California Solar gets a haircut - NEM 3.0

Except it's not a capital cost, it's collected over the life of the plants as part of the rate paid.

Say for example, Diablo Canyon OPEX is $0.038/kWh, but rate paid is $0.040 as it includes a $0.002/kWh rate rider for decom and post-operation fuel management. That sounds tiny, right?

Diablo Canyon is ~2,400MW. Assuming CF is in-line with the rest of the US fleet at ~93%, that's 19.6TWh/year; 19.55 billion kWh. That means that $0.002/kWh rider yields $39 million/year. Assuming a 60 year lifespan (most US reactors are licensed for 60 years, a couple 80 years now), that's $2.35 billion in the decom fund, which is invested and produces a yield over the life of the plant as it accrues, which is how we ended up at $20 billion for ours in Ontario.

Pretty sure the plant falls under a given companies capex?
Someone has to make the capital commitment to the plant.


Operating license timeframe does not equal time in operation - back to san onofre.
 
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Pretty sure the plant falls under a given companies capex?
Someone has to make the capital commitment to the plant.
I'm saying that decom isn't a capital expense factored into constructing the plant, it's something collected over the plant's operating life, so it's not on top of the $18 billion commitment as an upfront cost to build the facility.
Operating license timeframe does not equal time in operation - back to san onofre.
True, which is why usually the time to bank sufficient EOL funds is ~30 years. Darlington up here recently passed the 30 year milestone, it's our newest plant, but the fund is already well over-subscribed in terms of covering its end of life costs.

That said, nuclear is the only industry required to cover all of these costs. If we decom a hydro dam and have to remediate, the ratepayer is on the hook for that CAPEX. If a wind farm developer goes tits-up, the ratepayer is on the hook for remediation.

Nova Scotia, one of our poorest provinces, its ratepayers are currently on the hook for the removal and disposal of a tidal turbine currently stuck on the bottom of the Bay of Fundy:

Because the developer went bankrupt.

I think EOL costs should be included as part of any energy project, it's the most fair to ratepayers.
 
I'm saying that decom isn't a capital expense factored into constructing the plant, it's something collected over the plant's operating life, so it's not on top of the $18 billion commitment as an upfront cost to build the facility.

True, which is why usually the time to bank sufficient EOL funds is ~30 years. Darlington up here recently passed the 30 year milestone, it's our newest plant, but the fund is already well over-subscribed in terms of covering its end of life costs.

That said, nuclear is the only industry required to cover all of these costs. If we decom a hydro dam and have to remediate, the ratepayer is on the hook for that CAPEX. If a wind farm developer goes tits-up, the ratepayer is on the hook for remediation.

Nova Scotia, one of our poorest provinces, its ratepayers are currently on the hook for the removal and disposal of a tidal turbine currently stuck on the bottom of the Bay of Fundy:

Because the developer went bankrupt.

I think EOL costs should be included as part of any energy project, it's the most fair to ratepayers.

Right so the choice is - buy 3rd party generation or commit 18B in Capex (plus X amount of ongoing OPEX + decom) to replace it.

What is being labelled as a "subsidy" is really a service provided by thousands of third party generators who bear both capex and opex like any other independent provider.
 
Right so the choice is - buy 3rd party generation or commit 18B in Capex (plus X amount of ongoing OPEX + decom) to replace it.

What is being labelled as a "subsidy" is really a service provided by thousands of third part generators who bear both capex and opex like any other independent provider.
Yes, the alternative is to spend the $18 billion up-front for a series of assets you can depreciate and finance over 20 years with a 60+ year nominal lifespan, vs paying for a similar volume of power, but one which requires significant FCAS capacity (which isn't free) in the form of gas peakers to accommodate, without any direct capital expenditure, which will cost you that $18 billion over
Doesn't sound like much of a deal to me? (the solar).

Where the subsidy comes in is that this service is being over-paid for to incentivize these 3rd parties to make these capital purchases and afford them a hefty profit, vs paying them like any other market participant who has to do the same exercise, but only receives the market rate for the power they produce, and still have to cover their CAPEX and OPEX.

Put plainly: If you are receiving more than market price in an electricity market, you are receiving a subsidy.
 
