## PG&E to retire Diablo Canyon nuclear plant by 2025, replace with renewables and energy storage

##### 21 June 2016

PG&E announced a Joint Proposal with labor and leading environmental organizations that would increase investment in energy efficiency, renewables and storage beyond current state mandates while phasing out PG&E’s production of nuclear power in California by 2025 with the retirement of the Diablo Canyon nuclear power plant—California’s last operating nuclear power generation station.

Underpinning the agreement is the recognition that California’s new energy policies will significantly reduce the need for Diablo Canyon’s inflexible baseload electricity output. There are several contributing factors, including the increase of the Renewable Portfolio Standard to 50% by 2030; doubling of energy efficiency goals under SB 350; the challenge of managing overgeneration and intermittency conditions under a resource portfolio increasingly influenced by solar and wind production; the growth rate of distributed energy resources; and the potential increases in the departure of PG&E’s retail load customers to Community Choice Aggregation (CCA).

Diablo Canyon Power Plant (DCPP) has operated since 1985 with two Westinghouse Pressurized Water Reactor (PWR) units that produce a total of 18,000 gigawatt-hours of GHG-free baseload electricity annually. The Joint Proposal would replace the power produced by the two nuclear reactors at Diablo Canyon with a portfolio comprising energy efficiency, renewables and energy storage. It includes a PG&E commitment to a 55% renewable energy target in 2031—the highest such voluntary commitment by a major US energy company.

The parties to the Joint Proposal are PG&E; International Brotherhood of Electrical Workers Local 1245; Coalition of California Utility Employees; Friends of the Earth; Natural Resources Defense Council; Environment California; and Alliance for Nuclear Responsibility.

California’s energy landscape is changing dramatically with energy efficiency, renewables and storage being central to the state’s energy policy. As we make this transition, Diablo Canyon’s full output will no longer be required. As a result, we will not seek to relicense the facility beyond 2025 pending approval of the joint energy proposal. Importantly, this proposal recognizes the value of GHG-free nuclear power as an important bridge strategy to help ensure that power remains affordable and reliable and that we do not increase the use of fossil fuels while supporting California’s vision for the future.

Supporting this is a coalition of labor and environmental partners with some diverse points of view. We came to this agreement with some different perspectives—and we continue to have some different perspectives—but the important thing is that we ultimately got to a shared point of view about the most appropriate and responsible path forward with respect to Diablo Canyon and how best to support the strategy vision.

—Tony Earley, PG&E Corporation Chairman, CEO and President
 PG&E is forecasting a 33% reduction in energy sales post-2030 in a high CCA scenario. CCA allows cities and counties to purchase and/or generate electricity for their residents and businesses. Click to enlarge.

Key elements of the joint proposal. Under the terms of this Joint Proposal, PG&E will retire Diablo Canyon at the expiration of its current Nuclear Regulatory Commission (NRC) operating licenses. The parties will jointly propose and support the orderly replacement of Diablo Canyon with GHG-free resources.

Recognizing that the procurement, construction and implementation of a greenhouse gas free portfolio of energy efficiency, renewables and storage will take years, the parties recognize that PG&E intends to operate Diablo Canyon to the end of its current NRC operating licenses, which expire on 2 November 2024 (Unit 1), and 26 August 2025 (Unit 2).

This eight- to nine-year transition period will provide the time to begin the process to plan and replace Diablo Canyon’s energy with new GHG-free replacement resources.

PG&E will immediately cease any efforts on its part to renew the Diablo Canyon operating licenses and will ask the NRC to suspend consideration of the pending Diablo Canyon license renewal application pending withdrawal with prejudice of the NRC application upon California Public Utilities Commission (CPUC) approval of the Joint Proposal Application.

PG&E said it “does not believe” customer rates will increase as a result of the Joint Proposal because it believes it is likely that implementing the proposal will have a lower overall cost than relicensing DCPP and operating it through 2044. Factors affecting this include—in addition to lower demand—declining costs for renewable power and the potential for higher renewable integration costs if DCPP is relicensed.

The parties to the agreement are jointly committed to supporting a successful transition for DCPP employees and the community. PG&E’s DCPP Retention Program will provide, among other things, incentives to retain employees during the remaining operating years of the plant, a retraining and development program to facilitate redeployment of a portion of plant personnel to the decommissioning project or other positions within the company, and severance payments upon the completion of employment. PG&E has reached agreement on these benefits with IBEW Local 1245 and will immediately engage in bargaining with its other labor unions to ensure appropriate benefits for represented employees.

