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Executive Summary

The Oyster Creek and Salem nuclear power plants are scheduled to retire between 2009 and 2020. The plants, which pose environmental, health and safety concerns, account for about 17 percent of New Jersey’s electric generating capacity. New Jersey is also facing potential strains in its electricity supply given its reliance on power imported from out of state and the impending retirement of several aging fossil fuel-fired power plants. The state must plan now for replacing the power that comes from the state’s nuclear facilities.

Clean energy technologies can play a major role in that effort. The analysis that follows shows that New Jersey can retire Oyster Creek and Salem at the end of their current operating licenses without sacrificing the reliability of the state’s electric system or investing in significant new fossil fuel or nuclear power plant capacity.

Oyster Creek and Salem pose environmental, health and safety concerns and should be retired at the end of their operating licenses.

Oyster Creek is the nation’s oldest operating nuclear power plant. Serious concerns have been raised about age-related degradation of critical safety components at the plant. Oyster Creek’s design, no longer permitted for new plants, may not be able to prevent the escape of radiation during a meltdown. And Oyster Creek’s spent-fuel pool is particularly vulnerable to terrorist attack. The population of Ocean County has increased five-fold since the opening of Oyster Creek in 1969, making evacuation in the event of an accident or attack difficult if not impossible.

The Oyster Creek and Salem nuclear power plants have experienced a string of technical and managerial problems over the past decade. In 2004 for example, the Nuclear Regulatory Commission concluded that there were weaknesses in the Salem plant’s leadership and management, leading some employees to believe that the owner of the plant “emphasized production over safety."

Both Oyster Creek and Salem cause great damage to marine ecosystems through their use of once-through cooling systems, which take in and discharge vast amounts of water and associated aquatic life from nearby waterways. The Salem nuclear plant alone kills approximately 3 billion Delaware River fish each year.

Even without the retirement of Oyster Creek and Salem, New Jersey’s electricity system faces major challenges.

New Jersey currently imports about 28 percent of its power from other states. More importantly, New Jersey is dependent on out-of-state power to meet peak demand for electricity during the hot summer months. New Jersey has approximately 18,100 megawatts (MW) of generating capacity, yet in 2006, the state’s peak demand for electricity (or “peak load”) exceeded 19,800 MW.

Scheduled generator retirements will place further strains on New Jersey’s electric grid. New Jersey is scheduled to lose approximately 1,200 MW of generating capacity by the end of 2008 due to the anticipated shut-down of several aging fossil fuel-fired power plants. The retirement of Oyster Creek and Salem would result in another 2,900 MW of generating capacity going off line by 2020.

Not enough new generators are being built in New Jersey to close the gap. Given the historic rate at which proposed generators are completed in the PJM Interconnection region (of which New Jersey is a part), the state should expect only about 420 MW of new generation capacity to come on line in the next few years.

PJM Interconnection has already warned that closure of the retiring fossil fuel generators and Oyster Creek could result in the need for over $200 million in transmission investments to bring power from other states into New Jersey.

Clean energy technologies have the potential to fill the gap left by Oyster Creek and Salem.

Energy efficiency improvements are the cheapest and fastest way to meet New Jersey’s escalating power needs. Taking full advantage of New Jersey’s potential for cost-effective efficiency improvements would reduce peak demand by approximately 4,186 MW by 2020.

Combined heat and power - which maximizes energy efficiency by using the waste heat from electricity generators to provide useful heat to industrial and commercial buildings - has the potential to alleviate up to 2,100 MW of peak demand.

Solar photovoltaic panels are the focus of a strong promotion effort in New Jersey.
Achieving the solar power goals in the New Jersey renewable portfolio standard would result in 1,500 MW of solar power coming on line by 2020 - enough to reduce peak demand on the New Jersey electric grid by 750 MW.

Wind power, particularly off the Jersey Shore, has the potential to supply more than 1,750 MW of power by 2020, enough to offset at least 350 MW of fossil fuel or nuclear power capacity.

Demand response programs - which can use a variety of mechanisms to encourage consumers to reduce power demand during peak periods - can reduce projected peak demand by 3 percent or more, accounting for 850 MW of peak demand reductions in 2020.

Taking advantage of New Jersey’s clean energy potential could allow for the retirement of Oyster Creek and Salem without threatening the reliability of the state’s electric grid.

Achieving the targets laid out above would account for approximately 8,200 MW of capacity through reduced demand and new efficient and renewable resources by 2020 - enough to replace capacity from Oyster Creek and Salem.

Governor Corzine and the New Jersey Board of Public Utilities should anticipate and plan for the retirement of Oyster Creek and Salem at the end of their current operating licenses.

The state’s Energy Master Plan should include a comprehensive set of policies that will put New Jersey on track to replace the plants with clean energy resources.

In the short term, the state must adopt policies and practices designed to ease the transition after the closure of Oyster Creek in 2009. The state should focus on measures capable of achieving significant reductions in peak demand over the next two years. Such measures include:

Encouraging increased participation in PJM load management programs.

Encouraging voluntary conservation of energy by citizens and businesses.

Increasing support for deployment of combined heat and power.

The state should also adopt policies now that will encourage clean energy technologies over the long term, including:

Adopting an Energy Efficiency Portfolio Standard that will require the state’s utilities to achieve significant and increasing energy savings over time.

Renewing and doubling funding for the state’s energy efficiency and renewable energy programs through the societal benefits charge.

Properly implementing the regional cap and trade program for power plant pollution (the Regional Greenhouse Gas Initiative) by charging generators for all pollution allowances and investing that income into programs that reduce electricity demand.

Rapidly expanding the penetration of combined heat and power (CHP) through the continuation and expansion of current subsidies and more aggressive marketing of the program.

Setting aggressive standards for energy efficiency in new homes and commercial buildings and in common appliances and equipment.

Requiring homes on the market to be rated for energy use so that home buyers and homeowners can evaluate the energy efficiency of their properties.

Requiring developers to offer solar energy systems, including solar thermal energy, as an option for all new homes and exempt renewable energy systems from property tax assessment.

Encouraging the development of wind power off New Jersey’s coast.

Making New Jersey state government a leader by increasing the energy efficiency of state buildings and expanding government purchases of renewable energy.