Nuclear Power Deserves A Level Playing Field

by Arthur T. Motta

In one of the courses I teach at Penn State, we discuss the characteristics of an ideal electricity production portfolio for the United States and consider what form of energy policy would best achieve it. The class typically identifies the most important factors as cost, reliability of supply, public safety and environmental impact. Students also cite other characteristics, such as national security, domestic availability of fuels and technologies, and electric grid stability.

Because no real-world energy source fulfills all of these characteristics, we have to make compromises to find an optimal combination of energy sources. Ideally a well-designed national energy policy would give us a framework for making these choices by balancing short-term goals, such as cost, against long-term goals, such as environmental protection.

However, there really is no coherent long-term energy policy in the United States. What exists instead is an ad hoc hodgepodge of subsidies, taxes and regulations differing across regions of the country, that, along with the free market, end up determining what energy sources are used for the production of electricity. In particular, we have no carbon tax to penalize carbon-emitting technologies.

As a result, long-term goals are often neglected.

Under this ad hoc approach we currently reward some sources, such as renewables, for providing carbon-free electricity, but not others, such as hydro and nuclear power. In my view this is wrongheaded and inconsistent. The United States would do better by following the example of New York, which recently decided to support nuclear power plants to keep them from closing because of competition from cheap natural gas.

Natural gas: A mixed blessing

In the past decade U.S. domestic natural gas production has increased by 50 percent. Natural gas, which emits half as much carbon dioxide as coal when burned, is replacing coal for electricity generation. As a result, U.S. greenhouse gas emissions from electricity generation have actually decreased over the last decade, even as electricity consumption has increased.

U.S. Energy Information Administration.

U.S. Energy Information Administration.

 

This is very good news for the environment. Also, the low price of natural gas puts money in people’s wallets. However, natural gas is still a carbon-emitting technology and contributes to climate change. Thus, as concerns about climate change have grown, Congress and the states have adopted subsidies and tax credits to expand electricity production from low-carbon and carbon-free renewable fuels in an effort to reduce greenhouse gas emissions.

Such subsidies acknowledge that the monetary cost of energy production – which is now the primary factor in whether an energy source is developed and used – is in fact an imperfect tool for shaping medium- and long-term energy policy.

A long-term energy policy to achieve environmental goals

At a recent Department of Energy summit on improving the economics of U.S. nuclear power plants, speakers noted that, along with cost, factors such as production of carbon-free electricity, reliability, grid stability and diversity of fuel supply should influence decisions about energy supply. But energy sources do not consistently receive credit for helping to attain these goals, and are not consistently penalized if they fail to do so.

The subsidies and tax credits mentioned above are a step in that direction, and have increased development of renewable energy sources. As a result, the percentage of electricity from renewables has significantly increased in recent years, which is great. Solar and wind together currently provide about five percent of U.S. electricity.

Unfortunately, increasing reliance on renewable energy also has a downside. The intermittency of renewable energy and unavailability of energy storage means that the installed capacity of renewable sources has to be considerably higher than the desired output (by a factor of three or more). In other words, we have to build more than we need, and other energy sources are needed to provide backup when the wind is not blowing or the sun is not shining.

The Shepherds Flat wind farm in Oregon has 338 turbines over 32,100 acres and a maximum generating capacity of 845 megawatts. Such a plant would generate an average of 205 megawatts over a year at a capacity factor of about 25 percent, which is the level that the Department of Energy forecasts for Shepherds Flat. A typical nuclear power plant generates about 1,000 megawatts with capacity factors over 90 percent. U.S. Department of Energy

Moreover, at present renewable sources are not economically competitive without subsidies, but they become very competitive with them. With subsidies, wind power is practically free in some markets. This distorts the market because utilities have to produce less energy in cheaper nuclear power plants so they can use subsidized renewable energy. This causes utilities to operate nuclear power plants in an up and down mode rather than their normal baseload operation, making them even less competitive.

Recognizing the benefits of nuclear power properly

However, subsidizing carbon-free sources is justifiable to provide for the future greater good of the country because they provide climate change and clean air benefits. Perversely, however, the U.S. Environmental Protection Agency and most states have declined to consider rewarding the same benefits from existing nuclear power plants.

The main argument for not including existing nuclear power plants – as well as electricity from large hydropower dams – in clean air mandates and subsidies is that contributions from these conventional sources would dwarf new renewable generation, which the federal government wishes to encourage.