In addition, the Joint Proposal includes payments by PG&E to San Luis Obispo County totaling nearly $50 million. The proposed payments are designed to offset declining property taxes through 2025 in support of a transition plan for the county. Agreement contingencies. The Joint Proposal is contingent on a number of important regulatory actions, including: • Approval of a lease extension from the State Lands Commission without which the company cannot operate DCPP beyond 2018. • Approval by the CPUC of the proposed plan for replacement of Diablo Canyon with greenhouse-gas-free resources. Any resource procurement PG&E makes will be subject to a non-bypassable cost allocation mechanism that ensures all users of PG&E’s grid pay a fair share of the costs. • CPUC confirmation that PG&E’s investment in DCPP will be recovered by the time the plant closes in 2025. • CPUC approval of cost recovery for appropriate employee and community transition benefits. ### Comments Another NPPs operator switching to REs based on lower cost? How many of the other 100 NPPs or so in USA will go the same way? Will the new TWR be ready in time to replace many of the existing NPPs? I think they are switching because the old reactor has worn out and it is to expensive to build a new one. I wonder how far north you can do that. After a while, the amount of solar energy you get i winter will become negligible and no amount of storage will get you through the night. Note also that their "spring day" is May the 18th, barely a month off the longest day. I wonder what it is like on the 18th December. I can imagine you could get away with it in California, Arizona, Nevada, etc; but New York ? Oregon ? maybe not. I suspect there is a good likelihood that solar systems will become so inexpensive they will become common on residential and commercial buildings and that the owners will use and store as much of their self generated energy as they can and they won't even need to rely on selling surplus back into the grid although they may need to depend on the grid as backup. Some may choose to have their own back-up based mainly on natural gas or perhaps hydrogen. A lot will depend on future costs but before committing to nuclear I'd want some guarantee from the government. Is it possible that PG&E could be playing that card; ie if the government is unwilling to guarantee a profitable return for nuclear then we are unwilling to commit and the public can live with the consequences? @calgaryG Solar has certainly become very inexpensive. Battery storage has not yet become inexpensive, but the problem is one of bad weather. Sure, you could install enough storage to get you through the night 9 or 10 or even 12 months of the year, but still there will be occasional storms when the sky is dark for several days at a time. At this stage, you will need an alternative, be it the grid, or a generator. However, this will be expensive as you will have to pay "the grid" to hand around doing nothing for 300 or 350 days a year. A better approach [IMO] would be to have have enough storage to get you through the night maybe 6-8 months of the year and use the grid for the rest. This would have a low(er) capital cost while getting good use of the solar cells and batteries (and the grid). Average sunshine hours are very high in Southern Alberta, i.e. better than in Germany where Solar Energy is picking up fast. Longer term energy storage could be done with bioethanol fuel cells as back up + a few batteries as buffer. Alternatively, Solar could be coupled with Wind and Hydro energy? I would think that it would be far better to keep the nukes running and buy less coal fired power from Nevada and Utah. But, of course, that would not satisfy the anti-nuke people in California and the winds mostly blow the pollution from the coal fired plants east away from California. I too am surprised that PG&E would be shutting down a NPP particularly when many experts are suggesting that more will be required so I'm mainly trying to understand the logic of PG&E who I'm sure has a better understanding of current and future conditions in the electricity business. I understand Mahonj's point because even in the peak of summer we have cloudy periods where backup might be required for several days but if the grid connection costs are not prohibitive, behind the meter solar systems will probably continue to be installed as long as the economics work. SD is probably more correct though. It probably makes sense to use out of state coal so long as it can fly under the radar and since it would be a choice between nuclear and co2 maybe it will stay under the radar. California’s energy landscape is changing dramatically with energy efficiency, renewables and storage being central to the state’s energy policy. This is a sick joke. California has no energy storage worth talking about, and no way to build any in time. "Efficiency" and "renewables" are grossly inadequate to cope with requirements, and AT BEST will only compensate for what's being deliberately destroyed. As we make this transition, Diablo Canyon’s full output will no longer be required. No one could write this in honesty. Another NPPs operator switching to REs based on lower cost? It is anything BUT lower cost, but the "alternatives" receive Federal subsidies. Neither do the "alternatives" pay for their CO2 emissions or for their lack of energy security. The massive natural-gas leak at Aliso Canyon also lost much of the backup energy supply for