Is Nuclear Energy “Toast”?

"My sense as I speak to you here today is that nuclear energy is toast," said New York Times Reporter Eduardo Porter, as he opened a panel discussion titled "Nuclear Energy and the Clean Energy Future" held at the New York University School of Law on March 23.

"Despite the challenge from climate change that calls on developing zero-carbon energy, nuclear generating capacity around the world has been actually falling in absolute terms and dropping dramatically as a share of global electricity," Porter said. "We're seeing plants being shuttered before their time and there is no political will to do anything to encourage new generation."

"On top of this, the economics are dismal. Since the discovery of shale gas, it seems that nuclear is way out of the money," he added. "I was talking to some experts the other day about what kind of gas price we'd need to make nuclear competitive again and it's about three times the rate that it is today."

Three Benefits Offered by Nuclear Power

Not all of the panelists were quite as pessimistic as Porter. Emilie Nelson, vice president of market operations for the New York Independent System Operator (NYISO), agreed that it is a very challenging time for nuclear energy from an economic standpoint. However, she mentioned three benefits provided by nuclear power that make it worth keeping in the energy mix.

Specifically, she said nuclear power provides good reliability. In the NYISO region, nuclear power feeds about 30% of the electric demand on average. Nelson said having that consistent power is a critical component in maintaining a reliable system.

The price volatility of natural gas can present reliability challenges for NYISO, according to Nelson. Prices can spike when gas is in high demand during cold winter months, as was witnessed during polar vortex shifts in the winter of 2013-2014. Pipeline constraints can also come into play, reducing fuel assurance for natural gas-fired facilities. Nuclear plants, which are often refueled on 18- or 24-month cycles, offer reliability to the electric system.

Lastly, the integration of intermittent resources like solar and wind add yet another challenge. When the sun doesn't shine and the wind doesn't blow, the electric grid still requires a reliable source of power. Nelson noted that New York City often reaches its peak load at about the time that the sun is setting. Nuclear power can generally be counted on to be available around the clock.

Can Policy Shifts Make a Difference?

Martin Proctor, senior vice president of state government and regulatory affairs and competitive market policy for Exelon Corp., believes challenges will continue, but he is optimistic that policy shifts could turn the tide.

"In Illinois, we've begun some efforts to look at a low-carbon portfolio standard, which is more or less the equivalent, if you will, of a RPS-a renewable portfolio standard-but targeted at emission-free resources, such as nuclear," Proctor said. "I think that is a very meaningful mechanism that could preserve nuclear as part of the portfolio."

Porter, however, was skeptical that policy changes are forthcoming. He cited a recent Gallup poll that found a majority of Americans oppose nuclear power, including a majority of Republicans, who have typically been more supportive. Emily Hammond, associate dean for public engagement, professor of law at George Washington University Law School, isn't ready to concede to public opinion though.

"We cannot afford to lose our existing nuclear fleet, because of the carbon benefits that it provides," Hammond said.

She noted that trying to replace the current nuclear generation with renewables is simply not possible in the short term. Hammond also suggested that people have skewed risk perceptions when it comes to nuclear power. If actual data and risk assessments are reviewed, Hammond said people would see that nuclear is one of the safest means of producing electricity in the world, safer than hydro and far safer than fossil fuels.

"I think it is imperative that we look for policy solutions that help maintain the nuclear fleet, at the very least, if not incentivize new construction," Hammond said.

A Bridge to Somewhere

Last year, New York released a new state energy plan. Among other things, the plan calls for procuring 50% of the state's electricity from renewable energy sources by 2030.

"We are looking at nuclear as a bridge to the future of renewables," said Raj Addepalli, managing director of utility rates and services for the New York Public Service Commission.

Addepalli offered an example based on Exelon's 580-MW R.E. Ginna Nuclear Power Plant located near Rochester, N.Y., which has been rumored to be on the chopping block for a couple of years. He said if that unit were to be retired, about 1,800 MW to 2,000 MW of wind resources would need to be added to obtain the same amount of emissions-free power, given the capacity factor differences between the technologies. To get a little perspective on the magnitude of that task, even with the help of New York's renewable portfolio standard, it has taken 10 years for the state to install 1,800 MW of renewable resources.

NYISO has done similar calculations, according to Nelson. She said it has estimated that 25,000 MW of solar capacity would need to be added to replace the 5,700 MW of nuclear capacity currently in service in New York. Here too, the scale is obviously very challenging.

Is a Carbon Tax the Solution?

The dirty word that lawmakers always seem to shy away from is "tax," but the question was finally posed to the panel (Figure 1) if instituting a carbon tax might just be the best option for the U.S. The tax would force every energy source to price in a social cost for carbon. Porter noted that British Columbia has done it and its economy seems to be doing fine. Others on the panel appeared receptive to the idea.

1. Discussing the future of nuclear power. The panelists from left to right were Eduardo Porter, New York Times; Martin Proctor, Exelon Corp.; Emilie Nelson, NYISO; Emily Hammond, George Washington University; and Raj Addepalli, NY Public Service Commission. Courtesy: NYU School of Law

"I think if you ask many of the economists, that would be their dream, having a federal tax on carbon," said Addepalli.

"I think this is of national concern," he added. "Out of the 100 or so commercial reactors in the country right now, 10% or more are having financial challenges, and this is a federal issue. How do we deal with the energy security in the country as a whole, if you shut down rapidly a tenth or more of these commercial reactors?"

Although Hammond was pessimistic that lawmakers would go along with a carbon tax, she agreed that it is the best option.

"I maintain that we under-regulate our fossil fuel externalities and that is one of the reasons that nuclear power is disadvantaged in the marketplace," Hammond said.

"Everything that I've looked at suggests that a carbon tax would be the most efficient way to handle these issues that we've been talking about this morning," she added.

-Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)

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