According to this twisted logic, environmental benefits from new nuclear power plants do receive proper credit under the Obama administration’s Clean Power Plan. But the plan includes no economic rewards for keeping existing efficient, well-run plants in operation.

This makes no sense.

If these plants are shuttered, their output will be replaced in many cases by natural gas generation, which will increase greenhouse gas emissions, as has occurred after recent nuclear plant closures in Vermont and Wisconsin.

Nuclear power provides other benefits in addition to clean air. Nuclear plants also provide stability to the electrical grid, as their output is constant and reliable. They are available at nearly all times and especially in times of need – for example, during severe winter weather when coal deliveries may be disrupted.

Additionally, nuclear power is a technology-intensive industry in which the United States has traditionally led the world. With each closure of an operating U.S. nuclear power plant, the infrastructure built over the past 50 years – including suppliers, vendors, operators, maintenance and manpower – becomes increasingly imperiled as it serves a dwindling number of plants. If the industry disappears here, it will be very difficult to rebuild as China and Russia becomes world leaders in nuclear technology.

Reactor Unit 3 under construction at the V.C. Summer nuclear plant in South Carolina, 2014. U.S. Nuclear Regulatory Commission/Flickr, CC BY

Finally, nuclear power is also one of the rare industries that generates many high-paying jobs for engineers and technicians, as well as blue-collar jobs for plant workers – all of which must be sited in the United States. This is one reason why regulators in New York recently adopted a Clean Energy Standard that will provide significant yearly subsidies through 2029 to keep several existing reactors operating. Other states should consider taking similar steps to recognize the benefits of nuclear power and prevent premature plant closures. This would support their environmental goals.

In sum, there is a case for government intervention to improve the economic competitiveness of nuclear plants and avoid early closures. The nuclear industry does not need handouts, but a coherent U.S. energy policy should provide a level playing field in the electric markets by recognizing the essential contributions that nuclear power plants make toward reducing greenhouse gas emissions, ensuring reliable electricity and preserving grid stability. Failure to act could foreclose the nuclear power option in this country and make the road to clean air and energy independence in the future that much harder.

This article was originally published on The Conversation. Read the original article.


Arthur T. MottaANS Fellow Arthur Motto, Professor of Nuclear Engineering and Materials Science and Engineering, Pennsylvania State University. He is an ANS member and Fellow.

10 thoughts on “Nuclear Power Deserves A Level Playing Field

  1. Michael Pantano

    @John H Weiler @Stephen Maloney
    You both first need to understand what the point of the article was. The free market does not currently decide energy policy. As mentioned, wind is so subsidizes it is essentially free in some places. No technology can compete with that without similar government intervention.

    You can call it nuclear welfare if you so choose, but the point still stands that nuclear is one of the least subsidized energy sources in the US. That is the idea behind leveling the field.

    Additionally, utilities are already required to pay in to a fund to used in an accident scenario. Last check, it had $12billion in it.

    Yes, there are questions about climate chamge. However, there is still an overwhelming amount of evidence that carbon-free sources are better long term. Did you know a coal plant releases easily more radioactive material than a nuclear plant? We can debate climate change, but the idea of some tax on emissions that are outside the norm and potentially dangerous to an environment seems reasonable. Beyond that, an added tax on those expensive engineers (??) would lessen the burden of this federal welfare.

    Lastly, to deal with the idea of innovation in nuclear plants…it is already happening. The plants currently being built at Vogtle (GA) and in China are new, safer designs. Research is being done world-wide on the next generation of plants. All your demands about focusing on innovation and saving capital for an accident will not make nuclear uncompetitive. They are already in place and happening.

  2. li

    As one may see it ius clear that Obama administration paved the yard with ugly facts coated in nice words…demagoguery or hypocrisy ..
    see accessible care at a double price,
    NPT treaty with an alienated partner that spitted on that treaty
    Nobel Price for peace wit all Arab world in fire from Atlantic to China sea…
    Nuclear power subsidies…
    but a fact is clear for this administration:
    Who pays Plays!
    I do not say tha Bush’s was better; and I wonder when a president will make his dog a senator – you see in WDC who needs a true friend adopts a dog – well in a similar country 2 many years ago, one emperor made his horse a senator, but in modern US in WDC very few horses left, and dogs are dominating organized in various packs…guess what happened with that empire few years after that? …and who’s next…

