<< Back

Indian Point Nuclear Closing: What’s the Impact On New York Electricity Rates?

  • Jan 9, 2017

New York State has reached an agreement with Entergy to shut down Indian Point nuclear plant by April 2021.  The news, announced late Friday afternoon, prompts several questions: why is Indian Point closing, how will we replace the 2,000 MW of generation, and what impact will this have on electricity rates in New York?

Why Is Indian Point Nuclear Closing?


Indian Point’s two nuclear reactors generate over 2,000 MW (~20 billion kWh per year) of zero-emission, inexpensive, around-the-clock baseload electricity and provide about 25% of the electricity consumed in New York City and Westchester.

Yet Governor Cuomo has been trying to close Indian Point nuclear since he was elected in 2010, just like his father before him.  Their concern?  The plant’s proximity to New York City (just 35 miles north of midtown Manhattan) and the potential consequences of a disaster at the site (terror attack, earthquake, leak, etc.).  Cuomo and other proponents of shutting down Indian Point have also cited the age of the reactors and past problems at the plants (despite its operating at 93% capacity over the past 10 years vs. industry average 92.2%).

Nevertheless, closure of Indian Point did not seem likely, especially considering the amount of reliable power and capacity Indian Point provides. Plus, the closure seems antithetical to the State’s and New York City’s aggressive emissions reductions goals announced as the Clean Energy Standard this past August.

Related Article: New York Electricity Supply Costs to Increase in 2017 

This multi-billion dollar bailout subsidizing upstate nuclear energy generation (i.e. all nuclear in NY except Indian Point) was touted as a “critical element to achieving New York’s ambitious climate goals.” A press release at the time further noted:

A growing number of climate scientists have warned that if these nuclear plants were to abruptly close, carbon emissions in New York will increase by more than 31 million metric tons during the next two years, resulting in public health and other societal costs of at least $1.4 billion.

With a 2021 deadline, Indian Point is not closing abruptly necessarily; and its likely that if the 2,000 MW cannot be replaced (either through new generation, efficiency, or imports), the closure deadline will be pushed to 2025.

What’s The Impact on New York Electricity Rates?


The closure, though, will have several reverberations. Localized impacts such as the loss of about 1,000 direct jobs (plus hundreds of indirect employment) and PILOT/tax revenue (about $31 million in 2015), will likely be considerable. Here are three more direct impacts:

1. Rates Will Increase Due to Increased Power and Capacity Costs


Indian Point nuclear generates 2,000 MW of power on just 240 acres of land (1/3 square mile).  Nuclear is baseload generation, operating 24/7 to serve the non-peak load.  The Indian Point plant even surpasses industry average by producing 93% of its potential output.

indian point nuclear baseload generation

Other options are less reliable. Renewable energy sources, such as wind and solar PV, are non-dispatchable, intermittent resources.  The wind isn’t always blowing, nor is the sun always shining.  So while wind and sun are free, 2,000 MW of wind and/or solar does not equal 2,000 MW of nuclear.  Based on 2015 EIA data, wind operates at an average capacity factor of 32.2% and solar PV at 25.8%.  In order to replace the output from Indian Point nuclear, we would need 6,200 MW of wind or 7,750 MW of solar (or some combination thereof).

Plus, replacing Indian Point’s nuclear footprint with the land needed for renewable energy will prove costly.  New York will need 45-75 square miles to replace Indian Point with solar PV (120-200x more land then Indian Point), or 260-360 square miles to replace with wind (693-960x more land than Indian Point).

indian point nuclear renewable land use requirements

Of course, we can import wind and hydro from upstate NY where there’s abundant land for renewable development.  But, in order to import sufficient power, we’ll need new transmission lines to bring the power to Westchester and New York City.  Costs vary based on the size of the transmission line (138, 230, 345, 765 kV), but a quick and dirty rule of thumb is about $1 million per mile, which would be passed through to users (just as in the recent TOTS charges).

Related Article: Costs for New Transmission Lines in NY

So, whether we build the new generation locally, or import it from upstate, the cost per kWh is going to be higher.

Costs of electricity from different generation sources are compared based on the levelized cost of energy (LCOE), which accounts for capital costs, fuel costs, fixed and variable operations and maintenance (O&M) costs, financing costs, and an assumed utilization rate for each plant type.

