Observers watching the U.S. nuclear industry can tell you that the industry is struggling through a rough patch right now. Few new plants are being considered for construction. A number of those in the construction process – such as Southern Company’s Vogtle plant – have suffered delays and cost overruns. And some that had been on the drawing board, such as Florida Power & Light’s Levy plant – which saw budget estimates balloon from an original four to six billion to over 24 billion dollars – have been scrapped altogether.
The country’s existing and aging nuclear fleet is also facing significant pressure, resulting largely from the economics of restructured competitive power markets, and the fact that they do not do not value low- or zero-carbon electricity sources. The emergence of relatively cheap shale gas-fired power plants has proved to be tough competition. As a consequence, the economic viability of some of the existing nuclear facilities has become somewhat precarious.
The nuclear industry is pushing back against this dynamic, and has recently formed an initiative called “Nuclear Matters” to call attention to the fact that existing nukes provide some very significant benefits to society. Their position is that we should do everything we can to ensure these valuable generating assets continue operating. The organization has brought together some powerful voices to make their case, including former U.S. Senators and other politicians from both sides of the aisle. Thus we have, for example, the unlikely coalition of former Clinton EPA Administrator Carol Browner and former Republican Senator (MI) and Secretary of Energy Spencer Abraham on the same side of an issue.
Former Senators Blanche Lincoln (D- Arkansas) and Judd Gregg (R- NH) were at a recent luncheon in Austin to make the case for extending the useful lives of nuclear plants, blending their voices in near perfect harmony.
After the event, I followed up with Senator Gregg for a brief conversation to get a clearer picture of who Nuclear Matters is and what they are trying to do. The first thing to understand is that this is an effort supported by the nuclear power industry. Supporters include many of the actors one would expect: large energy companies such as Exelon EXC -0.3%, Dominion, Ameren AEE -0.56%, Southern Company, and Pacific Gas and Electric. Also included are the large engineering outfits such as Westinghouse, Areva Areva, GE, and Black and Veatch.
Their challenge is to draw attention to the benefits of nuclear power, and to the costs if the U.S. retires those plants too prematurely. As Senator Gregg points out, these plants produce the lion’s share of this country’s carbon free energy, at just over 63%. He notes that perhaps 20 or 30 of these plants might be closed prematurely owing largely to the current economic environment for energy. His is not just a theoretical argument: Wisconsin’s Kewaunee 556 MW facility shut down in May. Owner Dominion cited “a lack of economies of scale” and the fact that “Kewaunee’s power purchase agreements were ending at a time of projected low wholesale electricity prices in the region.”
Meanwhile, Vermont’s Yankee 620 MW plant is also expected to depart from the stage shortly, even though the license was renewed in 2011 and is valid until 2032, and despite the fact that New England is facing a shortage of generating capacity. In announcing the closure, owner Entergy cited a number of factors including “a natural gas market that has undergone a transformational shift in supply due to the impacts of shale gas, resulting in sustained low natural gas prices and wholesale energy prices.”
The company also referred to “wholesale market design flaws that continue to result in artificially low energy and capacity prices in the region, and do not provide adequate compensation to merchant nuclear plants for the fuel diversity benefits they provide.” (It should also be mentioned that there was additional pressure on the plant as a result of tritium found in a groundwater monitoring well.)
Gregg observes that the nation’s nuclear power plants produce 20% of our electricity, that the plants run steadily and reliably – producing round the clock baseload power – and that if we are intent on creating a cleaner energy future, the last thing we should do is to prematurely retire them.