Yes, the alternative is to spend the $18 billion up-front for a series of assets you can depreciate and finance over 20 years with a 60+ year nominal lifespan, vs paying for a similar volume of power, but one which requires significant FCAS capacity (which isn't free) in the form of gas peakers to accommodate, as a service, which will cost you that $18 billion over
Doesn't sound like much of a deal to me? (the solar).

Where the subsidy comes in is that this service is being over-paid for to incentivize these 3rd parties to make these capital purchases and afford them a hefty profit, vs paying them like any other market participant who has to do the same exercise, but only receives the market rate for the power they produce, and still have to cover their CAPEX and OPEX.

If they actually had a 60 life span they'd probably be a better deal than they actually are (if we did it like you did it but we dont )

If the service is truly being over paid - just cut me loose -

Why wont they cut me loose or let me go?
 
If they actually had a 60 life span they'd probably be a better deal than they actually are (if we did it like you did it but we dont )

If the service is truly being over paid - just cut me loose -

Why wont they cut me loose or let me go?
I don't disagree with your premise on being allowed to leave this dysfunctional system, you should absolutely be able to.

IIRC, keeping you tethered has something to do with building codes or property taxes? It's a bizarre but regulatory-driven arrangement.

On the topic of lifespan, Darlington refurb is already half done, newer pressure tubes are supposed to be longer lasting, so the next 30 years should actually be the next 40 years, which gives it a 70 year lifespan. Pickering is already >50, if the B units are refurbished (which it looks like they will) they will have a nominal life of around 90 years. Bruce units are in a similar boat, some in their 40's right now and refurbishment is underway, so they will be 80-90 years old in 2064, which is when the plant is currently planned to run until.

However

They are now saying "2064 and beyond", which opens the door for refurbishing them again. CANDU's can be refurbished multiple times, so I wouldn't be surprised to see Darlington get refurbished again in 2060 and Bruce getting refurbished again ~2065.
 
I don't disagree with your premise on being allowed to leave this dysfunctional system, you should absolutely be able to.

IIRC, keeping you tethered has something to do with building codes or property taxes? It's a bizarre but regulatory-driven arrangement.


They keep me/us tethered because they are dependent on the (the collectives) power generation and revenue thats already been paid for from a capex perspective.

They do not want to spend 18B+ replace it so the state concocts a scheme whereby they take what they wish from me by forcing me into a contract.

Defining this set of transactions as a "subsidy" doesn't square with the way business investment works anywhere else in the US.
 
We are alsolutely aligned that a well run efficient generation scheme can produce cheaper electricity more reliably and eceonimcally than renewables and if nuke based primarily can actually be green. If one cares about that.
 
They keep me/us tethered because they are dependent on the (the collectives) power generation and revenue thats already been paid for from a capex perspective.

They do not want to spend 18B+ replace it so the state concocts a scheme whereby they take what they wish from me by forcing me into a contract.

Defining this set of transactions as a "subsidy" doesn't square with the way business investment works anywhere else in the US.
I would argue they aren't dependent on the power generated, as they still have to have sufficient capacity during the morning/evening ramps (though that's marginal, exasperated by the loss of SONGS) but they are dependent on it for the emissions reduction and the associated claims. If they didn't have the solar, the gas plants that aren't run during the day, would run during the day. Remember, you have >33GW of gas capacity that is displaced, during the day, by solar, lowering average emissions:
Screen Shot 2022-12-18 at 3.54.46 PM.jpg
 
I would argue they aren't dependent on the power generated, as they still have to have sufficient capacity during the morning/evening ramps (though that's marginal, exasperated by the loss of SONGS) but they are dependent on it for the emissions reduction and the associated claims. If they didn't have the solar, the gas plants that aren't run during the day, would run during the day. Remember, you have >33GW of gas capacity that is displaced, during the day, by solar, lowering average emissions:
View attachment 131407

Aligned - the providers can completely replace solar with gas most of the time, except heatwave weeks.

The way the money works isnt fungible.

Adding back in the duty cycle on spinning raises both capex and opex on these plants.

The solar feed in is 100% deductible to them, carries no capex burden, is only opex AND they get to mark it up.

Yes the state also wants to claim X % of renewables.
 
