Sunday, 27 May 2018

How to save the failing nuclear power plants that generate half of America’s clean electricity

How to save the failing nuclear power plants that generate half of America’s clean electricity
12 May

Nuclear power currently provides about 20 percent of US electricity — and 50 percent of its carbon-free electricity. Insofar as the US economy has decarbonized (carbon emissions have been falling, fitfully, for more than a decade), nuclear power gave it a head start. Nuclear plants were not built because they produce carbon-free power, but since then, it has become a rather valuable feature.

Valuable to climate hawks, anyway. But not to the market. Nuclear power plants are getting killed in US markets. Five have retired in the past five years, and 12 reactors at nine plants have announced plans to retire ahead of schedule. That represents gigawatts of carbon-free electricity that new renewables will have to cover for (rather than making progress).

These plants can be kept running, but it will take advocacy and organizing. These are live battles, ongoing in states like Ohio and Arizona. Experience at the state level thus far suggests that only an alliance of nuclear and renewable supporters can win them.

Let’s start with a quick review of the state of existing nuclear plants; then we’ll look into the tools available to help them stay alive.

US nuclear is not doing well and isn’t expected to do much better

Analyst Michael Scott at the US Energy Information Administration (EIA) recently released a fantastic summary of the present state and future fate of US nuclear, drawing on insights from EIA’s Annual Energy Outlook 2018 (AEO2018).

Due to cheap natural gas, flat electricity demand, and rising renewables, nuclear plants are floundering economically. They are not compensated for the ecological benefits of their power, and without those benefits, they don’t have much else to offer. From a grid perspective, they are little different from large, slow, expensive coal plants, which are also getting creamed in power markets.

nuclear retirements EIA

Both of the plants underway in the US, the VC Summer plant in South Carolina and Vogtle in Georgia — have gone wildly over budget. The former was abandoned last year; Vogtle is still plugging forward, expected to cost, in the end, a face-melting $25 billion. No other new plants are planned.

What does the future hold for US nuclear?

In the AEO2018 reference case, “US nuclear power generating capacity is projected to decline from 99.3 gigawatts (GW) to 79.1 GW over the projection period of 2017–50,” which translates to 20.2 GW of lost carbon-free power capacity.

That’s just the references case. Scott notes that projections are sensitive to both natural gas prices and the ongoing operating costs of nuclear plants. If natural gas prices go up and operational costs go down, retirements could slow. If natural gas prices stay lower than expected and operational costs increase, retirements could accelerate (in that worst-case scenario, nuclear capacity hits 18.1 GW by 2050).

Nuclear plants are worth saving

I already made the case for keeping existing nuclear plants open as long as possible; I won’t make it all over again. It’s enough just to reiterate that letting them close is likely to increase cumulative carbon emissions.

That’s not a necessary and inevitable outcome. Amory Lovins has made the case that if the operating costs of the more expensive nuclear plants were put toward energy efficiency, more carbon could be reduced for the same money. That may be true, and it is possible that perfectly wise decisions by policymakers in, say, Pennsylvania could result in retired nuclear and lower emissions both.

But thus far, in practice, retired nuclear plants have been replaced mostly by natural gas. Unless state lawmakers and regulators in the Midwest and North Atlantic are struck by a carbon fervor hitherto not in evidence, there’s good reason to think roughly the same mix will replace retirements in the near future.

Let’s assume we agree that increased carbon emissions are a bad thing and want to keep these plants open. What can be done?

A relatively modest carbon price could save nuclear’s bacon

One intriguing result of Scott’s analysis is that nuclear’s fate is also quite sensitive to a carbon price.

A $15-per-ton carbon price would hold US nuclear capacity roughly steady through 2050. A $25-per-ton carbon price would substantially increase capacity.

Here are all the possibilities Scott charts for nuclear, gathered in one of the EIA’s trademark frustratingly small graphs (HOGRT basically means natural gas prices stay low). You’ll notice that the “CO2 price” lines are the only ones that go upward.

EIA - nuclear EIA

While persistently low natural gas prices and/or higher operating costs could deal nuclear a grievous blow, a relatively small carbon price could rescue it.

But, you know, if wishes were horses, beggars would ride. A national carbon price seems unlikely in the near future given the current political leadership, to put it mildly. So what else could be done?

Funny you should ask. Analyst Doug Vine at the Center for Climate and Energy Solutions (C2ES) has just released an excellent report of his own: “Solutions for Maintaining the Existing Nuclear Fleet.”

Some non-policy trends and strategies could help nuclear in the interim

Before getting to policy fixes, Vine reviews a few possible tech and operational developments that might improve the situation for nuclear plants.

First, there’s the big boom in electricity demand that is expected to come with electrification of transportation and industry. Electrification is a huge part of any serious climate plan, and if it goes as fast as it needs to, it is expected to raise electricity demand “by more than 75 percent by 2050.” Rising demand would ease pressure on all big, older power plants.

