Nuclear power advocates are increasingly emphasizing the value of existing but financially struggling U.S. nuclear plants in curbing carbon emissions and addressing climate change.
Questions about nuclear power's costs and safety that kept it at 18% to 20.6% of U.S. electricity generation from 1990 to 2020 left little support for new plants. But extreme weather-driven disasters and predictions of much worse in the recent reports from the Intergovernmental Panel on Climate Change and National Oceanic and Atmospheric Administration are driving new thinking about existing plants.
"The economic feasibility of existing nuclear is a very different question depending on whether the power market values clean energy," said Exelon Senior Vice President of Regulatory Policy and Analysis Mason Emnett. In a power market that compensates all clean resources, "our nuclear units could compete, operate safely and reliably, and be relicensed."
"Financial incentives for zero-carbon generation are a no-brainer," said Analysis Group Senior Advisor Susan Tierney, a former nuclear skeptic, Department of Energy (DOE) official, and Massachusetts utilities regulator. Unsafe nuclear plants should not be preserved, but incentives for existing and safe nuclear are better than rising emissions from increased use of natural gas generation, she added.
Growing support for new federal and state initiatives to support nuclear power shows clean energy advocates and power system analysts are confronting the possibility that the transition to net zero emissions may require investment in existing nuclear.
State policy efforts
The changing appreciation of existing nuclear, and its role in fighting climate change, is reflected in laws enacted from 2017 to 2019 to fund zero emissions credits (ZECs) in Connecticut, Illinois, New Jersey, New York and Ohio. While ZEC programs differ, existing nuclear plants generally receive above the electricity market price for the power they produce based on "an established social cost of carbon" that reflects the environmental cost of emissions, a 2019 Department of Energy report said.
Exelon's recent fight for new ZECs for plants not included in Illinois's 2016 allocation began with a state Environmental Protection Agency-commissioned report by Synapse Energy Economics on nuclear economics. But it was the link between nuclear power and the climate crisis fight that led to the Illinois House and Senate passing comprehensive clean energy legislation this month with bipartisan support in both chambers.
"Nuclear power is necessary for the state's transition to 100% clean energy," according to the recent legislation. To avoid losing "environmental benefits" from Exelon's nuclear generation, the bill instructs Illinois regulators to allocate approximately $700 million in carbon mitigation credits to three non-competitive Exelon plants — Byron, Dresden and Braidwood — from June 1, 2022 through May 31, 2027.
SB 2408's new ZECs for nuclear had bipartisan support because responding to climate change requires "closing fossil resources first," Citizens Utility Board of Illinois Executive Director David Kolata said. "Closing nuclear plants too soon could prevent reducing emissions in the most cost-effective way."
This kind of support may also be needed in other states.
Nuclear provides 85% of the clean energy in Maryland and Illinois, 91% in Pennsylvania, and over 50% in New York, Exelon Executive Vice President and Chief Generation Officer Bryan Hanson told a July U.S. Chamber of Commerce webinar. But nuclear plants are being closed because "outdated markets don't distinguish between dirty coal electrons and carbon-free electrons."
Pennsylvania, for instance, wants to keep its nuclear generation at current levels to prevent increasing the 66% of its electricity generation that comes from fossil fuels until it can cost-effectively develop alternative zero emissions resources, according to the state's 2021 Climate Action Plan, released September 22.
But more cost effective natural gas has been driving the state's nuclear generation out of the PJM market that supplies the state’s grid, according to June data from the Energy Information Administration. And renewables remain only 3% of the state’s electricity supply.
To keep its nuclear generation competitive long enough to develop renewables, Pennsylvania's legislature can pass legislation approving ZECs, its action plan said. At present, however, it appears legislators may be reluctant to take on the costs and challenges from renewables advocates, the plan and state leaders acknowledged.
Longstanding debates about a price on carbon continue while federal lawmakers presently consider a clean energy standard and tax credits that would support existing nuclear plants.
A national policy that is "technology neutral" will drive cost-effective decarbonization, Exelon's Emnett said. "A price on carbon will do that very efficiently. A well-designed clean energy standard can largely achieve the same thing, or it could be done through tax policy" and "we'll meet policymakers where they are" to protect the existing fleet.
"Nuclear power can't be dismissed as a potential part of the long-term climate solution," a 2018 report by long-time nuclear skeptic the Union of Concerned Scientists (UCS) agreed. But ZECs should be market based, available to other clean energy sources, and only go to plants that are verified as safe, need financial support, and would avoid increased emissions, UCS stipulated.