California's electric demand peaks this summer. Shutting down Diablo Canyon is equivalent to adding 3 million cars to the road. It is an environmental atrocity, a crime against humanity. Those who decided and those who have agitated for it should be arrested and put on trial. I think they are switching because the old reactor has worn out and it is to expensive to build a new one. Diablo Canyon is in beautiful shape. It is capable of running for at least 60 years of operation. In 20 years it can be looked at again, and it will probably be fine for a further 20 years for a total of 80 before neutron embrittlement becomes a true problem. To shut down one of the few remaining 24/7/365 carbon-free generators in the United States makes a mockery of "clean power". The people who insist on this while forcing nuclear off the grid are not environmentalists, they are the paid stooges of the fossil industry. I suspect there is a good likelihood that solar systems will become so inexpensive they will become common on residential and commercial buildings and that the owners will use and store as much of their self generated energy as they can and they won't even need to rely on selling surplus back into the grid although they may need to depend on the grid as backup. No freeloaders. If you want to signal your virtue with a roof-full of solar panels that can go off-line for days or months in winter, you can pay for your own backup. If pollution controls and carbon caps won't let you run an internal-combustion engine and the grid has nothing extra for you—tough, you made your choice, you suffer with it. Give me nuclear. I too am surprised that PG&E would be shutting down a NPP particularly when many experts are suggesting that more will be required so I'm mainly trying to understand the logic of PG&E who I'm sure has a better understanding of current and future conditions in the electricity business. The sister of Gov. Moonbeam sits on the board of Sempra Energy. They both should have been put on trial for treason before this decision was handed down. I took a quick look at the agreement and note there is a clause stating that it is subject to the approval of the public utility commission and if the PUC directs PG&E to re-apply for a licence with NRC they will comply. So the agreement looks to buy them goodwill with the environment groups and if the PUC determines that the nuclear plant is required then presumably PG&E will be in a strong position to dictate their terms. So the public will have to decide if they need to keep operating the NPP's and PG&E will be made whole either way. Perhaps the way it should be except that its not really free enterprising capitalist risk taking. Ontario Canada, Quebec, France, Germany, Sweden, Norway, California and many other States/Countries will close older NPPs in the next 5 to 20 years because they are too difficult and costly to refurbish and have very poor population acceptance. The nuclear industry should find ways to design/produce and install safer lower total cost units. TWRs may be one of the possible solution by 2035+ or so. Otherwise, large centralized and small decentralized lower cost solar units (with storage) will control a much larger share of the market. There is no way solar and wind are going to replace Bruce, Pickering, and Darlington nuclear plants in Ontario; these are ~50% of Ontario's electrical supply and that supply is not dependent on weather, and if the electric-car proponents (or even more so, fuel cell proponents!) get their wishes, we will be needing more, not less. Wind power is an uphill battle thanks to NIMBY residents. All I've heard about California's electrical supply is that it is strained to the limit as it stands right now. Losing a base-load nuclear plant sure doesn't seem like the right direction to go. The left hand (that wants to shut down nuclear power) does not know what the right hand (that wants more electric cars and fuel-cell vehicles that aren't really-expensive fossil-fuel vehicles) is doing. What many are missing is that PG&E has said that the cost of electricity from an upgraded plant after applying for a new license is significantly higher than the cost of new renewable power solar and wind in the latest bids. It is better to use that extra money to invest in lower cost renewables than to upgrade the plant and relicense. So the pro-nuclear people saying we need to keep this going are saying that California ratepayers should pay a higher rate for nuclear power plant power vs renewables. And on top of that, mid-day when solar covers more than we need and we can't shut down Diablo for a few hours, we should just waste the power. PG&E is saying that does not make sense for ratepayers. And if a money-making entity like them has moved beyond a well-run nuke, I think its a matter of time for all the other nukes to shut down nationwide. Good point VL: The very high cost ($0.20 to $0.25+/kWh) of new and/or major refurbished-relicensed NPPs versus REs with storage (under$0.10/kWh) is the main economic factor that (all) ongoing nuclear power plants will have to face.

The current energy generation mix will most probably change in favor of REs, if the price gap keeps changing.

Ontario Canada will have a major cost problem with their 18 CANDUs, unless the Federal Government comes in ounce again with huge subsidies. Using more REs with storage (without subsidies) should be one of the optional solution.

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