Nuclear Energy on the Edge

by Will Davis

Clinton Power Station, courtesy Exelon Nuclear

Clinton Power Station, courtesy Exelon Nuclear

Yesterday, June 2, 2016, may have marked a watershed moment in the present day history of nuclear power plants in the United States, when two nuclear plants were selected by their owner for shutdown far in advance of their license expiration dates for economic reasons. The fast-moving pace of plants being shut down under similar economic circumstances (unbalanced energy markets that favor other forms of energy to the detriment of nuclear) signals a broken system that must be changed, now.

Exelon announced yesterday that the Clinton Power Station will close on June 1, 2017, and the Quad Cities Generating Station will close one year later on June 1, 2018.  Until now, threatened plants in the United States have typically been older, small (lower-capacity), single-unit sites, but neither of these plants fit that description. Clinton is one of the newer nuclear plants in the United States, having been placed in commercial service in 1987.  It is however rated at 1069 MWe capacity, and until now the threatened units in the US have been considered at or below that rating. Quad Cities, on the other hand, is a two-unit site with a combined rating of 1871 MWe.

According to Exelon’s statements, these plants have lost over $800 million in the last seven years. What caused the loss?  They’re operating in a deregulated market where heavily subsidized renewables and low-priced natural gas are in competition.

Policies that do not treat nuclear power equally with other clean energy sources will not get us where we want to go. – Peter Lyons & Donald Hoffman

There’s no question that nuclear energy is important to everyone (or should be) because it provides low-carbon energy around the clock.  Nuclear energy doesn’t require a train load of fuel  (like large coal plants do) or a continuous pipeline of fuel (like natural gas combined cycle plants do) which makes it less sensitive to climactic issues and steadies its cost over time.  Nuclear provides power around the clock and is able to meet demands for energy whether or not the sun is up, or the wind blows. It’s also considered by many, including environmentalists, as perhaps the most important tool in a clean energy diversification plan. The problem is that current energy policies and market economics almost never support these nuclear energy advantages – and sometimes, as we just saw last week in Seattle, there can be unilateral energy policy made directly against nuclear energy.

According to a new op-ed by Dr. Peter Lyons (former Assistant Secretary of Nuclear Energy for the Department of Energy) and Donald Hoffman (past ANS President) that appeared today on the Governing Magazine website, states must develop clean air standards, as opposed to renewable standards alone. They are urging state lawmakers and policymakers to level the playing field, which would make nuclear more economically competitive with other low-carbon emitting energy sources.

Lyons and Hoffman point up some of the many benefits nuclear energy has which aren’t directly tied to supplying or stabilizing the grid.  Nuclear plants are good neighbors in their communities, employing hundreds of people in good paying jobs. They donate money and pay taxes. Many incorporate wildlife reserves.

Shutting down a nuclear plant has some immediate repercussions. In an effort to replace energy sources, carbon emissions go up, as we’ve seen happen in Vermont and California. Many people are put out of work and will move soon from their communities, taking away monies spent in those communities by the now-displaced consumers, not to mention the charitable contributions they make both monetarily and as volunteers in those communities.

Tools for YOU

The American Nuclear Society’s Special Committee on Nuclear in the States has provided to anyone who wishes to get involved (and that includes policymakers) or simply is interested, with the Nuclear in the States Toolkit. The kit provides policy options for states to consider, with support for retention of the current nuclear fleet. The subtitle of the report, “Policy options for states considering the role of nuclear power in their energy mix,” says a lot about what’s needed – policy that levels the playing field for the all-important, established, round-the-clock energy provider that is nuclear power. The American Nuclear Society also has a special report on what the impact of nuclear plant closures would be.

What can you do?  Get the toolkit, then figure out what’s going on in your region.  Discover what policy looks like relative to energy where you live. Get involved by writing your representatives. Posting on social media like Facebook so that your friends will get motivated or show up at meetings. Let your voice be heard.

There are many ways we can all help stop this trend before we find ourselves saddled with high costs for unreliable energy, with thousands and thousands of good paying high tech jobs lost, with communities broken, and the air we breath more polluted than before. Communities are people; the state governments work for those people.  Let them know what YOU, the people, want.


 

Will DavisWill Davis is Communications Director and board member for the N/S Savannah Association, Inc. He is a consultant to the Global America Business Institute, a contributing author for Fuel Cycle Week, and he writes his own popular blog Atomic Power Review. Davis is also a consultant and writer for the American Nuclear Society, and serves on the ANS Communications Committee and will serve on the Book Publishing Committee beginning in June. He is a former US Navy reactor operator and served on SSBN-641, USS Simon Bolivar.

9 thoughts on “Nuclear Energy on the Edge

  1. Engineer-Poet

    We could de-skew the anti-nuclear market with some anti-carbon skew with a feebate affecting only dispatchable (non-wind, non-solar, non-ROTR hydro) generators based on their carbon emissions.  The “social cost” of CO2 has been estimated as high as $220 per ton, roughly 22¢/kWh on coal-fired power.

    So, simple solution:

    1.)  Tax all dispatchable generators based on the carbon in the fuel they use, at a rate TBD.
    2.)  Rebate the full sum of this tax to the same generators as a flat fee per kWh generated.

    If nuclear plants were collecting upwards of 5¢/kWh for NOT emitting carbon, none of them would be going out of business.  Oh, geothermal and hydro would do fine as well, but they’re 7% max compared to 20%.

  2. Meredith Angwin

    Will,

    Excellent important post!