Without incentives, "cheap natural gas will increasingly drive the retirement of zero-emitting nuclear plants, canceling out gains in emission reductions," a March 2021 independent analysis by consulting firm Rhodium Group confirmed.
Nuclear power's value in the climate fight has won bipartisan support in federal planning and the Biden administration's infrastructure bill, Department of Energy Acting Assistant Secretary and Principal Deputy Assistant Secretary for Nuclear Energy Kathryn Huff told the U.S. Chamber webinar.
The Senate's $1.2 trillion Infrastructure Investment and Jobs Act (H.R. 3684) was passed August 10 by a 69-30 vote. It incorporated the Senate's bipartisan American Nuclear Infrastructure Act (S. 2373), includes $6 billion to fund ZECs from 2022 to 2026 where they are demonstrated as economically necessary to limit emissions. It is expected to be reconciled with the House's more ambitious but unfinished infrastructure bill scheduled for a vote on Sept. 30.
The Senate bill's ZECs would be allocated through competitive bidding by plant operators. They would go to financially threatened plants certified as likely to lead to increased carbon emissions if closed and certified as operationally safe by the Nuclear Regulatory Commission (NRC).
The final infrastructure bill could also include a clean energy standard, which would resemble state requirements that electricity providers procure progressively larger amounts of emissions-free energy. As a national mandate, it could face rejection by conservative lawmakers and evolve into a more politically palatable clean electricity payment plan that offers incentives to procure zero emissions energy, according to University of California at Davis Economist James Bushnell.
But a Clean Electricity Performance Program, like the one approved this month by the House Energy and Commerce committee as part of the House version of the budget reconciliation bill, has unrecognized potential pitfalls, Bushnell said. It could lead to double-counting of clean energy or duplicitous shifting of clean energy procurements between providers that would threaten customer costs.
An alternative to the infrastructure bill initiatives is the Zero-Emission Nuclear Power Production Credit Act of 2021 (S. 2291). It would provide a $0.015/kWh production tax credit (PTC) to existing nuclear and was recently endorsed by both the NRC and the Nuclear Energy Institute (NEI). It has obtained little attention and not emerged from committee while lawmakers work through versions of the infrastructure bill.
That PTC "will make an enormous difference for climate and for our nuclear plants," Exelon President/CEO Chris Crane said Aug. 4 in the company's Q2 earnings release.
There are also provisions in existing legislation and proposed legislation for advanced nuclear technologies.
Another bill includes incentives for research, development and demonstration of advanced nuclear technologies and small modular reactors. Interest in these technologies as part of the climate fight was reflected in PacifiCorp's August 2021 long term resource plan, which proposed a 500 MW TerraPower advanced nuclear reactor, to be online in 2028, to replace the company's retiring coal plants.
But some advanced nuclear designs "pose even more safety, proliferation and environmental risks than the current fleet," a March 2021 UCS analysis concluded. And advanced nuclear technologies "require rethinking incentives" because "other clean energy resources are more immediately available," added Center for Energy Efficiency and Renewable Technologies (CEERT) Executive Director V. John White.
Beyond doubts about advanced nuclear technologies are bigger unresolved questions about nuclear power's safety and costs.
Keys to closure
It may be appropriate to provide financial supports for an existing nuclear facility if it can operate safely and if there are inadequate cost-effective alternatives to prevent it being replaced with emissions-creating generation, analysts said.
But this is not always the case.
"Diablo was one incident away from a disaster, its maintenance is expensive, and California has affordable alternative zero emissions resources available," said CEERT's White, who helped convince Pacific Gas and Electric (PG&E) to close Diablo Canyon, California's last nuclear plant, in 2025. "Indian Point's proximity to New York City made its questionable operational history a factor."
"Indian Point was shut down because of its threat to New York City," the Analysis Group's Tierney agreed. "But the upstate New York nuclear plants got ZECs because they had good operating histories and delivered economic benefits."
Exelon's claims that its nuclear plants' safety and reliability are good and getting better are supported by the NRC, but UCS remains dubious.
"Safety issues are economic issues," UCS Director of Nuclear Power Safety Ed Lyman said. "Industry pressure on the NRC to reduce costs for maintenance and refueling have weakened safety standards" set by the commission's Reactor Oversight Process (ROP) "over the past few years," he told Utility Dive.
New Biden administration appointments to the NRC, including Commission Chair Christopher Hanson, led to NRC Staff's August 5 retraction of two papers that would have decreased ROP inspection frequency and intensity, Lyman acknowledged. "But every operational incident reviewed this year has involved inadequate maintenance and the impact of the new leadership is not yet clear. Safety might be better, or they might have changed standards," he said.
