On July 27, 2018, NextEra Energy Resources announced that Duane Arnold Nuclear Plant will close in late 2020. Licensed until 2034, Duane Arnold had previously planned to shut down in 2025, following the expiration of its current Power Purchase Agreement (PPA) between NextEra Energy, who owns 70% of the plant, and Alliant Energy, Duane Arnold’s largest customer. In exchange, Alliant will submit a $110 million buyout in September 2020 to cover the remaining five years of the PPA. Alliant will also purchase 340 MW from four NextEra wind facilities located in Iowa in exchange for ending the PPA. Officials for both Alliant and NextEra say cheaper prices for alternative energy sources drove the decision to close the plant.
Duane Arnold is a single-unit, 615MW boiling water reactor located near Cedar Rapids, Iowa; it is the only operating nuclear power plant in Iowa
The plant had a three-year capacity factor of 95.8%, higher than the industry average
The shutdown of Duane Arnold affects approximately 500 highly skilled workers, although 200-300 jobs will remain at the plant to support decommissioning
Duane Arnold produces 9.2% of Iowa’s total electricity and 19% of Iowa’s emission-free electricity
Central Iowa Power Cooperative (CIPCO) owns 20% of Duane Arnold and takes 35% of its energy portfolio from the plant; CIPCO’s energy supply is more than 60% emission-free, and according to CIPCO’s CEO, “nuclear energy is a key part of [CIPCO’s] carbon-free resource diversity”
This is an example of another well-run plant closing down. The announcement to prematurely close Duane Arnold five years early represents another setback for the United States nuclear industry. The shutdown will have adverse effects on jobs, the local economy, and the community where Duane Arnold operates. Duane Arnold is one of the largest employers in Linn County, Iowa, and is considered an active and charitable member of its community. Iowa will also miss Duane Arnold’s resiliency—the plant remained online during Iowa’s catastrophic flooding in June 2008, while other generating assets were forced to shut down.
According to ScottMadden’s study published in April 2018, “While You Were Sleeping: The Unnoticed Loss of Carbon-Free Generation in the United States,” the United States faces the loss of more than 228,000 gigawatt hours of carbon-free nuclear generation due to plant closures, representing 5.6% of total U.S. net generation in 2016. Once a nuclear plant is shut down, it will not restart, and that source of carbon-free electricity is lost. The Trump Administration is considering using emergency powers to subsidize nuclear plants for national security reasons. Likewise, left-leaning politicians and environmentalists have expressed concerns about the closure of nuclear power plants, because shuttered nuclear plants tend to be replaced by carbon-emitting sources, including natural gas.
In the long run, renewable technologies, namely wind and solar, may evolve to the point that they can economically compete with cheaper fuels. In the short term, meaningful reduction in carbon emissions will require nuclear power plants to be operational.
NEI: Iowa Fact Sheet
Utility Dive: NextEra to Retire Iowa Nuclear Plant in 2020
RTO Insider: NextEra to Close Duane Arnold Nuclear Plant
This report is part of ScottMadden’s Nuclear Minute series. To view all featured Nuclear Minutes, please click here.
Additional Contributing Author: Jim House
Sussex Economic Advisors is now part of ScottMadden. We invite you to learn more about our expanded firm. Please use the Contact Us form to request additional information.