Electricity-Market Price Impacts from the San Onofre Nuclear Plant Shutdown

by Cameron Bernhardt

Since the Fukushima Daichii nuclear power plant disaster in 2011, the future of nuclear power generation has been challenged. A wide range of policy responses to the Fukushima incident have been employed in many countries around the world, varying from dismissal of the accident and nuclear expansion to immediate shutdowns of nuclear plants and the suspension of new plant approvals. In California, the San Onofre nuclear plant was shut down in January 2012 due to the significant wear on over 3000 different tubes in the plant. This policy decision by the California Energy Commission (CEC) naturally had a huge impact on the state of the electricity market in California; the 2160-MW San Onofre plant provided a large share of the electricity to its surrounding region. In light of this decision by the CEC, Woo et al. (2014) wanted to analyze the price impact of San Onofre’s shutdown. Woo et al. used intra-hour prices to compute average real-time market prices from roughly 24,000 observations between California’s three independent operating regions. The regression results led the authors to conclude that a $6-9/MWh increase in wholesale electricity prices occurred from the San Onofre shutdown. The authors also concluded that this price increase could be offset by reducing system load and expanding solar and wind generation.

Woo et al. believe that their work provides the first analysis of the real-time electricity-market price increase resulting from the shutdown of nuclear plant in California. Examining the policy implications of the San Onofre shutdown has global relevance due to the size of California’s electricity market. The establishment of their regression model should further enhance the potential for analyzing market-price impacts from power plant closures around the world. In addition, their recommendation of wind and solar generation expansion to offset price increases would likely decrease carbon emissions from electricity generation in California and assist in combatting climate change.

Woo, C. K., Ho, T., Zarnikau, J., Olson, A., Jones, R., Chait, M., Horowitz, I., Wang, J., 2014. Electricity-market price and nuclear power plant shutdown: Evidence from California. Energy Policy 73, 234-244

http://www.sciencedirect.com/science/article/pii/S0301421514003085

 

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