"It is good that stakeholders raise safety concerns, but the NRC has extended the licenses of the bulk of existing fleet, some to 80 years," and "their owners will use them as a backbone to reach their climate goals," said former NRC Commissioner and nuclear advocate Jeffrey Merrifield, now a Pillsbury-Winthrop law firm partner.
The NRC "has consistently and rigorously assessed the ROP" and NRC safety inspections show "almost every U.S. nuclear power plant is operating at the highest level of performance," NRC spokesperson Scott Burnell added in an email.
But nuclear plant owners may not continue to take on the costs of inspections and maintenance necessary, Lyman cautioned. There is an "absolutely necessary" but elusive difference for the NRC to identify "between barely acceptable and really acceptable."
The linkage between safety and economics raises even harder-to-answer questions about the cost of having nuclear power or other firm capacity to achieve deep decarbonization.
The need for firm power
There is growing, though not unanimous, consensus that nuclear or another form of firm power will be needed to cost-effectively reach net zero emissions, scientists and analysts said. Many policymakers and nuclear advocates see financial support to existing nuclear as the most immediate and cost-effective of the firm power choices.
But there is no consensus on the most cost-effective way to achieve 100% renewable energy because cost analyses have "many nonlinearities and unknown unknowns," according to the authors of a National Renewable Energy Laboratory (NREL) report in May on the challenges of identifying the lowest cost power mix.
"Firm capacity" that can be called on at any time like nuclear energy, thermal generation with carbon capture and storage (CCS), geothermal, green hydrogen, or other clean fuels will be needed to assure the best system reliability at very high renewables penetrations, according to studies using multiple state-of-the-art modeling tools by NREL, UCS, Princeton University, Evolved Energy Research and Energy and Environmental Economics (E3).
That need for firm capacity is only at or above 95% renewable energy penetrations, and even at 100% renewables, the added costs of overbuilding renewables and storage instead of using firm capacity "were still less than $0.04/kWh," Stanford University Professor of Civil and Environmental Engineering and Director of the Atmosphere and Energy Program Mark Z. Jacobson disagreed.
But other studies do not validate the greater cost-effectiveness of overbuilding renewables and storage to supporting firm capacity in reaching net zero emissions.
"Nuclear or another firm capacity is part of the picture if the goal is zero carbon" because "getting to zero carbon with only wind and solar and batteries and even hydrogen is very expensive," E3 Senior Partner Arne Olson insisted.
Power sector emissions reductions of 80% to 100% below 1990 levels in the Pacific Northwest are "achievable at manageable cost, provided that firm capacity is available," E3's March 2020 assessment concluded. The same is true for New England, its November 2020 modeling of the region found.
"[W]e need to build the heck out of renewables now because they are cheap and scalable, but they will not get us to the finish line."
Senior partner, E3
Other research agreed that the absence of firm power resources increase the cost of reaching 100% decarbonization.
Models commissioned by environmental groups Environmental Defense Fund and Clean Air Task Force found renewables and batteries alone would increase wholesale electricity rates "65% over today."
The most cost-effective approach likely includes clean firm resources like CCS, nuclear and clean fuels, and "we need to invest heavily in them so they are live options in the 2030s," E3's Olson said. "And we need to build the heck out of renewables now because they are cheap and scalable, but they will not get us to the finish line."
But even with firm capacity like nuclear energy, the costs from adding new generation and transmission infrastructure will be significant.
Getting to 100% renewables by 2050, even with firm capacity, raises system costs by 29% because "system costs increase nonlinearly for the last few percent approaching 100%," an NREL June 2021 study found.
"It is not clear how much electricity prices and price profiles would be impacted" by these system costs, NREL Senior Energy Analyst and co-author of the May and June papers Trieu Mai told Utility Dive. "There might be high prices at some hours, but not at others, which might increase demand for flexibility and drive electrification."
It is also not certain how research might lower the costs of distributed generation, which means the technologies for the last 5% to 10% of a 100% renewable energy system "are highly uncertain," he added. But "the U.S. is still at 20% renewables and the challenge of deploying the technologies that are commercially available now is important before the challenge of the last 5% to 10% emerges."
Traditionally, technology development follows a walk-trot-run trajectory, he acknowledged. But to meet the Biden administration's 100% decarbonization by 2035 goal, "we have to sprint for the next 14 years."
Making the necessary and appropriate expenditures to keeping existing nuclear generation in place may be the most cost-effective way to get across that net zero emissions finish line. But despite nuclear advocates' aggressive push, uncertainties about nuclear's cost and safety keep it among the firm power options rather than the preferred one, scientists and analysts agree.