Top five things grid gurus need to know about nuclear
- November 6, 2013
- 329 views
By Richard Myers
Short-term market conditions represent a challenge for the entire electric power industry. Demand for electricity in the United States has not yet returned to the level seen in 2007 before the financial crisis. Because of weak economic conditions, most of the United States has excess generating capacity, which obviously contributes to low power prices. U.S. natural gas prices slipped below $2 per million Btu last year, and gas-fired generation sets the price in many power markets. Coal-fired power plants have borne the brunt of low natural gas prices to date. In 2012, gas-fired generating capacity displaced approximately 200 billion kilowatt-hours of coal-fired generation (although natural gas prices have increased significantly from last year’s lows, and the gas-for-coal displacement is reversing).
Although this short-term picture is challenging, the longer-term fundamentals support continued reliance on, and expansion of, America’s nuclear energy infrastructure. Here are five points to remember when considering the future of nuclear energy in America.
Point #1. The nuclear power plant shutdowns that have occurred so far this year do not represent a trend.
Three of the four reactors that shut down (Crystal River 3 in Florida and San Onofre 2 and 3 in California) are unique situations—the product of steam generator replacements that ended badly. Around the world, approximately 110 reactors have replaced steam generators since the early 1980s, 57 of them in the United States. These three ended badly. That is not a trend. The fourth plant to close—Kewaunee in Wisconsin—was the victim of a market (the Midcontinent ISO) that provides no value for capacity and does not provide price signals that will justify investment in new generating capacity or support continued operation of existing capacity. Although not yet a trend, it is certainly possible that a few additional U.S. nuclear power plants might shut down before their licenses expire. Older, smaller, single units in merchant markets that face large capital expenditures are particularly vulnerable.
Point #2. Any nuclear plant shutdowns will be dwarfed by the massive amount of fossil-fueled capacity bound for the scrapyard.
Consensus estimates suggest that approximately 100 gigawatts (GW) of generating capacity—approximately 10 percent of installed capacity—will be retired this decade. Approximately 30 gigawatts of U.S. generating capacity was retired during 2011-12, and an additional 70 GW is expected to be retired by 2020. Much of this capacity (40,000 megawatts or more) is coal-fired capacity, which will close because it does not make economic sense to invest in the pollution control technology necessary to meet tighter environmental requirements.
Point #3. The nuclear renaissance is alive and well.
In the United States, four new reactors are under construction (in Georgia and South Carolina) and will start commercial operation in 2017-2018. The Tennessee Valley Authority is also completing a reactor that was abandoned partway through construction in the 1980s. Around the world, 69 other new reactors are under construction and another 162 planned. The nuclear energy industry is a global enterprise with a global supply chain. It would be a mistake to gauge its health by taking a snapshot of one country at a single point in time.
Point #4. Nuclear energy represents a unique value proposition.
That value proposition starts with production of large quantities of electricity around the clock, safely and reliably. But the value proposition does not end there. Nuclear power plants also provide clean air compliance value: In a cap-and-trade system, nuclear energy reduces the compliance burden that would otherwise fall on emitting generating capacity. Nuclear power plants provide voltage support to the grid, helping to maintain grid stability. Nuclear power plants provide forward price stability and are not subject to the price volatility associated with, say, gas-fired generating capacity. Finally, nuclear power plants provide large numbers of high-paying jobs (larger numbers and higher-paying than other sources of electricity) and anchor the local tax base. No other source of electricity provides such a portfolio of value. Renewables can match nuclear energy’s zero-emission profile, but are intermittent resources, cannot meet baseload demand and have no capacity value. Coal-fired power plants can match nuclear in terms of baseload power and forward price stability, but cannot match the emission profile. Many of the components of nuclear energy’s value are largely unrecognized. They are not monetized by markets, particularly the merchant markets. They do not show up in net present value calculations. But they exist nonetheless.
Point #5. Nuclear power in the United States enjoys strong public support.
NEI has been tracking public attitudes to nuclear energy since the early 1980s, and it is consistently durable. Recent opinion polling shows that 68 percent of the American people favor nuclear energy, more than twice as many as are opposed (29 percent). These numbers are remarkable stable over time, save for a brief—and unsurprising—drop after the Fukushima accident in Japan in March 2011. Over time, public perceptions of the safety of nuclear power plants have become much more favorable. Between 1984 and 2013, those giving high ratings to the safety of nuclear power plants doubled from one-third of the public to two-thirds of the public, and those giving low ratings dropped from half the public to just 14 percent.
Richard Myers is vice president of policy development at the Nuclear Energy Institute (NEI), a membership-based entity responsible for establishing nuclear industry policy on regulatory, financial, technical and legislative issues.
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