Millstone Power Station:
Supporting Connecticut’s
clean and efficient electricity goals
Sue Tierney
Connecticut General Assembly
Committee on Energy and Technology
January 24, 2017
Background
New report on the value to
Connecticut and New England
electricity consumers from the
continued operation of the
Millstone Power Station.
Study prepared at the
request of Dominion
Resources, Inc., but reflects
the analysis by the report’s
authors (Tierney & Aubuchon).
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 2
Context for our study: Grounded in Connecticut’s goals
 “Affordability” – CT’s goals for more affordable, more
reliable and cleaner power supply.
 “Decarbonization” – CT’s goals to reduce greenhouse
gas (“GHG”) emissions by 80% from 1990 to 2050.
Key question in our study:
 What would happen to CT consumers’ electric bills and
in-state CO2 emissions if the Millstone #2 and #3 were to
retire in the near future (and ahead of their authorized
licenses)?
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 3
Starting point: Millstone’s profile
 New England’s largest power station:
 2,111 MW: total generating capacity at Millstone Station
 Unit #2 = 882.5 MW, with approved operating license to 2035
 Unit #3 = 1,228 MW, with approved operating license to 2045
 Millstone currently produces:
 1/7th of NE’s total electric power generation
 Nearly 60% of electric power consumed in CT
 No emissions of air pollutants contributing to smog or acid rain
 98% of carbon-free electric power generated in CT
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 4
Approach used in our study:
 Modeling of the NE (and larger regional) electric system
with and without Millstone (2017 – 2030).
 Base-case assumption that CT fully meets its electric
goals (e.g., renewables added to meet states’ RPS;
energy efficiency implemented; Canadian hydro added).
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 5
Core results reported in the study
 Premature retirement of Millstone’s two units would move
CT in the opposite direction relative to its goals for
 Affordable electricity
 Lower-carbon electricity
 That’s our conclusion even if all goes well for CT meeting
other targets for clean energy.
 But if those targets end up being more challenging than
expected, it will be harder for CT to meet them without
Millstone.
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 6
Consumers’ electric expenditures (2016 – 2030)
With v. without Millstone
NE:
$6.2b higher
expenditures
without
Millstone
These are only
energy-market
savings
(i.e., no capacity-cost
savings calculated).
Illustratively at the
upper bound,
Losing Millstone
capacity could
increase total
capacity costs by up
to $1.5 billion for the
2019-2020 delivery
year.
(Based on ISO-NE
FCA 10 capacity
prices)
CT:
$500/household
in higher costs
without
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Millstone
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 7
Average wholesale electric energy price in CT
With v. without Millstone ($/MWh) (2016-2030)
Average annual
spot prices:
21% higher
without
Millstone
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 8
Natural gas-fired generation as percent of total NE generation
With v. without Millstone, (2016-2030)
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
In our base-case,
NE’s goals for clean
generation and
efficiency are met
(with commensurate
reduction in gas-fired
generation).
An early Millstone
retirement would
reverse that trend.
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 9
Connecticut CO2 Emissions
With v. without Millstone (2016-2030)
CT:
Increased CO2
= 10% of
targeted
reductions
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 10
Regional CO2 emissions (and CT’s share of the NE total)
With v. without Millstone (2016-2030)
CT CO2 =
33% of NE
emissions
without
Millstone
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 11
Conclusions: If Millstone prematurely retires….
• Its output will be replaced in the short term with output at
gas-fired resources – worsening local air pollution,
putting pressure on in-state carbon emissions.
• Replacing Millstone’s clean generation could require an
additional ~5,000 MW to ~7,000 MW of wind (on top of
the 5,800 MW already assumed to come on line in our
base case). Based on recent cost and performance data from NREL,*
the incremental capital cost to replace Millstone’s output
(17.4 million MWh) would be:
$12-$15 billion for 7,000 of onshore wind
$28-$37 billion for 5,000 of offshore wind
* Onshore wind cost range: $1,723/kW - $2,186/kW (with a capacity factor of ~28%)
Offshore wind cost range: $5,739/kW - $7,344/kW (with a capacity factor of ~40%)
National Renewable Energy Lab, Annual Technology Baseline and Standard Scenario,
http://www.nrel.gov/analysis/data_tech_baseline.html
All values are in $2014.
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 12
Conclusions
Millstone’s continued operation is key to enabling
Connecticut to stay on track in its clean energy,
climate and affordable-energy goals.
 At best: Millstone helps with the transition toward cleaner
supplies and avoids higher-cost replacement resources.
 At worst: Millstone provides a valuable, effective and
efficient insurance policy to help CT focus on “lowering
energy bills and improving the state’s competitiveness.”
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 13
Appendix:
Additional figures from the Report
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 14
Estimated Base Case:
NE generation and CO2 emissions (With Millstone, 2016-2030)
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 15
NE wholesale natural gas prices:
With v. without Millstone ($/MMBtu, 2016-2030)
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 16
Estimated RGGI CO2 Emission Allowance Prices”
With v. without Millstone ($/Short Ton, 2021-2030)
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Source: Tierney, Susan F. and Craig P. Aubuchon, “Millstone Power Station: Providing support for achieving Connecticut’s clean energy goals,” Dec 2016.
Page 17
Susan Tierney, Ph.D.
Senior Advisor
Analysis Group
[email protected]
617-425-8114
Connecticut General Assembly – Energy & Technology Committee – 1-24-2017
Page 18