Nuclear looks for recognition of wider benefits

Wednesday, 24 September 2014

US nuclear generators continue to fight for recognition of their contribution to electricity supply, as subsidies for other forms of power undermine the business case for operation of older nuclear units.

In the state of Illinois, Exelon's Kathleen Barrón spoke at a policy session organised by the Illinois Commerce Commission meant to gather perspectives on the Environmental Protection Agency's (EPA's) plans to reduce carbon emissions from existing power plants.

"We are pleased that the EPA has recognised the important environmental, reliability and economic benefits of existing nuclear power plants and is creating a regulatory incentive that values the many benefits they provide to Illinois and the businesses and families here," said Barrón.

Kathleen Barrón at a 2013 event organised by the Bipartisan Policy Center (Image: BPC)

 
Exelon considers at least three of its nuclear reactors in Illinois to be at risk of economic closure, the company said in a statement. Retiring these for economic reasons before their technical lifespan is over "would set the state back substantially and jeopardise its ability to meet emissions reduction targets." Illinois sources 48% of its electricity from nuclear power plants, said Exelon, and about half of the reactors that generate that power are vulnerable.

Nuclear power plants feature low and stable operating costs, and are most profitable when run at high power for long periods, which they do reliably. "Our nuclear facilities are available 24/7," said Barrón, "While many plants struggle to run during extreme heat or cold, when their power is needed most - as we saw during the peak of this past January's Polar vortex - ours do not." US nuclear generators, including Exelon, have argued that nuclear power should be valued for this reliability benefit, as well as for its production of low-carbon electricity.

"All zero-carbon resources should be treated similarly, and a state like Illinois that has invested in nuclear technology should be recognized for that clean energy investment," concluded Barrón. The American nuclear industry argues that recognition of some other low-carbon technologies' benefits has inadvertently destabilised the commercial conditions for nuclear power.

For many years new US wind power projects have been granted a federal production tax credit (PTC), recently equivalent to some $23 per MWh for the first ten years of operation, in addition to state incentives. While this was successful in boosting a new wind power industry since 1998, the subsidy is having knock on effects in power markets. During times of low power demand and low market prices, the PTC means that wind producers can make a small profit even when the market is oversupplied and prices are negative. By encouraging oversupply, the PTC artificially lowers power prices and revenues for all generators. Fossil fuel generators shut down or reduce output to limit their losses, but nuclear power operators are more limited in what they can do.

An unfortunate feature of the US regulatory system that exacerbates the problem is that a nuclear power plant cannot be mothballed and brought back into operation when economic conditions improve. The US Nuclear Regulatory Commission offers only licenses to operate and to decommission, making those the only options for owners of nuclear power plants.

In May 2013 Dominion closed the single-unit Kewaunee nuclear power plant in Wisconsin after no buyer could be found for the plant, despite it being licensed to operate for a further ten years. And in August last year Entergy announced that its 635 MWe Vermont Yankee reactor would be closed down as it had become uneconomic. According to the Nuclear Energy Institute, some ten other nuclear plants - comprising 13 reactors - are considered to be at risk of closure, all but one of these in the northeast of the country, in deregulated states.

Since introduction in 1998 the PTC has expired and been extended several times, although power projects awarded the subsidy continue to receive it for the full ten years. The most recent PTC program expired at the end of 2013 and this month congressmen Earl Blumenauer of Oregon and Dave Loebsack of Iowa introduced a bill intended to bring the PTC back until the end of 2016, matching the Investment Tax Credit that solar companies receive.

Researched and written
by World Nuclear News