A new state law requiring half the state’s electricity to come from renewable sources by 2030 was the key motivation in PG&E’s decision not to seek license renewal for Diablo Canyon nuclear power plant, PG&E’s Chief Nuclear Officer Ed Halpin told The Tribune on Thursday.
“Over the past two years, the market has changed and the regulatory landscape has changed,” he said. “The plant’s power is just not needed.”
Earlier this week, PG&E announced that it will not seek license renewal with the Nuclear Regulatory Commission for the plant’s two nuclear reactors. The current operating licenses expire in 2024 and 2025.
The state’s energy goals to have 50 percent renewable power and a doubling of energy efficiency savings by 2030 as required by 2015’s Senate Bill 350 were the leading factors in PG&E’s decision, Halpin said. California regulators do not consider nuclear power to be renewable and are required to purchase renewable energy before they can purchase non-renewable power, Halpin said.
PG&E initially applied for license renewal in 2009 when the requirement for renewables was 20 percent. It has since grown to 33 percent.
If it had remained at 33 percent, conditions would have been more favorable for justifying the plant’s energy, Halpin said.
The decision also was influenced by the growth of decentralized distributed energy in the state, such as solar and wind power, and the loss of customers through community choice aggregation that allows local jurisdictions to purchase or generate their own electricity for homes and businesses.
Those changes combined to reduce the demand for power supplied by large power plants such as Diablo Canyon that must run continuously, Halpin said. In spite of these factors, the utility will run both reactors at full power until their licenses expire.
“It costs too much to maintain the plant not to run it,” he said. “It is only after 2025 that we are projecting that we won’t need the plant’s power.”
The deal also eliminates the need for PG&E to spend billions of dollars to replace its once-through cooling system with cooling towers. The state has ordered once-through cooling to be phased out because of its impact on ocean fisheries. The existing system runs 2.5 billion gallons of seawater through the plant each day, and then discharges the heated water back into the ocean.
The decision not to seek license renewal was announced Tuesday. It was negotiated with PG&E by labor unions International Brotherhood of Electrical Workers Local 1245, Coalition of California Utility Employees and four environmental groups.
As part of the agreement, PG&E commits to procure enough renewable power to meet a 55 percent renewable portfolio by 2031, which is 5 percent more than what state law mandates.
Rochelle Becker with the Alliance for Nuclear Responsibility was one of the parties that negotiated the deal with PG&E. She said she had been hearing rumors as early as last fall with the passage of SB 350 that PG&E was considering not renewing the plant’s licenses, but she did not enter into formal negotiations with the utility until June 14.
Halpin said he is working to rally support for the closure deal among community groups within San Luis Obispo County. The backing of the community is necessary for the utility to overcome several regulatory hurdles.
“We are looking for support,’’ he told about 300 business leaders attending a San Luis Obispo Chamber of Commerce breakfast meeting Thursday.
Those include a hearing Tuesday in Sacramento before the State Lands Commission in order to renew the plant’s license for its once-through cooling system, which will expire in 2018. The plant would have to shut down then if that license is not renewed.
The utility must also get approval for the closure deal from the state Public Utilities Commission. Halpin said he is confident that the two state agencies will give PG&E the necessary regulatory approval.
On Thursday, the San Luis Obispo City Council unanimously voted to send a letter to the State Lands Commission in support of PG&E’s request to renew its cooling system license. The San Luis Obispo Chamber of Commerce and the nonprofit Economic Vitality Corp. told the council that they, too, would be sending letters of support.
Halpin said the decision to not pursue license renewal was purely driven by economics and market forces. PG&E’s public relations difficulties caused by the 2010 San Bruno gas pipeline explosion that killed eight people were not a factor, he said. A criminal trial over the explosion is ongoing in San Bruno.