  3. Stephen Maloney

    Professor Motta
    If I understand your argument for additional subsidies for nuclear generation, three points seem to stand out:
    • Nuclear generation offers relatively lower GHG emissions than competing technologies (principally, gas turbines fired by natural gas)
    • Failure to prop up the US nuclear industry would have other nations (e.g., Russia or China) assume a leadership role in this aging technology
    • Nuclear generation requires expensive engineers whose incomes need to be subsidized to retain the workforce.
    Obviously, the marginal benefits of avoided GHG emissions are very speculative so let’s defer that topic for the moment and focus on the two welfare programs you advocate:
    • Corporate welfare to otherwise uncompetitive US nuclear vendors
    • Welfare for expensive US engineers working in an otherwise uncompetitive industry.
    Of course, welfare and corporate subsidies would be paid from some combination of rate subsidies, tax receipts and government debt. In the case of Federal debt used for a subsidy (e.g., Federal loan guarantees), recall the cumulative debt load currently covers some 40% of the Federal budget and growing faster today than ever before. You seem to advocate more Federal debt for the nuclear welfare program.
    Who’s paying for all of this? Likely, it’s a very large number of taxpayers and ratepayers making less than your average nuke engineer paying for engineers making more than they are. Likely, those ratepayers and taxpayers are not earning the yields the vendor stockholders would earn with the subsidy. Those taxpayers and ratepayers would also be subsidizing companies that would be out of business if they were in a lot of other industries not on welfare.
    As for the rising debt load, safe to say there are direct and indirect effects: monetization which drives up asset prices and the corrosive effects of monetary policy enabling such monetization. These effects have led to a strip-mining of assets, driven investment off-shore, and hollowed out entire industries and regions. The Fed’s G.17 July 2016 report has total industry utilization and manufacturing utilization running at 75.9% and 75.4%, respectively – clear signs of excess capacity. Utilities are at 81%. Growth is at a stand-still.
    At about this point, some people jump in and start waving their hands about nuclear’s role as a solution to the global average temperature reductions a hundred years from now. Of course, by then, the Federal debt loads will likely be many multiples of our GDP. We could also be debating how many angels dance on the head of a pin.
    So, let’s focus on sustainability in the here and now, and perhaps consider an alternative proposal.
    Rather than advocating more welfare for expensive workforce and vendors and an aging, uncompetitive technology, why don’t you advocate for making the current nuclear fleet capable of operating with a lower headcount? Why not argue that nuclear operators need to be sufficiently capitalized with reserves and contingent capital to handle a Fukushima and still able to drive process improvements in operating and maintenance costs.
    And, if the answer is the technology can’t get the costs down any further to compete or the companies can’t raise the capital, perhaps one might conclude no amount of welfare will make nuclear technology sustainable.

  4. John Tanner

    I have heard that federal subsidies for renewable energy are to be gradually phased out, ending in 2020. Is that correct?

  5. Russell Starkey

    I’m a retired ANS member who made a 45 year career in nuclear energy management, US Navy for 10 years and civilian power generation and uranium enrichment for about 35 years. This article is right on target from my perspective and it’s a message I’ve delivered to a number of folks at different times. Unfortunately, due to the distortions and misleading in the press the general public does not begin to understand this. There is a chronic need for public education to drive responsible action by government.

  6. William Corcoran

    What is the premium per Mwhr that would be fair? How would that be calculated?

  7. john h. weiler PE

    This article is insulting to those who still believe in having facts before stating that theorys are facts. Climate change(i.e. global warming) due to carbon based fuels is a theory not a fact. Climate change has been occurring since the beginning of time ; it is a natural occurrence. I am a very big proponent of nuclear power, but it nor any of the other energy sources, wind, solar, hydro, gas, coal, oil etc.should be subsidized by the government. Please allow the free market determine the best choice!!!

  8. Brad Gooden

    I had always wondered why nuclear plants were not considered for carbon emissions. The explanation above for providing an enhancement for the production of renewables does not seem to be fair (not a level playing field) for nuclear plants which are zero carbon emitters.

  9. Calvin M. Hopper

    There has been a fair-to-limited public discussion regarding the vulnerability of our US power grids to cyber and physical attack but I have not heard anything regarding the vulnerability of our “renewable” energy sources due to simple physical attacks. Do you have information to indicate that the “renewable” energy sources are so dispersed that such a threat would not be any more significant than to coal-fired or nuclear power plants? If so, please share it with me and your readers. It can be imaged that it would be necessary to take down 100s to 1000s of the “renewable” sources as compared to single conventional power plants but there does not seem to be similar degrees of physical protection among the various energy sources. Should that be a concern? Likely not(?).

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