Why does Utah and the surrounding region need nuclear power?
Nuclear power provides some of the most stable base load sources of power in the U.S. Furthermore, nuclear power generation costs have been at or below the national average of coal and natural gas fired power plants during the last decade. However, there have been only a few nuclear power plants built in the West. Of the 104 commercially operating nuclear power reactors in the U.S., only eight are located in the west.
Utah and the western region have significant need for new electricity resources. Utah is one of the primary areas that would benefit from new base load nuclear electrical generation. Because Utah has the closest service area to the proposed plant, it would not incur the cost of long distance transmission, and therefore, load serving electric utilities in the State would have a a cost advantage participating in the Blue Castle project.
PacifiCorp is projecting Utah's annual coincident peak load growth to be 2% per year-the third highest in the entire six state PacifiCorp service area. Energy growth for Utah is also expected to be about 2.6% per year (versus 2.3% for the entire seven state service area) [Table 3.1 and 3.2 of Updated 2008 Integrated Recourse Plant]. Given PacifiCorp's existing resource base of power plants, power purchases, interruptible power contracts and demand side management (DSM) for the eastern region, PacifiCorp's east service area (comprising Rocky Mountain Power), planning reserve margin (12%) is likely to be breached by 2012 and by 2018 the east service area will require an additional 2,380 megawatt of capacity to meet peak load growth (see below).
Additional pressure for new electric resources in the west is materializing because of coal plant closures and essentially no new coal plant construction. The recent changes to the EPA emissions standards for coal fired power plants has resulted in the 2005 closure of the 1,500 megawatt Mohave Power Station in Nevada. The EPA has targeted the 2,040 megawatt Four Corners Power Plant in New Mexico to either improve emissions or shutdown. The 2,280 Navajo Generation Station in Arizona will likely be next.
The value proposition of new nuclear can be represented by comparing projected electricity costs from the most likely new base load alternatives-natural gas. A new coal resource is not included in this comparison because of the low probability that such a project could successfully be permitted in the foreseeable future.
PacifiCorp's(regional Investor Owned Utility - IOU) has projected the range of costs for electricity produced with natural gas to be anywhere from slightly higher than nuclear power to as much as double the cost of nuclear electricity when gas is used in plants that are not base loaded. Natural gas is the only dual use fuel used by electric generators and presents business risks that are extremely difficult to contain and manage. In the early 2000s, gas market volatility caused the collapse of the merchant natural gas generating industry. However, the lower initial capital cost and short construction time makes natural gas a continuing option for some utilities, especially with the current low marketplace cost of gas. The importance of fuel diversification and price predictability for a region like Utah should not be underestimated, making nuclear power a natural option for inclusion in the state energy portfolio.
Nuclear power on the other hand presents virtually no volatility issues to generators. The cost of nuclear fuel is less than 12% of the total cost of nuclear generation (versus 80% for natural gas). Once a nuclear plant begins commercial operation there are almost no resource risks to manage and the cost of nuclear electricity is highly stable and predictable.
Even though it will require five years to license and another five to seven years to build a new nuclear facility, its 60 year- long term benefits should be considered to improve the base loaded, low cost electricity supply to Utah and some of its neighbors.
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