By George Harvey
On August 26, 2016, the Omaha Public Power District (OPPD) announced that it would close the Fort Calhoun nuclear power plant, which had a rated output of 476 megawatts (MW). It had been in operation since 1973, and its original 40-year license had been extended for another 20 years.
The reason OPPD decided to close the plant was a matter of simple economics. It was not making money and keeping it open would require an increase of 2.5% in electric bills for ratepayers. OPPD decided there were better alternatives and notified the Nuclear Regulatory Commission that the plant would cease operations on October 24.
Electric demand has fallen in many parts of the country because of efficiencies. For this reason, it was not necessary to replace the full 476 MW of the Fort Calhoun plant. OPPD indicated that it was interested in replacing the nuclear plant, which had a considerably lower carbon footprint than natural gas, with 400 MW of renewable power. Since the plant is in a state with great wind resources, the utility was interested in contracting for a power purchase agreement (PPA) for wind power.
It did not take very long for OPPD to negotiate a PPA. It announced in mid-December that it had contracted for 400 MW of wind power from the Grande Prairie Wind project, which is owned by BHE Renewables, a unit of Warren Buffett’s Berkshire Hathaway Energy. The project is on 76,800 acres in Holt County, Nebraska, and has 200 Vestas turbines.
There are a couple of observations that should be made about these proceedings. Possibly the most important is that nuclear power, which had so long been considered one of the least expensive ways to produce electricity, has been replaced with wind power, which many people still seem to think is too expensive. Current data indicates that both ideas are quite wrong.
Perhaps the most quoted current source for comparing electricity prices is Lazard’s Levelized Cost of Energy Analysis, Version 10.0, which compares costs, including regular subsidies and incentives (http://bit.ly/Lazard-LCOE-10). According to Lazard, the levelized cost of wind power is $32 to $62 per megawatt hour (MWh), and the cost of nuclear power ranges from $97 to $136 per MWh. Even with backup power and purchases to cover power not delivered during calm times, wind power is very much less expensive than nuclear.
The second observation we might make is that nuclear power, which is baseload electricity, is being replaced by wind power, which is variable. The short explanation of this is that the replacement is easier than many people might realize. It happens that baseload power requires backup regularly, just as intermittent and variable sources do. The idea that we cannot go without baseload generation is itself a sort of myth.
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