    I have been studying the grid for a while, and I am rather cynical about the statement that the deregulated (RTO) areas are competitive markets. If they were competitive markets, they have had plenty of time to lower prices for their consumers. They haven’t. If you look at the price of electricity on those markets: RTOs haven’t lowered the price.

    You can see a chart of RTO versus non-RTO area prices on this blog post. RTO areas started out more expensive and they are STILL more expensive.

    It’s also worth noting that the natural gas plants get much of their revenue (sometimes up to 80% of their revenue) from something besides selling kWh..they sell “capacity.” No kWh needed for these payments! Of course, nuclear plants also get paid for their capacity, but this is a very small portion of nuclear revenue, because nukes sell so many kWh.

    Now, if the RTOs eliminated capacity payments, gas plants couldn’t afford to stay in business unless they charged more per kWh or sold more kWh. That would even the playing field between nukes and gas plants, to some extent. (Gas plants also get ancillary services payments, but these are seldom crucial to their revenue.)

    I have come to the conclusion that, whatever their original purpose, the forward capacity auctions function as a de facto subsidy for gas-fired plants. Which means that “the grid price is down” is very far from the whole story.

    You have to follow some of the links in my blog post for more on this. I just want to note that these RTO “markets” have not lowered prices for consumers, and they include many payment streams that are de facto subsidies. They are another type of market, all right, but just one with more difficult and arcane regulations. I don’t consider them to be competitive markets.

  3. Brian Mays

    My recollection is that Clements’ statements rarely if ever include renewables boosterism.

    Jim – Perhaps not as director of the Nuclear Control Institute, but he has also been an activist for Greenpeace and Friends of the Earth, as well as a candidate for the Green Party. All three of these organizations are heavy “renewables” boosters. Don’t you agree?

  4. Jim Hopf

    I’m impressed by the toolkit. An excellent list of all the available policy options, and summary of recent efforts involving some of those policy options.

    Brian,

    My recollection is that Clements’ statements rarely if ever include renewables boosterism. He’s just plain anti-nuclear, with no discussion of what should be used in its place. His arguments are generally economic in nature (saying that nuclear is more expensive than current market prices, i.e., essentially that it is more expensive than fossil fuels). This leads one to believe that he is fine with fossil fuels, especially in lieu of nuclear.

  5. Dwight Baker

    Hans has a good point about the term ‘deregulated markets’. Perhaps a better term would be ‘markets distorted by anti-consumer regulations’.

  6. Brian Mays

    The only reason that the new AP1000 reactors are under construction here in South Carolina and Georgia is because laws in both states allow financing charges to be passed through to rate payers in advance, creating a totally skewed market.

    Tom – What market? These are regulated utilities. There is no market. The regulators determine the price and what the utility is allowed to charge.

    all other costs will eventually be placed on the rate payer and not the company or shareholders.

    Oh really? And how has that been working out so far?

    The average price of electricity (in cents per kilowatthour) in March 2016 to residential customers in the South Atlantic region (where the new plants are being built) is 11.72.

    Meanwhile, the average price of electricity (in cents per kilowatthour) in March 2016 to residential customers in California, which has deregulated, market-based electricity pricing (with heavy subsidies for renewable energy and where nuclear plants are being shut down) is 17.66 (about 50% higher).

    I’d say that the regulated utilities still have a long way to go before they reach the abysmal situation in the “renewable nirvana” that people like Tom favor.

    More nonsense from our resident anti-nuke. Thanks, Tom.

  7. Tom Clements

    The economics of new reactor construction in the US is abysmal. The only reason that the new AP1000 reactors are under construction here in South Carolina and Georgia is because laws in both states allow financing charges to be passed through to rate payers in advance, creating a totally skewed market. all other costs will eventually be placed on the rate payer and not the company or shareholders. (A sweet deal if there ever was one.) In SC, we are now facing the 9th pay-in-advance rate hike to pay for the new reactors at VC Summer, construction of which started in 2009, and the average residential customer will soon be paying about 18% of the bill for reactor construction. It’s scary to think what might happen when the capital (construction) costs go into the rate base when the first units come on line in 2020 or so. SCE&G just filed on May 26, 2016 for another cost overrun – of $852 million – and we expect more delays and cost overruns. Even though the projects are facing huge hurdles in the US, NuGen in the UK is making a presentation it can build 3 AP1000s adjacent to the Sellafield nuclear site in something like four years. The industry needs to get a grip on the fact that new reactor construction is risky and more costly than originally presented and perhaps only possible at this point with laws that seriously distort the market and stick it to rate payers.. — Tom Clements, Savannah River Site Watch, Columbia, South Carolina

  8. Hans Gougar

    “a deregulated market [with] heavily subsidized renewables…” is an Orwellian contradiction in terms. My nuclear colleagues must stop blaming ‘unregulated’ electricity markets for contributing to the premature closure of plants. While parts of the electricity market may be less regulated than others, the state and federal governments still retain many coercive, field-tilting tools such as subsidies, production tax credits, feed-in tariffs, and portfolio standards which are used to achieve a politically correct outcome, in this case the proliferation of unreliable ‘green’ energy sources and the death of nuclear.

    Instead of pushing for nuclear-friendly versions of these market manipulators, how about banning all of them and let the chips fall. With rational and limited regulation, the inherent advantages of nuclear will ensure its survival in one form or another.

  9. David Dixon

    Could you be more specific about why these large plants are loosing money. Is it operating costs, and would relieving ALARA help?

    Also, assuming the newer plants have significant depreciation expense, won’t shutting them down cause the utility to write off the undepreciated cost of the plant. Assuming that is significant, how can it save money to shut the plants down.