NextEra Energy Resources, the wholesale power generating subsidiary of Florida-based NextEra Energy Inc., announced it has struck a deal to shorten its power purchase agreement (PPA) with Alliant Energy and will retire the Duane Arnold Energy Center (DAEC)—a 615-MW nuclear power plant located in Palo, Iowa—before the end of 2020.
DAEC’s reactor is licensed with the U.S. Nuclear Regulatory Commission to operate until February 21, 2034, but it was expected to close in 2025 when the PPA with Alliant was originally slated to expire. If the agreement to cut five years from the term is approved by the Iowa Utilities Board, Alliant would pay NextEra $110 million in September 2020 as part of the buyout. Furthermore, NextEra would supply Alliant’s customers with wind energy from four of its repowered Iowa wind facilities—about 340 MW of combined capacity—under other PPAs. The transactions are expected to save customers nearly $300 million in energy costs, on a net present value basis, over 21 years, according to NextEra.
The DAEC is the only nuclear power plant in Iowa. It was constructed in the early 1970s, entering commercial operation in February 1975. It was built in a low-risk seismic area on the Cedar River about 8 miles northwest of Cedar Rapids. With a plant elevation 20 feet above river level, it was well protected against flooding, even continuing to operate during a “500-year flood” that occurred in 2008. Nonetheless, the facility faced similar financial struggles as other relatively small single-unit nuclear plants across the country. A string of single-unit facilities have closed, or announced closure, since May 2013 when the Kewaunee plant in Wisconsin was the first to be shuttered. Vermont Yankee, Fort Calhoun, Pilgrim, Palisades, and Oyster Creek are others on the list.
About 500 employees work at DAEC. NextEra said it expects a gradual reduction in staffing at the facility over the next seven years as the decommissioning process takes place. It has developed a comprehensive employee plan that includes an enhanced retirement program for eligible employees; placement in other jobs throughout the company; and job retraining, outplacement services, and severance packages, where applicable. NextEra is also partnering with Alliant and other companies in the energy industry to identify opportunities for DAEC employees.
“The eventual closing of the Duane Arnold Energy Center is a difficult decision because of the approximately 500 highly skilled men and women who consistently have made it one of the top-performing nuclear facilities in the country,” Armando Pimentel, president and CEO of NextEra Energy Resources, said in a news release.
“You have our assurance that we will continue to practice our corporate values of doing the right thing by our colleagues and treating them with the respect they have earned and deserve. We are committed to minimizing any impact today’s announcement may have on them, their families and the community they call home. Importantly, as we proceed into the next decade, several hundred jobs will remain at the plant for a number of years as a result of what will be a lengthy decommissioning process, along with the creation of new jobs through our continued investment in Iowa,” Pimentel added.
NextEra plans to invest about $650 million in existing and new renewables generation across the state by the end of 2020, including approximately $250 million to repower the four wind facilities that are part of the deal with Alliant. Repowering the facilities is expected to create 200 new construction jobs during the process. NextEra said it is also evaluating redevelopment opportunities at the DAEC site, including the construction of new solar energy, battery storage, or natural gas facilities.
—Aaron Larson, executive editor (@AaronL_Power, @POWERmagazine)