Impacts of NY’s Nuclear Power ‘Bail Out’ and Solar, Wind Boost

By Tara MacIsaac, Epoch Times
August 3, 2016 2:31 pm Last Updated: August 6, 2016 10:08 am

New York State’s Clean Energy Standard, approved by the Public Service Commission on Aug. 1, will have an unprecedented impact on the nuclear power industry.

It includes what has been called a consumer-funded bail out of upstate New York’s struggling nuclear power plants.

Nuclear energy is treated in the state’s plan as a bridge to a renewable energy future. The commission said nuclear is necessary to maintain stability in the power grid as New York makes the transition toward the standard’s goal of 50 percent renewable energy by 2030.

By subsidizing nuclear power alongside solar and wind, the state is making a bold statement about the value of nuclear reactors as zero-emission energy sources. This could ripple to other states, inspiring similar initiatives to revive the sputtering nuclear industry.

Impacts of the clean energy plan on the nuclear, solar, and wind industries will affect New Yorkers in many ways.

For the upstate communities surrounding the nuclear plants, the commission’s decision to approve the standard brings new hope. The plants may have shuttered without the help of these subsidies, taking thousands of jobs and massive contributions to the local economies with them.

Upstate communities can also expect to see more large-scale wind and solar farms. Debates about the pros and cons of these farms are bound to ensue, as many such projects have already been slowed or halted due to community opposition.

Consumers all over New York will help cover the costs of implementing the Clean Energy Standard. But Governor Andrew Cuomo’s office estimates consumers will only see an increase on their power bills of about $2 per month or less.

How It Works

Electricity providers will be required to obtain a targeted number of renewable energy credits (RECs) and zero-emissions credits (ZECs) each year.

A REC is created each time 1 megawatt-hour (MWh) of electricity is generated by a renewable resource. RECs can then be sold and traded among providers.

ZECs, on the other hand, are related solely to the nuclear plants. These credits are created when zero-emission nuclear power is generated.

Ravenswood Generating Station in New York City. (Felix Lipov/Shutterstock)
Ravenswood Generating Station in New York City. (Felix Lipov/Shutterstock)

So the state awards ZECs to the nuclear companies, which the energy providers must buy from them. The costs of the ZECs that electricity providers purchase will be passed on to the consumer, baked into the supply charges on consumers’ bills.

A back door may be opened for New Yorkers opposed to supporting nuclear energy.

This is how consumers will pay for reviving the nuclear plants.

How It Will Affect Consumers

The nuclear industry is having trouble competing with low natural gas prices. ZECs essentially force state residents and businesses to pay above-market rates for nuclear energy.

But the governor’s office and Public Service Commission Chair Audrey Zibelman suggested a back door may be opened for New Yorkers opposed to supporting nuclear energy.

A press release from Cuomo’s office stated that consumers may be offered a 100 percent renewable energy option. The idea is that consumer demand for 100 percent renewable energy could naturally encourage the development of new renewable energy facilities.

“If it does that,” Zibelman said at the commission hearing on Aug. 1, “then I think it’s fair to say to those customers, if you truly don’t want to buy nuclear, we will allow you not to be required to contribute to that program.

“We’re asking staff to look at that and we’ll see how we can make that happen.”

(Tonyz20/Shutterstock)
(Tonyz20/Shutterstock)

In addition to providing various options for consumers, Zibelman said clear labeling will be important. “What I would like to know, as a consumer, [is] that if I’m … buying what is a ‘green product’ … are those megawatts really green,” she said. If it’s only 50 percent renewable, for example, the consumer will be told so in clear terms.

How It Will Affect Nuclear

There are six nuclear reactors in New York State: two at the Indian Point Energy Center, one at the James A. FitzPatrick Nuclear Power Plant, one at the Robert Emmett Ginna Nuclear Power Plant, and two at the Nine Mile Point Nuclear Station.

The commission only talked about the necessity of the four upstate reactors, leaving Indian Point out of the discussion. Cuomo has long called for Indian Point’s closure, concerned by its proximity to New York City.

