Exelon Corp. is scrapping expansion plans at nuclear plants in Illinois and Pennsylvania because of waning demand for electricity and competition with subsidized wind generators.
“We removed these previously deferred extended power uprate projects from our program in response to market conditions and artificially depressed power prices resulting from subsidized wind energy,” Exelon spokesman Paul Elsberg said in a statement. “Extended power uprates are large investments with paybacks toward the end of plant life, and in this instance, we decided that the risk involved did not provide the necessary returns.”
Exelon has been front and center in the debate over whether the government should offer incentives for wind power, and last year was ousted from the American Wind Energy Association over its opposition to extending the production tax credit, a position that put it sharply at odds with the rest of the industry.
The utility’s executives have said wind energy tax credits are allowing companies to give away power for free or at negative prices at a time when gas supplies are historically low. Such factors, Exelon has said, are making it harder for nuclear reactors to compete in competitive markets (E&ENews PM, Nov. 27, 2012).
Exelon is mainly concerned with the federal tax credit of 2.3 cents per kilowatt-hour, which has allowed wind generators to pay consumers to take their electricity at certain points of low demand and excess capacity, such as overnight.
The industry won a one-year extension to the PTC in January and is now focusing on a longer-term strategy that doesn’t depend on the boom-and-bust reliance on federal support. Ongoing negotiations over comprehensive tax reform, which could include a PTC phaseout, are also a focal point (Greenwire, May 24).