The EPA rules on carbon for existing power plants issues June 2 create an interesting dynamic for a company like Exelon, based in Chicago, and host city for ELECTRIC POWER 2015. Current market forces have put several of the company's nuclear plants out of the money in PJM, the power market in the east where Exelon plays. The company says it could decide by the end of the year whether or not to keep several of its nukes open.
Keep in mind, however, that the EPA rules favor nuclear generation as a carbon-emission free source of power. In the longer run, those plants seemingly should be quite important in achieving the carbon reduction goals. Sure, you could replace them with gas-fired turbines, but at a net increase in carbon emissions. Energy efficiency and renewables also would be carbon-free choices, but at a cost compared with the existing nuclear assets. Will short-term economics trump long-term benefit?
Meanwhile, NRG Energy’s newly acquired portfolio of coal-fired power plants around Chicago may well suffer long-term under the EPA rules. We saw a month ago David Crane say that those plants could be competitive in the near term against Exelon’s nukes because the coal-fired assets are better able to follow renewables by cycling.
That advantage seems to go away in the longer term as the carbon goals take hold. What ultimately happens also depends on how compliance menu items like new gas-fired generation, energy efficiency, and renewables (among others) are played. And those coal assets are older, so may have a relatively few years of viable operation remaining.
Chicagoland could offer a good snapshot of how the generation mix could be impacted by EPA's rulemakings. What Exelon does with its nukes and how NRG manages its new coal-fired assets may offer a good example of how other generators will address this latest challenge from EPA. I can't think of a better location for ELECTRIC POWER to convene as these rules roll out.
David Wagman, Content Director, ELECTRIC POWER
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