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Dominion closing nuclear plant due to low natgas prices
(Reuters) - Dominion Resources Inc plans to shut its Kewaunee plant in Wisconsin next year, the first U.S. nuclear plant to fall victim to the steep drop in power prices as rising natural gas production makes some plants uncompetitive.
After claiming hundreds of coal-fired plants, the boom in U.S. shale gas output is now starting to grind down the nuclear industry, with smaller older plants like the 566-megawatt (MW) Kewaunee plant first to be affected.
The surge in U.S. shale gas has upended the domestic power market, and this year combined with flagging demand due to the struggling economy to send prices to near 10-year lows. For the nuclear industry, it means the Dominion plant -- which had been up for sale since April 2011 -- will be the first U.S. reactor to shut since the late 1990s.
The closing, which did not catch many in the industry by surprise, highlights the struggle of the U.S. "nuclear renaissance."
A decade ago, the nuclear industry talked about a nuclear renaissance due to rising fossil fuel prices and concerns about meeting greenhouse gas emissions, but the revival did not occur in the United States as the cost of fossil fuels like natural gas fell and the federal government has been slow to put a price on carbon.
Recently, the rush of domestic gas into the U.S. market and public concerns following the Fukushima disaster in Japan have helped to scuttle some plans to build new reactors.
Natural gas' share of total U.S. generation has increased to 30 percent this year from about 20 percent in 2006, while the percentage from nuclear has held steady at about 20 percent.
Power prices in the PJM grid, the nation's biggest power grid, for the first nine months of 2012 were down almost 30 percent from the same period last year and the lowest since 2002.
For Virginia-based Dominion, the decision to decommission the plant, in the second quarter of next year, was "based purely on economics," according to Thomas Farrell, Dominion chairman, president and chief executive.
Attempts to find a buyer failed, even thorough the plant had a renewed license that did not expire until 2033. With natural gas prices expected to remain under pressure from rising shale output, the company decided to take a third-quarter after-tax charge of $281 million to decommission Kewaunee.
Supply and Demand, works every time. Just goes to show that we think the cost associated with climate change are going to be less than expensive electricity.
just companies trying to give their shareholders the biggest return in the shortest time and not worrying about what is 5 years down the line. The problem is noone is pushing any other ideas to the short term money making.
You can't fight the economics. Nuclear has never been particularly cheap, it was only embraced so wholeheartedly in the 20th century because the major powers had strategic interests that made access to a uranium fuel cycle attractive. From a financial point of view the tight regulation and safety standards required meant it's a fairly high cost way to sell dirt cheap base load electricity.
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