Second, there’s energy storage. Storage is usually thought of as helping renewables, but if it’s costing nuclear plants a bunch of money to ramp up and down, they could theoretically just run all the time and store power when the grid doesn’t need it. Midday nuclear (unneeded by the grid, which will be swamped with solar) could be stored as hydrogen, which can then be used as a feedstock or fuel to help decarbonize transportation.

Third, there’s running more flexibly. Nuclear has generally been thought of as “baseload,” always-on power, but nuclear plants in France and Germany frequently ramp up and down to follow load. Researcher Jesse Jenkins and colleagues at MIT recently published a study that shows that flexible nuclear operation paired with renewable energy “lowers power system operating costs, increases reactor owner revenues, and substantially reduces curtailment of renewables.”

Fourth, there are possible (if somewhat remote) alternative value streams wherein nuclear plants could sell the copious heat they produce, or desalinate water, or run district heating systems. All of these would have to overcome substantial investment and regulatory barriers.

Some states are acting to support existing nuclear

As Vine notes, “stable policies that promote a long-term movement toward a low carbon future by mid-century and beyond are necessary to stimulate the high level of investment required.” Ultimately, that means federal action — a federal carbon price, a federal clean energy standard, energy market reforms, tax credits, and supportive regulations from agencies like EPA and DOE.

Vine reviews such a federal agenda in some detail, but Trump being Trump, it’s unlikely any of it will come along in time to save imperiled nuclear plants.

That leaves action in the states. A few have taken steps:

  • New York has a Clean Energy Standard (CES) that requires the state’s utilities to reach 50 percent renewable energy by 2030. Alongside that, the state has implemented a program of zero emissions credits (ZECs), paid for by a small tariff on ratepayers, meant to keep its nuclear plants (which provide almost a third of the state’s electricity) running. In this way, New York is reaching for a renewable energy future but maintaining its bedrock of carbon-free nuclear energy.
  • Illinois also has a ZEC system, meant to help save some of the 11 nuclear plants that provide more than half its electricity. The ZEC program was part of the Future Energy Jobs Act (FEJA), passed in December 2016, which also beefed up the state’s renewable energy and energy efficiency standards. Like New York, Illinois is working to ramp up renewables on a foundation of nuclear.
  • New Jersey passed a ZEC bill this April, alongside a renewable energy bill. The both-and approach pulled together a larger coalition than either side could assemble by itself.
  • Connecticut has one nuclear plant that provides almost 45 percent of its electricity. It is allowing that plant to participate in a competitive procurement process for zero-carbon energy, on the condition that the plant open its books and prove it was at risk (it did, and it was).

Meanwhile, Ohio (two plants, 11 percent of state electricity) keeps trying but hasn’t gotten any nuclear supports through the legislature. Pennsylvania (five plants, 39 percent of state electricity) has done nothing.

In Arizona (one plant, the nation’s largest, which provides around 25 percent of state electricity), there are competing proposals. The state’s power regulators, the Arizona Corporation Commission, want an 80 percent “Clean Resource Energy Standard and Tariff” that would include nuclear; there’s also a ballot initiative that would raise the state’s renewable energy standard to 50 percent, excluding (and possibly leading to the closure of) the nuclear plant.

The Palo Verde nuclear generating station in Arizona.
The Palo Verde nuclear generating station in Arizona.

Zero emission credits make the best of a bad situation

The situation with existing nuclear is slightly ridiculous. The reason to keep nuclear power plants open is that they are generating carbon-free electricity. We need more carbon-free electricity, not less.

Since we can’t seem to consistently price carbon — and in the areas of the US where there is a price in place, it is too low to save nuclear plants — climate hawks are forced to use various state-level hacks to get the job done.

The most tedious outcome of that strategy is endless debates among fans of various energy sources about who’s getting more subsidies than whom. But as ugly as it is, when it comes to decarbonization, the answer is usually both-and. More carbon-free electricity, not less.

Vine reviews all these policy options and concludes that, given the urgency — “some reports estimate that more than half of [US nuclear] plants are operating at a loss (i.e., additional retirement announcements are likely)” — something like a ZEC program is probably the best available option for states that don’t have one yet. They can be passed quickly, and they have, at least thus far, withstood legal challenge.

Another possibility is clean energy standards like the one proposed in Arizona, which encourage rapid renewables growth but also make room for existing nuclear. Another is increased use of long-term power purchase agreements (PPAs) with “government agencies, cities, and businesses.”

These are not first, best policy options, but carbon is carbon, and something’s got to be done. A political coalition that includes both supporters of existing nuclear and supporters of renewable energy is bigger than either alone, and coalitions like that are at least getting some results at the state level.

The argument over new nuclear power plants will never end, but it doesn’t need to cloud the debate over what to do with the ones already built. Carbon math means they need to keep running.

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