California’s San Onofre nuclear plant shutdown

The San Onofre Nuclear Power plant located near San Diego will be permanently shut down, according to Southern California Edison (SCE), which operated the plant.


Last January the San Onofre plant was shut down following the discovery of advanced wear on some of the tubes running to the steam generators.


While SCE had been hopeful that a portion of the San Onofre facility would be permitted to resume operations at partial capacity, they announced that given the unclear timeframe for resuming electric generation and the significant cost that the repairs would require they are shutting San Onofre’s doors for good.


The loss of the San Onofre plant will be felt throughout the state, as it supplied upwards of 8% of total electricity demand.


To replace the loss of energy generation, other power plants that rely on fossil fuel combustion have had to ramp up their operations.


Since nuclear energy results in net zero carbon emissions, this unexpected reliance on fossil fuel will push the energy sector closer to the state mandated emission cap.


This in turn will push demand for California carbon allowances (CCAs), which already cleared at a record $14 per tonne at last month’s CCA auction.


As CCA prices continue to mount, regulated businesses will look to reduce the cost of compliance by purchasing carbon credits produced from one of four California Air Resources Board protocols, including Forestry, Livestock, and Ozone Depleting Substance projects.


However the cost of compliance will likely remain high, since there is an expected shortfall of supply in the face of a potential demand of 28 million credits between 2013-2014.