The New Jersey state legislature’s vote to pass legislation to preserve its nuclear fleet is pivotal — a move that doesn’t allow short term prices to dictate the long-term fate of a generation source that is both clean and has years to live.
The reality is that cheap natural gas has not just put nuclear energy at a disadvantage but also all other fuels, including wind and solar. And equally real is the fact that prices can gyrate, which then forces policymakers to consider forsaking fuels that have kept the lights on through thick-and-thin.
Free marketers would say to let the “best man” win while traditional environmentalists would say “good riddance” to fewer nuclear reactors, which they say are not just expensive but also problematic — that they create spent nuclear fuel that has must be buried on site.
“Nuclear is a workhorse,” Maria Korsnick, chief executive of the Nuclear Energy Institute, told Wall Street financial analysts yesterday. “Getting that volume without any impact to the environment needs to be recognized and acknowledged.”
And that is now the dilemma before several state legislatures. As for New Jersey’s legislators, they voted yesterday to keep PSEG’s Salem and Hope Creek nuclear plants operating — facilities that support 5,800 jobs, supply power to 3,000 homes and produce 90% of the state’s carbon-free power. The governor is expected to sign the measure, which will receive an $11 per megawatt-hour subsidy.
New Jersey follows Connecticut, which is trying to preserve Dominion Energy’s facility and which voted to allow nuclear energy to participate in its clean energy procurement process. Ohio, meantime, is considering a zero-emission nuclear credit bill to save First Energy’s facilities there. And the Minnesota legislature has advanced pro-nuclear bills to keep alive two Xcel Energy nuclear plants in the state.
Those states follow Illinois and New York, which enacted laws to credit their nuclear units for the clean energy they generate by providing ratepayer subsidies. Exelon Corp., the nation’s biggest nuclear producer, is the chief beneficiary.
“If the goal is to reduce emissions, then all zero-emission technologies must be part of the solution,” Korsnick says.
Right now, 99 nuclear reactors provide about 20% of the nation’s electricity and 56% of its carbon-free power. But those 99 plants generate as much as 140 units did in the 1980s, the Nuclear Energy Institute says. That’s because they are operating at a 92% capacity factor — more than any other type of electric generation and exactly what is required to keep the lights on during cold winters when bottlenecks may prevent natural gas from flowing to where it needs to go.
At the same time, the industry says that its operating costs have fallen by 19% since 2012.
But six plants have shut down over the last five years, either the result of safety issues or the fact that they have been unable to compete with cheap natural gas generation. That is a loss of 38 million megawatt-hours of emissions-free electricity every year, the industry says. And 12 more may be on the chopping block in the coming years — unless the states act to preserve them. That would result in the loss of 120 million megawatt-hours of carbon-free generation, or equal to half of all the megawatt-hours of wind generation in the last year in this country.
The Brattle Group noted that if the plants in Ohio and Pennsylvania keep running, more than 21 million metric tons of carbon will be avoided each year. That’s compared to using natural gas and coal to replace those plants — reversing the emissions benefits of renewable generation in the PJM Interconnection over the last quarter century.
“We are seeing state governments taking a lead to ask and answer those questions,” Korsnick says. “And, increasingly making choices about how they will value nuclear energy. We have nuclear power plants in 30 states. Three years ago we saw only about a dozen nuclear-related bills in the state houses; last year we saw more than 100 of them.”
She stresses that the ultimate answer is tied to free markets — that plants must be able to compete on their own merits. But forcing the retirement of otherwise healthy assets is short-sighted, she argues, given the stresses that can be placed on the grid and the historic fuel price volatility. A lot of states are now considering those dynamics and whether they want to enact policies to ensure the preservation of their existing nuclear facilities.
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