PowerSource Voice: Economics of nuclear power leave Pennsylvania vulnerable

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As of December 2013, Pennsylvania ranked second in the U.S. in the amount of electricity generated. None of our neighboring states was in the top six.

Pennsylvania exports a third of the electricity it generates to other states. These exports are worth about $4 billion a year. Norristown is home to the headquarters of the largest electric power market in the world, PJM Interconnection Inc.

Will this economic powerhouse continue to benefit our state? That depends on whether our Commonwealth can be nimble in responding to the rapid changes in electric power generation that are sweeping the country.

Pennsylvania has a fairly traditional mix of fuels that are used in our power plants. Our coal plants produce about the same percentage of power as in the rest of the country, while our natural gas plants’ market share is only three-quarters as large as that for other states.

In the country as a whole, low-pollution sources of power (nuclear, hydroelectric and renewables) accounted for 32 percent of all electric power last year. Pennsylvania did better than the nation, with 38 percent.

But most of our state’s low-pollution power is from a single source — nuclear.

2013 saw four of the country’s 103 nuclear plants close, three of them largely for economic reasons. Wholesale electricity prices are low because of both low natural gas prices and weak demand for power. When a generation plant requires significant maintenance (for example, a new steam turbine), the slim profits in today’s weak market could make closing the plant an attractive option.

As many as five more nuclear plants may close in 2014. While I am not privy to the financial details of Pennsylvania’s nuclear generators, it is reasonable to expect they are under the same financial pressures as plants in other states. That is the largest threat to clean electric power the country faces.

Pennsylvania’s reliance on nuclear for low-pollution power may make us vulnerable to these market conditions. Our hydroelectric and wind generation (totaling 2.6 percent) lag well behind that in other states (10.7 percent). Local firms like EverPower Wind Holdings are hanging on, but low market prices for power are not making investors keen to build modern water or wind plants.

New Jersey generates six times as much power from the sun as Pennsylvania does.

Pennsylvania’s position as a leading power generation state is at risk. Our coal and gas plants are generally old. The current criminal investigations of contamination from fossil fuel ash in North Carolina and Tennessee have prompted tighter regulations on coal generating plants. The federal government has followed Pennsylvania’s lead in putting stringent controls on mercury pollution from coal plants. Hatfield’s Ferry power station in Greene County and Mitchell power station in Washington County both closed in October.

Pennsylvania has not yet taken advantage of its natural gas resources to bring the market share of power generated by gas up to that in the rest of the nation by building many new gas plants.

Industry values a clean environment to attract workers and a responsible environmental image.

Clean energy is a plus in convincing businesses to locate facilities like Aquion Energy’s battery plant in Westmoreland County. The biomedical and technology companies in Pittsburgh and near Philadelphia that have spun out of our world-class universities all need bright people who like a healthy place to live and work.

What should we do to maintain our enviable position as a major electricity source with a high proportion of clean power?

All the action on energy is at the state level, rather than in Washington, D.C. Pennsylvania led the way in cleaning up the toxic heritage of waste coal piles with our Advanced Energy Portfolio Standard (AEPS). We have the tools we need to diversify our portfolio of low-pollution power.

We can broaden our AEPS to require that utilities in the state continue to supply about 40 percent of power from low-pollution sources. We might call it a Clean Energy Standard.

That would help the economics of our existing nuclear plant and encourage more renewables as well as hyper-efficient natural gas and combined heat-and-power plants.

Any candidate for governor who proposes such a standard would go a long way to ensure Pennsylvania’s electric power future.

Jay Apt is a professor at Carnegie Mellon University and director of the Carnegie Mellon Electricity Industry Center.

Power Source Voice is a regular feature offering insight and opinion on energy subjects. To contribute, contact Teresa F. Lindeman at tlindeman@post-gazette.com.

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