SCOTTMADDEN, INC. | 38 NUCLEAR POWER: HOW DO YOU REDUCE EMISSIONS WITH THE LARGEST ZERO EMISSIONS SOURCE AT RISK? Gas and, increasingly, renewable generation pressure nuclear. But could clean energy credits be the answer? Tough Times for Nukes in the Market • Nuclear power continues to face low market clearing prices due to: Cheap natural gas prices Renewables, benefiting from declining installed costs and policy support • Some nuclear units are not even earning value as capacity—for example, Exelon’s Three Mile Island did not clear PJM’s most recent capacity auction; only a portion of its Byron plant cleared • Moreover, the outlook is not improving, especially as electric consumption is growing tepidly Bidding Farewell: Should I Stay or Should I Go? Announced Nuclear Plant Closures 7 5 6 9 4 8 1 1. Clinton - 1,078 MWs 2. Diablo Canyon Unit 1 - 1,122 MWs 3. Diablo Canyon Unit 2 - 1,118 MWs 4. Fort Calhoun - 479 MWs 2 3 5. FitzPatrick - 852 MWs* 6. Oyster Creek - 637 MWs 7. Pilgrim - 684 MWs 8. Quad Cities Unit 1 - 908 MWs 9. Quad Cities Unit 2 - 911 MWs • More than 6 GWs of nuclear capacity retirement have been announced. Some examples: Quad Cities and Clinton, both in Illinois, have been affected by the Midwest’s migration to gas generation and failure to date to win financial support from the state Diablo Canyon is slated for retirement by 2025 in the face of increasing demand for renewable resources, required investment for safety and seismic concerns, and flattening or negative load growth • Many other units face stark decisions: will investments in facilities and safety improvements for relicensing be compensated by the market? • Moreover, the Clean Power Plan affords no credits for keeping existing nuclear plants online • Analysts believe among those most vulnerable are small, single-unit plants and merchants in low capacity value markets • A coming catalyst for closure decisions, should the market environment remain the same, may be those units that are due for relicensing but face significant capex needs