Entergy’s Grand Gulf Nuclear Station went offline at approximately 4pm CT on Saturday, February 23, changing power flows across the grid. While Nuclear Regulatory Commission (NRC) reports show this was not planned, our analysts expected this could happen due to its track record of unreliability. Grand Gulf is a baseload facility, meaning it is designed (and expected) to produce 1,433 megawatts (MW) of electricity around the clock, every day of the year, so an outage here has a significant impact on market activity.
Sitting on the sidelines is not uncommon for Grand Gulf as it spent much of the last two years offline. One way to gauge how much a power plant like this produces is the capacity factor. The capacity factor is the ratio of actual generation to maximum possible generation over a period of time. The EIA shows that all nuclear generators in the U.S. had an average capacity factor of 92.2 percent in 2017. Grand Gulf, by comparison, averaged around 59 percent according to Genscape data. Grand Gulf also averaged 60 percent in 2018, which is just slightly higher than the coal and gas fired generators designed and expected to be more flexible in terms of production. To put that in perspective, if Grand Gulf performance was in line with the average nuclear facility it would have generated nearly 4,000,000 additional megawatt hours (MWh) in 2018, which is enough to power 285,000 Louisiana homes for a year. This power had to come from a costlier alternative as a result.
What happens to the rest of the grid while Grand Gulf sits idle?
Punching a 1.5-gigawatt (GW) hole in the system can stress market dynamics and the physical grid itself. In the moments after a power plant unexpectedly goes offline, the price for electricity can become volatile. The system operator scrambles to bring on generation that can respond quickly to these events, usually at a high cost. This time, Grand Gulf went offline quickly, but not to the point where costly reserves were deployed. That is not always the case. While reliability was not at risk this time around, there were other impacts. Genscape data shows that Grand Gulf regularly offers their power at a price between $6-$8/MWh. While Grand Gulf remains offline, that power must be sourced from a higher cost generator, increasing the price for energy from North Dakota to the Gulf of Mexico, if ever so slightly.
Losing a power plant of this size can also cause congestion, or traffic, on the electric grid. During the Grand Gulf outage, Genscape’s team of power market analysts saw increased loading on the McAdam’s Transformer (located in nearby McAdams, MS), a piece of equipment used to reduce the voltage of electricity for eventual consumption. When the transformer reaches a certain utilization, the local price for energy starts to change as power surges into the region from northern parts of Mississippi and Louisiana. These changes in price create risks and opportunities for different stakeholders in the wholesale energy markets.
Despite challenges outlined above, Entergy is licensed by the NRC to operate Grand Gulf through 2044. While safety is never seriously questioned, Entergy’s customers deserve and expect affordable, reliable power. Every time Grand Gulf is offline, customers’ electricity bills go up. While it takes some time for costs associated with maintaining and repairing the ailing nuclear plan to trickle down, the rate payer still foots the bill for inherent market fluctuations caused by Grand Gulf outages.
As timely market events occur, wholesale power market participants need more transparency into real-time impacts to the grid. Genscape is committed to keeping our clients in the know about these events with the market knowledge and analysis needed to understand how to react. To learn more about our PowerIQ service, please click here.