|
October 2017 - Schultz Engineering, LLC - How to Replace Palisades Nuclear Power with Renewable Energy by 2022? While there are mixed reactions from the environmental community given the concern about what will replace Palisades, the reality is that economics, not emissions, drive our energy decisions in Michigan. If Palisades ceases operation in the Spring of 2022, how can we replace its production with something cleaner that is also economically viable? On September 28th, 2017 Palisades announced, "Entergy to Continue Operating Palisades Power Plant Until Spring 2022 COVERT, Mich. (September 28, 2017) – Entergy Corporation (NYSE: ETR)announced today that it plans to operate Palisades Power Plant in Covert, Michigan, until the spring of 2022, under the existing Power Purchase Agreement (PPA) with Consumers Energy. “In light of the Michigan Public Service Commission’s order issued September 22, which granted Consumers Energy recovery of only $136.6 million of the $172 million it requested for the buyout of the PPA, the parties have agreed to terminate the buyout transaction,” said Charlie Arnone, site vice president and Entergy’s top official at Palisades. Today’s announcement reverses Entergy’s December 2016 decision to close Palisades on October 1, 2018, but Entergy remains committed to its strategy of exiting the merchant nuclear power business. We greatly appreciate the continued patience of our employees and the local community in Southwest Michigan throughout this regulatory process, and we will continue to focus on the plant’s safe and reliable operations, Arnone added. Entergy will continue to make all necessary investments and maintain appropriate staffing, in accordance with strict licensing standards. Financial Implications: The impact of the decision on free cash flow is expected to be positive $100 million to $150 million compared to the PPA amendment with Consumers Energy. In addition, due to the change in operating assumptions, under applicable accounting rules we no longer expect fuel, refueling outage costs and capital expenditures to be expensed as incurred. Instead, these expenditures will be amortized or depreciated over their useful lives and the expense will be included in operational results."  Picture source: http://www.palisadespower.com |
|
Can we replace Palisades Nuclear Plant with Clean, Renewable Production Economically? The Short Answer is "YES!" I base this answer on the conclusions of the comprehensive "Prosperous, Renewable Maryland" report released in November 2016. http://ieer.org/wp/wp-content/uploads/2016/11/RenewableMD-Roadmap-2016.pdf "This report details a Climate Protection Scenario that can also be seen as a scenario for healthy prosperity. It shows that an energy system to protect climate would be 4 to 23 percent more economical than business-as-usual (BAU). It will save Marylanders between $1.3 billion and $7.3 billion a year (2011 dollars) in energy costs in 2050..." "The electricity system can be 100 percent renewable based almost entirely on solar and wind as primary energy sources, complemented in various ways by demand response, combined heat and power (CHP), renewable hydrogen, and battery storage. Baseload generation is not required..." quote from page 20 of Prosperous, Renewable Maryland report. |
|
The Economics behind closing Palisades "The companies entered the 15-year PPA (Purchase Price Agreement) in 2007, when Entergy bought the plant from Consumers parent CMS Energy for $380 million. However, the agreement's prices exceed market prices and escalate each year, reaching $61.50/MWh in 2022. "We determined that a shutdown in 2018 is prudent when comparing the transaction to the business risks of continued operation," Entergy CEO Leo Denault said in a press release in December 2016. In its most recent 10Q, Entergy said the "fair value of the Palisades plant would have been, and currently would be, significantly lower in the absence of the power purchase agreement that is scheduled to expire in 2022." It also pointed to the drop in energy prices in MISO, in which Palisades operates." Source: https://www.rtoinsider.com/entergy-closure-palisades-nuclear-plant-35133/  In a May 8th public hearing, MPSC Chair Sally Talberg said, "Specifically the Michigan Public Service Commission is considering whether Consumers Energy can recover, from its customers through its utility rates, a ($172 million) buy-out payment to Entergy...We're examining whether there is actual cost savings when you factor in the buyout payment and replacement of any alternatives to provide energy." "Consumers has proposed to recover the $172 million buy-out payment through customers utility rates using a special form of financing known as securitization. In an application for a financing order filed Feb. 10, Consumers alleges its customers would save between $54 million and $1.1 billion by ending the contract early, even with the utility charges." "The Public Services Commission will make a decision on Consumers' application by August. While expert witnesses will testify before Administrative Law Judge Sharon L. Feldman in June, the Monday meetings were held to solicit feedback from people directly affected by the closure." "Issues related to safety and economic impact aren't in the purview of the regulatory commission, Talberg said, though it is "cognizant of the broader implications of this decision."" ""The commission is really focused on cost-savings (and) looking at the overall power supply to make sure that if this contract is terminated early there is adequate energy resources to keep the lights on," Talberg said." source: http://www.mlive.com/news/kalamazoo/index.ssf/2017/05/palisades_nuclear_plant_closur_1.html#incart_river_index_topics "Entergy has notified the U.S. Nuclear Regulatory Commission (NRC) of its intent to permanently shut down Palisades by May 31, 2022." Charlie Arnone, Site Vice President Palisdades Dec. 4, 2017 letter to MSEF. |
|
How Much Electricity Does Palisades Produce? PALISADES POWER! Peak Output: 800 MegaWatts Historical Yearly Output: 6,000 Giga Watt-Hours (GWh), That is 6 Million Megawatt-Hours, or 6 Trillion KiloWatt-Hours Production Ability: 24 hours per day, months at a time with no stoppages for refueling, etc.!!! Estimated Annual Gross Revenue: 6 Trillion kWh x $.055/kWh = $330,000,000 = $330 Million Dollars per year Facility Size: 432 Acres  |
|
The Bigger Picture: How much electricity does the State of Michigan use per year? The state of Michigan is using about 105,000 GWh of electricity per year 10 Million People live in Michigan, There are about 3.8 Million Households in Michigan. Therefore, Palisades produces about 6% of the electricity consumed in the State of Michigan.  |
|
Decommissioning Trust Fund - How Much Will It Cost to Decommission Palisades? Here is a picture showing how the trust fund balance has changed over the years.  When asked "What does Entergy estimate it will cost to decommission the Palisades Nuclear Power plant after the planned end of production in the spring of 2022?", they responded with this letter.  |
|
Exactly how much Wind, Solar and Storage Needs to be installed to replace Palisades? Click Here for more technical details on how much wind and solar would need to be installed to replace Palisades |
|
Copyright 2017 Schultz Engineering, LLC Click here for printable version of this page |