Don't let nuke plants go too fast

I never thought I’d be writing this sentence:  It would be penny unwise and pound foolish to allow safely operating nuclear power plants to retire too soon. 

That statement constitutes a big turnaround for me.  I started my professional career at a time when scores of new nuclear power plants were under development.  That was eons ago, when there were promises of “power too cheap to meter” and realities of huge cost overruns and local protests.  As a graduate student, I studied these controversies.  As a state utility regulator in the 1980s, I grilled nuclear plant owners about those cost overruns and whether consumers should have to pay for them.  I watched as less than half of the roughly 250 nuclear units originally proposed eventually went into commercial operation.  The rest were cancelled or otherwise didn’t go forward.  Let’s just say I wasn’t a fan of nuclear power.  

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Fast forward to 2015:  99 nuclear units are still in operation in the U.S.  Most have approval to operate for several more decades.  A fifth of U.S. electricity comes from these plants.  In the wholesale competitive power markets in parts of the eastern U.S., where “merchant” nuclear units are owned by non-utility companies, nuclear units provide a third of the power supply.  Their operations help to keep electricity prices lower than they would otherwise be.  They routinely generate power at levels of output far exceeding other types of power plants.  They provide almost two-thirds of zero-carbon electricity. 

So what’s the problem?  Some of the nation’s best-performing nuclear units are financially distressed.  Many have not been able to cover their costs in recent years, largely due to competition from low natural gas prices and flat electricity demand.  

Economic pressure also results from the reality that these power markets routinely fail to compensate nuclear units for many of the important attributes – especially that valuable carbon-free, around-the-clock generation – they contribute to the electricity system.  For example, public policies that aim to bring low-carbon energy resources into the system categorically exclude existing nuclear generators from receiving revenues that would help them stay in the market.  Premature loss of safely-operating nuclear plants, due to these market failures, risks leaving the nation’s electric resource mix much less diverse, with much higher costs and much higher carbon emissions.

That’s why I worry about letting safely operating nuclear power plants retire too soon. 

To me, it’s all about the threat of climate change and the urgent need to reduce carbon emissions from electricity production.  That’s what changed my mind about the near-term fate of U.S. merchant nuclear reactors.   Even assuming continued operation of today’s existing nuclear plants, it will be hard enough to reduce U.S. CO2 emissions from the power sector (almost forty percent of U.S. emissions).  Meeting the president’s commitments will require aggressive action.   

I want to see the nation’s power sector reduce its carbon footprint, not increase it because of premature closure of existing nuclear units.  In the long term, of course, the current fleet of nuclear plants will eventually retire and need to be replaced by electric resources that don’t contribute to climate change.  But in the near term, any time a nuclear unit retires, its output is replaced by plants that burn coal, natural gas or oil. 

In the near term, every new wind and solar project displaces output at those fossil-fuel units, but the pace of adding those renewable energy projects doesn’t offset (much less more than compensate for) the zero-carbon output that would be lost if nuclear units retire soon.  Given the long-lived nature of greenhouse gases in the atmosphere, retaining zero-CO2-emitting power plants currently in operation is as important as introducing new clean generation resources in the future.

So what can be done?  For one thing, I hope that as the U.S. Environmental Protection Agency moves to finalize its rules to reduce CO2 emissions from the electric system, the agency will recognize the value of existing nuclear units in ensuring progress toward lowering overall carbon emissions from the fleet.  We can’t take for granted that safely performing nuclear units will remain in operation, unless there are affirmative provisions to assure that their carbon-free output is recognized as part of making progress to reduce emissions.  I hope that EPA’s final rules don’t allow states to ignore the implications of nuclear plant retirements for the overall emissions from the power sector.  EPA could do this by ensuring that a state’s carbon-reduction plan takes into account the carbon-free emissions from nuclear plants, so that if an existing unit retires, the emissions it would otherwise have avoided must be offset.  I hope that EPA would allow states considerable flexibility in how they do that, as long as the ultimate goal of emissions reductions is preserved. 

We cannot wait any longer to attend to the urgent challenges now facing nuclear units. Investors have little patience for financially struggling assets in the absence of signals that there will be action to address market failures.  More importantly, the health of our planet depends upon urgent action to reduce emissions that lead to climate change.

We need to make sure that our safety regulations are strong, that our wholesale power markets compensate power plants for their provision of carbon-free electricity, and that upcoming carbon regulations treat existing nuclear plants fairly relative to other carbon-free power sources, like wind and solar energy.  Otherwise, we will likely see more premature nuclear retirements and it will be significantly more costly to make progress toward reducing carbon emissions from the U.S. power system.  

That would be plenty foolish.

Tierney is a senior adviser at Analysis Group, and former assistant secretary for Policy at the U.S. Department of Energy.