Based on the just released Annual Energy Outlook 2017 from the EIA, the LCO for generation entering service in 2022 is:

  • onshore wind 5.69 cents
  • solar PV 6.63 cents
  • conventional combined cycle natural gas at 5.81 cents.

According to the Institute for Energy Research, the LCOE for existing nuclear plants is 3 cents (compared to 9 cents for new nuclear).

A report analyzing Indian Point retirement, commissioned by the New York City Department of Environmental Protection from Charles River Associates, estimated an increase from about $1.5 billion to $2.2 billion per year over a 15-year period for the State’s wholesale energy market.  For New York City customers, this is an estimated rate increase of roughly 1 cent to 1.5 cents per kWh for supply based on impacts to the wholesale power and capacity markets.

Download the Electricity Markets Explained Report for NYISO, PJM, and ISO-NE markets

2. Increased Incentives for Demand Management


At the same time, the loss of 2,000 MW of zero-emission power does not necessarily have to be fully replaced.  A portion of New York’s power needs could be met with increased energy efficiency, demand response, and distributed generation.

A report from Synapse Energy Economics, Inc. (commissioned by the NRDC and Riverkeepers, staunch opponents of Indian Point) estimated “that over the next decade there is enough energy efficiency in the regions near Indian Point to reduce peak demand by nearly 1,570 MW – above and beyond the efficiency savings currently assumed by NYISO in their load forecasts.”

We can expect then that at least some of the output could be met with demand management (capital upgrades, DR enablement, battery storage, etc.).  Existing incentives from Con Ed and NYSERDA should also be continued into the future, if not made richer, and easier to get approved, helping the state to amp up its demand management efforts by 2021.

3. Increased Greenhouse Gas Emissions


Ultimately, though, emissions will increase — unless we’re replacing all of the 2,000 MW of Indian Point’s output with zero-emission renewables and/or reduced demand/capacity from energy efficiency.  For example, when Vermont Yankee Nuclear Power Station closed at the end of 2014, the output was replaced almost entirely by natural gas:

indian point nuclear electricity change

While natural gas generation is often cited for its low emissions (half of coal), it’s still a net positive increase vs. zero-emission nuclear.



Politics of the move aside, it’s clear that the 2021 closure of Indian Point, which supplies 25% of electricity consumed by NYC and Westchester, will impact the local economy, increase rates (estimates range from an increase of $.01 to $.015/kWh), drive demand management incentives, while also, regrettably, seeing an increase in greenhouse gas emissions.


Charles River Associates. Indian Point Energy Center Retirement Analysis (Aug 2011). Boston, MA.

Garcia, E. (2015, August 04). Recent series of Indian Point shutdowns worst in years. Retrieved January 08, 2017, from http://www.lohud.com/story/news/2015/08/04/indian-point-shutdowns/30841551/

Lesser, Jonathan A. The Economic Impacts of Closing and Replacing the Indian Point Energy Center (Sept 2012). New York, NY. Center for Energy Policy and the Environment at the Manhattan Institute.

Lovett, K. (2017, January 06). Deal reached to shut Indian Point nuclear power plant by 2021. Retrieved January 07, 2017, from http://www.nydailynews.com/new-york/deal-reached-shut-indian-point-nuclear-power-plant-2021-article-1.2937714

U.S. Energy Information Administration – EIA – Independent Statistics and Analysis. (n.d.). Retrieved January 08, 2017, from https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_6_07_b

Wilson, D. M. (2015, August 13). Tax Watch: Entergy strikes deal with Buchanan, Hen Hud. Retrieved January 08, 2017, from http://www.lohud.com/story/money/personal-finance/taxes/david-mckay-wilson/2015/08/13/entergy-strikes-tax-deal-buchanan-hen-hud/31411813/

Woolf, Tim et al. Indian Point Energy Center Nuclear Plant Retirement Analysis (Oct 2011).  Cambridge, MA. Synapse Energy Economics, Inc.

Yee, V., & Mcgeehan, P. (2017, January 06). Indian Point Nuclear Power Plant to Close by 2021. Retrieved January 07, 2017, from http://www.nytimes.com/2017/01/06/nyregion/indian-point-nuclear-power-plant-shutdown.html?_r=0