Banks bail out California’s PG&E; Rolls-Royce to supply backup generators for Hinkley plant
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Banks bail out California operator PG&E after Chapter 11 filing
Pacific Gas and Electric (PG&E) Company has been awarded access to $1.5 billion of bank financing to fund ongoing operations following its Chapter 11 filing for bankruptcy protection, the company announced February 1.
PG&E filed for Chapter 11 on January 29 after several recent deadly wildfires left it with billions of dollars of potential liabilities.
The utility owns the 2.2 GW Diablo Canyon plant, California's only operational nuclear power plant. Diablo Canyon consists of two 1.1 GW reactors which are scheduled to be shut down in 2024 and 2025. PG&E announced it would close the reactors in 2016, due to rising renewable energy capacity in California.
In total, 12 U.S. reactors are scheduled to close in 2019-2025, according to the US Energy Information Administration (EIA).
US reactors that have closed or announced closure
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Source: EIA, September 2018.
PG&E estimates the cost of decommissioning the Diablo Canyon plant at $4.8 billion, according to its latest estimates published in December 2018. PG&E’s nuclear decommissioning trust fund for the plant is currently at around $3.2 billion, it said.
The U.S. Bankruptcy Court for the Northern District of California has granted PG&E interim approval to access up to $1.5 billion of its $5.5 billion in debtor-in-possession financing which will fund "essential maintenance and continued investments in safety and reliability," PG&E said February 1.
"The Court's approval of these motions is a positive step forward that will enable PG&E to continue providing safe and reliable natural gas and electric service to our millions of customers," John Simon, PG&E's Interim CEO, said.
"In addition, with access to new financing, we have the necessary capital to continue investing in system safety and ensure essential maintenance as we move through this process," Simon said.
Rolls-Royce to supply backup power generators for Hinkley Point C
Rolls-Royce has won a contract to supply diesel-fired power generators to EDF's 3.2 GW Hinkley point C plant in Somerset, UK.
Rolls-Royce will deliver four generator sets that will act as backup power generators in the event of an unplanned outage of the site's standard power units. In 2017, Rolls-Royce signed a contract to provide heat exchangers to the plant.
The 20 billion-pound ($25.8 billion) Hinkley Point C project is the only nuclear plant currently under construction in the UK and is expected online from 2025. In 2013, the government agreed an electricity strike price for the plant at 92.50 pounds/MWh for a period of 35 years.
UK day-ahead power prices
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Source: UK Office of Gas and Electricity Markets (Ofgem) Ofgem. Data source: ICIS
In January, Hitachi shelved its project to build the 2.9 GW Wylfa nuclear plant in Wales after it failed to come to an agreement with the UK government. Last year, Toshiba abandoned its 3.8 MW Moorside nuclear new build project in Cumbria following a strategic restructuring.
The government wants new nuclear capacity to replace coal-fired plants and ageing reactors.
Other nuclear projects at the Sizewell C and Bradwell sites are advancing and "small modular reactors can have a role to play," Energy secretary Greg Clark said in a letter published in the Financial Times (FT) on January 23.
Rolls-Royce is among a number of SMR developers looking to build plants in the UK.
The Rolls-Royce SMR is based on light water reactor (LWR) technology and the company has asked the UK government for over 200 million pounds of funding to develop and license the design, the FT reported last month.
Rolls-Royce believes a 440 MW model can be built at a first of a kind (FOAK) cost of 70 pounds/MWh and the cost will fall to around 60 pounds/MWh from around the fifth unit onwards.
Nuclear Energy Insider