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Is It Time for California to Phase Out Nuclear Power?

Italy recently became the fourth nation to pledge to phase out nuclear power since Japan's Fukushima disaster. Italy accomplished this feat by a popular referendum, soon after Germany did the same in its legislature (Bundestag). Switzerland has also agreed to a phase out and Japan itself has agreed to phase out much of its nuclear capacity in favor of renewables and natural gas.

Should California do the same? Could it do the same?

California has effectively banned new nuclear plants in the state since the 1970s due to a law that requires there be an effective federal nuclear waste disposal facility before any new plants are built in California. And despite efforts to create a federal waste facility at Yucca Mountain, Nevada, and elsewhere, the U.S. is still far from completing any such facility.

There has not, however, been any widespread push to phase out California’s existing nuclear plants. We have three, two in California (Diablo Canyon in San Luis Obispo County and San Onofre in San Diego Conty) and one in Arizona (Palo Verde) that serves California. These three plants have about 5,000-MW capacity that provide electricity to California and have never suffered any major accidents.

5,000 MW is a lot of baseload power and would require enormous amounts of new wind, solar and/or natural gas to replace these nuclear power plants.

But if a decision were made to phase out these plants, would they need to be replaced?

No one has yet, to my knowledge, looked at this issue in detail. But the state’s grid operator, the California Independent System Operator (CAISO), has recently completed a detailed analysis for integration requirements to get to 33 percent renewables by 2020, now required by law since Gov. Brown signed SB 2. “Integration” refers generally to new natural gas power plants to provide power when variable renewables like wind power or solar power aren’t available.

CAISO examined four scenarios in its recent 33 percent renewables by 2020 analysis, some focusing on in-state renewables only, others including some out-of-state power, more wind, etc. The good news is that CAISO concluded, under its current set of assumptions, that California will not need new capacity to integrate the 33 percent renewables by 2020. The analysis found that only a small “load following down” capacity would be required, which could be met through curtailment of existing facilities, rather than building any new facilities. Why such a surprising finding? A number of factors are relevant, but the primary ones are: an excess of existing natural gas generation; robust state-wide energy efficiency and demand response programs, and a significant number of new cogeneration facilities coming online.

CAISO also found that the state would have about 14,000 MW of excess power available by 2020, even after meeting the 33 percent renewables mandate. This is over and above the “planning reserve margin” required by state law. The planning reserve margin is 15-17 percent above expected normal demand for each utility and it provides a buffer in cases where demand peaks are far higher than expected — during summer heat waves, for example. Figure 1 shows the key slide (slide 65) from a recent CAISO presentation on its analysis. The key figure is in the last column, third from the bottom (14,144 MW). The full presentation is available here and was affirmed on July 1, 2011, with CAISO’s finalized analysis submitted to the CPUC.

Figure 1. CAISO results from 33 percent renewables by 2020 analysis (July 1, 2011)

Comparing the 5,000 MW of nuclear power that serves California, it seems that the projected 14,144 MW surplus by 2020 may allow the phase out of these plants in the coming years without harming the ability of our grid to function reliably.

It is important, however, to recognize that this CAISO report did not explicitly examine a “nuclear phase out” scenario. It would, thus, be irresponsible to conclude without further analysis by CAISO that we could immediately or painlessly phase out these nuclear plants. The responsible course of action would be for CAISO to include a nuclear phase-out scenario in a future iteration of this analysis and vet the results thoroughly with other agencies and stakeholders.

Moreover, the technical ability to serve California’s power demand without our existing nuclear power plants is not the only relevant factor. Another important factor relates to “stranded costs” of these power plants. Nuclear power plants cost billions of dollars to build, which is ultimately paid by ratepayers. Power plants must generally stay online long enough to allow revenue from power sales to pay for the investments. If they are forced offline, and contracts are broken, and “stranded costs” must be paid by ratepayers. No one knows at this time what the stranded costs would be for our existing nuclear plants, but it may be a large amount.

It seems, based on CAISO’s recent analysis, that California may indeed be able to phase out its nuclear power plants without great detriment to the state. But additional study is required, involving not only the ability to serve the electricity needs of Californians but also the stranded costs resulting from such a phase out.

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