The Indian Point nuclear power plant in New York. (Mario Tama/Getty Images)
The Indian Point nuclear power plant in New York. (Mario Tama/Getty Images)

The FitzPatrick plant was set to close in January 2017. However, the commission has built incentives into the standard to keep all four upstate reactors running. For example, it will cut overall nuclear subsidies if any of the four reactors is shut down.

Although nuclear subsidies are estimated to cost $1 billion in the first two years, and more over the 12-year course of the plan, nuclear industry advocates have said the plants will return more than that to the state’s economy.

The benefits of retaining the state’s nuclear plants in the first two years of the program, valued at $5 billion, dramatically outweigh the estimated costs of less than $1 billion.
— Marvin Fertel, president and CEO, Nuclear Energy Institute

According to a study commissioned by New York utility and trades councils, “New York consumers would pay over $1.7 billion annually and almost $15 billion in the next ten years … absent the upstate nuclear plants.” The study bases this estimate on capacity market price changes that could occur as a result of natural gas replacing nuclear in the grid.

Nuclear currently accounts for about 30 percent of New York’s electricity.

Marvin Fertel, president and CEO at the Nuclear Energy Institute, released a statement after the standard was approved, part of which reads: “The Public Service Commission staff estimates that the benefits of retaining the state’s nuclear plants in the first two years of the program, valued at $5 billion, dramatically outweigh the estimated costs of less than $1 billion.”

Aside from jobs, the plants provide other economic stimuli for upstate New York, such as the millions they pay in taxes annually.

Where Will All the Solar Panels and Wind Turbines Be Built?

About 90 percent of the state’s renewable energy is anticipated to be located in upstate New York, according to a supplemental environmental impact statement prepared by the commission for the New York Department of Public Service.

The impact statement estimates 34,000 gigawatt-hours (GWh) of new renewable energy will be needed to meet the standard’s mandate. About 3,000 GWh of that is expected to come from behind-the-meter generation, such as solar panels on people’s houses. But utility-scale solar and land-based wind is expected to account for large portions of the rest of it.

Wind turbine and solar array projects have already met with resistance in many communities.

Windmills along the Lake Erie shoreline near Buffalo, New York. (Bruce MacQueen/Shutterstock)
Windmills along the Lake Erie shoreline near Buffalo, New York. (Bruce MacQueen/Shutterstock)

For example, residents of Oneida, New York, have filed a lawsuit against developers of a 10-acre solar array that would provide power for city government buildings. Among the objections are concerns that property values would drop as wooded land is swapped for solar paneled land, which some people consider an eyesore.

Yet the largest solar farm in the eastern United States began operations near the Brookhaven National Laboratory in 2011, despite some community resistance.

In addition to wind turbines and solar arrays, the New York Independent System Operator (NYISO) has warned that some 1,000 miles of new bulk power transmission infrastructure may have to be built to get the power from upstate to the southern regions. Historically, communities have not been keen on these construction projects either.

NYISO has also expressed concerns about the reserve energy that will need to be on demand as less reliable forms of energy (wind and solar) play a bigger role in the grid. Zibelman said the commission will work closely with NYISO to address these concerns.

Could the Plan Be Challenged in Court?

Some question remains over whether the plan will be challenged in court, even though it has passed through the Public Service Commission.

The U.S. Supreme Court quashed power plant incentives in Maryland, on the grounds that they interfered with the wholesale energy market, which is the jurisdiction of the federal government. Some critics have compared the Maryland incentives to those in New York.

The commission expressed several times during the Aug. 1 hearing, however, that it has been careful to avoid the wholesale market and any overlap with federal jurisdiction, so that it can avoid getting caught up in litigation.

No large-scale plan is without its bumps, but the commission said it will have annual and triennial reviews to make sure everything is on target, new technologies are integrated, and obstacles are given due consideration. Commission staff member Scott Weiner said the reviews will help the commission keep “a constant hand on the policy throttle.”

Correction: This article originally stated that there are five nuclear reactors in New York State, with only one at Indian Point. Actually, Indian Point has two, for a total of six reactors in the state. Epoch Times regrets the error.