Wednesday, February 6, 2013

Another Nuke Plant to be Mothballed

There has been much made about "cheap gas" contributing to the early retirement of smaller nuclear plants and those that require significant capital reinvestment to continue to operate.  Continuing this trend, Duke Energy announced yesterday that it will close down its idled Crystal River nuclear plant in Florida and replace it with a new $900 million natural gas-fired plant in North Carolina.

Nuclear was long ago billed as the cheapest of energy sources, but the enormous capital investment required for long-term upkeep of troubled plants make them easy marks for the scrap heap.  Plants with smaller capacity have trouble covering the overhead nut when coal and gas are both inexpensive.  Nuclear remains a valid power source, but with cheap, plentiful natural gas and highly efficient gas turbines, the "nuclear paradigm" holds up in fewer situations than it did a decade ago.

I view the utility market as the greatest opportunity for natural gas to expand gross consumption.  Most of this new consumption will come at the expense of aging coal plants that will be retired because they are heinous polluters and retrofitting them to meet new air pollution standards would be cost prohibitive. But with the mothballing of more than a handful of nuclear plants years before their permits expire, natural gas has an additional opportunity to gain market share.

This will be an interesting trend to watch.

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