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Aligned - the providers can completely replace solar with gas most of the time, except heatwave weeks.

The way the money works isnt fungible.

Adding back in the duty cycle on spinning raises both capex and opex on these plants.
Baseload operation of gas plants is actually easier on them, lowering OPEX in terms of maintenance ;) Fast-ramp is much harder on equipment and requires a significant increase in maintenance service. It also reduces efficiency considerably, as the units are most efficient in baseload operation.
The solar feed in is 100% deductible to them, carries no capex burden, is only opex AND they get to mark it up.

Yes the state also wants to claim X % of renewables.
I don't think they are marking it up as much as you think they are. It's retail (or very close to it in your case) while wholesale might be $0.04/kWh for gas producing during the same period, that's a relative chasm. All of these costs are stacked and an average supply price derived. Paying retail to NEM customers reduces the profit margin considerably (remember, I noted you can't buy and sell at retail and survive) when compared to the spread on average wholesale, which in turn drives up the overall average supply price, which then gets all the PG&E costs added to it (administration, grid management, profit...etc) and is presented to the ratepayer.

FIT contracts did essentially the same thing here in Ontario where our IESO doesn't make a profit. You add enough $0.80/kWh solar contracts to the grid and retail rates go up, considerably, because it drives up the average cost of generation.
 
Baseload operation of gas plants is actually easier on them, lowering OPEX in terms of maintenance ;) Fast-ramp is much harder on equipment and requires a significant increase in maintenance service. It also reduces efficiency considerably, as the units are most efficient in baseload operation.

I don't think they are marking it up as much as you think they are. It's retail (or very close to it in your case) while wholesale might be $0.04/kWh for gas producing during the same period, that's a relative chasm. All of these costs are stacked and an average supply price derived. Paying retail to NEM customers reduces the profit margin considerably (remember, I noted you can't buy and sell at retail and survive) when compared to the spread on average wholesale, which in turn drives up the overall average supply price, which then gets all the PG&E costs added to it (administration, grid management, profit...etc) and is presented to the ratepayer.

FIT contracts did essentially the same thing here in Ontario where our IESO doesn't make a profit. You add enough $0.80/kWh solar contracts to the grid and retail rates go up, considerably, because it drives up the average cost of generation

Super curious to see the metrics on a gas peaker in terms of hot section rebuild time for 100% load and varied load - what amount of time determines a " fast ramp"?

.38 is base rate now on a TOU and 40+ on a fixed + overage plan.

IF they buy at 30 it's a discount over what they sell to anyone at on any plan.

I cant imagine a flat .8 rate - thats borderline nuts.
 
Super curious to see the metrics on a gas peaker in terms of hot section rebuild time for 100% load and varied load - what amount of time determines a " fast ramp"?
Some CCGT's run mixed-mode, IE, they run as an OCGT for fast ramp (are kept hot and then run-up hard) and don't run on the 2nd side if they are doing this sort of service, which dramatically reduces performance and efficiency.


Peak load operation will have in excess of a six fold effect on the life of the blades compared with base load operation.

This article:

Has this chart:
1804PEf3-z02.jpg


Most peaker OCGT's are fired cold and ramped fast, while CCGT's may be partially loaded, load following or hot.
.38 is base rate now on a TOU and 40+ flat rate with base and over.

IF they buy at 30 it's a discount over what they sell to anyone at on any plan.
Yeah, but that's not much of a difference compared to the chasm between either of these prices and wholesale, so you have to consider how that skews the final rate.
 
Some CCGT's run mixed-mode, IE, they run as an OCGT for fast ramp (are kept hot and then run-up hard) and don't run on the 2nd side if they are doing this sort of service, which dramatically reduces performance and efficiency.




This article:

Has this chart:
1804PEf3-z02.jpg


Most peaker OCGT's are fired cold and ramped fast, while CCGT's may be partially loaded, load following or hot.

Yeah, but that's not much of a difference compared to the chasm between either of these prices and wholesale, so you have to consider how that skews the final rate.
Ive seen the Twi piece, I'll check the other one out thanks!.

GE has another one that has interesting matrices.

One thing is for sure - if the plant doesnt have to run at all that saves money compared to running it.
 
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