plans to build more.

    Finally, wind and solar cannot produce the huge amount of energy Western life style consumes. Many factors contribute to this failure. Reliability (the sun doesn’t always shine and the wind doesn’t always blow), storage (there is no way to store solar energy for the night for example, so excess energy is not there when we need it later), Batteries (there is no current technology that can meet the performance needed to back up renewables and we can’t put our hope in something that has never existed and may never exist; research is not a guarantee), NIMBYism (Not In My BackYard; people are fine if you put up a few solar panels or wind turbines, but when you start pushing closer to the billions of solar panels and wind turbines needed to make any difference, people start resisting because they cover so much land and are not aesthetically pleasing in massive numbers.

    Nuclear on the other hand, produces electricity day or night, windy or not, frigid cold or extremely hot in huge numbers while occupying very little land.