EVA has modeled the impact of the retirement of Entergy’s Indian Point nuclear plant and found that in the near term, power sector carbon emissions will increase as the lost nuclear generation is replaced with natural gas generation. Further, the retirement will increase the cost to comply with the state’s recently updated Clean Energy Standard (CES) because additional carbon-free generation will be required. Beyond 2021, however, the development of offshore wind and solar resources in response to state solicitations will pressure natural gas consumption to the point that carbon emissions continue to decline.
Carbon emissions from New York’s power sector have declined by more than one-third over the last decade thanks to a transition away from coal towards efficient gas-fired combined cycles (CCGT). Coal’s market share has dwindled from 10% to roughly 0.5%, and the state’s last remaining coal plant is expected to retire this year. With wind and solar struggling to gain a foothold so far, New York’s six nuclear reactors combined with its hydroelectric fleet provide more than 90% of the state’s carbon-free generation.
When the first unit at Indian Point is shuttered in April, it will be the ninth reactor to be retired in the U.S. since 2010, and the first in the new decade. The second unit will follow suit a year later in April 2021. The 2,050-MW plant, which lies 25 miles north of New York City, generates close to 17,000 GWh annually and accounts for roughly 12% of the state’s total generation. It is also New York’s second-largest source of carbon-free generation.
Indian Point’s fate was sealed in early 2017 when Entergy and New York State announced that they had reached an agreement in which Entergy would fully shutter the plant by April 2021 in exchange for the state’s support in the renewal of its Nuclear Regulatory Commission operating licenses, which had expired several years prior. The announcement marked the end of a years-long battle between the administration of Governor Andrew Cuomo (D) and Entergy around the safety hazards of operating a nuclear plant near the country’s largest metropolitan area.
Following the announcement, the market reacted accordingly. Two efficient CCGT plants that would serve as replacement capacity for the retiring nuclear facility were soon under construction. The first plant, the 700-MW Valley Energy Center, entered service in mid-2018 while the second plant, the 1,000-MW Cricket Valley Energy Center, is slated to begin operating in March. These plants will largely rely on gas from the Marcellus and Utica shale regions in neighboring Pennsylvania and Ohio. In addition, a new 1,000-MW transmission line designed to bring hydropower from Ontario to New York City remains in development, though its future is uncertain amid a lack of regulatory progress.
In August 2016, several months before Entergy announced that it would retire Indian Point, the New York Public Service Commission (PSC) adopted a Clean Energy Standard that, among other things, called for 50% of the state’s electricity to come from clean sources by 2030. Under the Standard, the state’s existing nuclear facilities qualify as clean sources. In June 2019, Gov. Cuomo announced the Climate Leadership and Community Protection Act (CLCPA), which expanded the existing Clean Energy Standard and called for even steeper greenhouse gas reductions.
For more details and analysis on how New York is likely to meet its aggressive carbon reduction goals (read EVA’s report on the CLCPA) or to discuss any other policy assessments, please contact Rob DiDona at [email protected]