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Published November 07, 2016
Nuclear power has the potential to help the United States in its efforts to reduce carbon emissions, but low natural gas prices and increased operating costs threaten the future of the U.S. nuclear industry, a report co-written by a University of Wyoming professor concludes.
Chuck Mason, UW’s H.A. “Dave” True Jr. Chair in Petroleum and Natural Gas Economics, is one of the authors of the report requested by U.S. Energy Secretary Ernest Moniz. The other author is John Collins of the Idaho National Laboratory (INL). UW and INL are both members of the Center for Advanced Energy Studies, a consortium that also includes Boise State University, the University of Idaho and Idaho State University.
“If current market conditions persist, it is plausible that 50 percent or more of the current (U.S.) nuclear fleet could be at risk of retirement before 2030, making it much more difficult for the United States to meet its clean-energy, national-security and economic objectives,” the report states.
The report is a summary of discussions that took place May 19 in Washington, D.C., during the Summit on Improving the Economics of America’s Nuclear Power Plants. Convened by Moniz, it included experts from industry, government, nongovernmental organizations, labor organizations and academia.
Nuclear power plants generate about 20 percent of U.S. electricity and about 60 percent of the nation’s carbon-free electricity. There are 61 operating nuclear plants, with a total of 99 reactors, in the country. Wyoming is the nation’s largest producer of uranium, which fuels nuclear power plants.
Nuclear operators have found increasing difficulty competing in a low-energy price environment arising from flat or declining energy demand, low natural gas prices, increased operating costs and other factors, Mason and Collins wrote. Since 2013, five reactors have been shut down before the end of their licensed lifetimes, with seven more units slated to close at the end of their current operating licenses.
The report notes that, in Illinois, two plants planned for closure are very efficient, with power generation costs that are quite low by historic and current market standards, but which face unusual markets -- forced to accept negative wholesale electricity prices, as a result of subsidized wind energy in Iowa.
Four nuclear reactors currently are under construction in the Southeast, with another -- Tennessee Valley Authority’s Watts Bar Unit 2 in Spring City, Tenn. -- beginning commercial power production this fall. But if the economic situation doesn’t change, more utilities are likely to retire reactors early, and new reactors are unlikely to be pursued.
“While a few retirements have been driven by mechanical failures that were deemed too costly to repair in a less than favorable energy market, the majority are due to plants in wholesale markets facing a poor economic outlook,” the report states. “The early retirement of nuclear power plants not only makes carbon-reduction targets more difficult to achieve, it also impacts energy security and national security.”
The document outlines a number of measures that could be taken to improve the economic outlook for nuclear power, including:
-- Increase industry efficiency to reduce electrical generation costs without sacrificing safety.
-- Include nuclear energy in states’ renewable portfolio standards, treating nuclear the same way renewable energy is treated.
-- Institute a federal production tax credit for use of nuclear power.
-- Place a price on carbon, either through a carbon tax or a cap-and-trade system, to reward carbon-free production sources such as nuclear power.
-- Streamline the federal regulatory process.
“As the world transitions to a low-carbon economy, U.S. leadership in nuclear power is critical in meeting the nation’s objectives in the areas of clean energy, electrical reliability, economic competitiveness, national security and nuclear-weapons nonproliferation,” the report concludes. “Nuclear power is expanding worldwide. In order to have a major role in setting international standards of safeguards, physical security and safety, the United States must set the example.”
The report is available online at https://gain.inl.gov/Shared%20Documents/Convening%20Summit%20Final%20.pdf.