WASHINGTON (November 8, 2018)—More than one-third of the United States’ nuclear power fleet—21 of 60 facilities that provide low-carbon electricity—will be or could be shuttered in the next decade before their operating licenses expire and replaced primarily by natural gas and coal, according to an analysis released today by the Union of Concerned Scientists (UCS) that assessed the economic viability of the U.S. nuclear power industry. The plants, which are mostly smaller, single reactor plants, provide more than one-fifth of the country’s nuclear power.
According to the report, early nuclear retirements pose no threat to the nation’s electricity reliability and resilience. The threat is the potential replacement of their low-carbon electricity with fossil fuels.
“The United States is facing a dilemma,” said Steve Clemmer, co-author and director of energy research and analysis at UCS. “Nuclear power plants are being squeezed economically at a time when we need every source of low-carbon power we can get to replace retiring coal plants and prevent an overreliance on natural gas. Strong policies can prevent the abrupt closure of nuclear plants that meet stringent safety standards, while we continue to ramp-up investments in renewables, efficiency and other low carbon technologies to drive down emissions.”
Last month the Intergovernmental Panel on Climate Change released a report that said meeting the global 1.5 degrees Celsius temperature target will require bringing global carbon dioxide emissions to net zero by mid-century and dramatically reducing emissions of other heat-trapping gases. This calls for transforming the energy system, transitioning away from fossil fuels by greatly ramping up energy efficiency and embracing renewables and other low-carbon energy sources, and investing in negative emissions technologies, such as carbon capture and storage.
The IPCC report “reminds us that we are running out of time and will have to make hard choices. Preserving the capacity of safely operated nuclear plants or ensuring that this capacity is replaced with zero carbon alternatives, is an imperative that cannot be ignored,” wrote Ken Kimmell, president of UCS, in a related blog.
The UCS report, “The Nuclear Power Dilemma: Declining Profits, Plant Closures, and the Threat of Rising Carbon Emissions,” recommends the federal government and states adopt strong policies that would rapidly increase the amount of low-carbon energy sources and help preserve the low-carbon electricity the at-risk nuclear power plants provide.
“The best solution to this problem by far is a national carbon price implemented alongside a suite of economy-wide complementary policies,” said Jeremy Richardson, co-author and senior energy analyst at UCS. “When we burn coal and natural gas to generate electricity, we don’t pay for the damages these fuels inflict on the climate. A carbon price would level the playing field for all low-carbon technologies and address the current market failure. In addition to preserving existing nuclear generation, such a policy would increase investments in solar panels and wind turbines. It would also make low-carbon technologies, such as carbon capture and storage, more economically viable.”
If policies such as a national carbon price or low-carbon electricity standard were adopted, the study said they could avoid the potential early closure of all the unprofitable and marginally economic plants identified in the analysis and would help the U.S. stay on track to achieve the emissions reductions called for in the Paris climate agreement. UCS found the cumulative U.S. power sector carbon emissions would be 28 percent lower by 2035 under a modest $25 per ton power sector carbon price starting in 2020 that rose 5 percent per year, or 19 percent lower by 2035 under a low-carbon electricity standard of 60 percent by 2030 and 80 percent by 2050. Conversely, if at-risk plants close early and their power is replaced by natural gas and coal, that could result in a cumulative increase in U.S. power sector carbon emissions of up to 6 percent by 2035. The net cumulative public health and economic benefits would be about $234 billion by 2035 under that carbon price or $61 billion under that low-carbon electricity standard.
To ensure they don’t lose a vital source of low-carbon electricity, states have adopted a variety of approaches. California’s strong renewable energy and energy efficiency standards and climate policies will likely allow it to replace the power generation of the retiring Diablo Canyon nuclear facility by 2025 with clean energy and continue to drive down emissions. States such as Illinois, New York and New Jersey have adopted policies that provide temporary financial assistance for at-risk plants paired with greater incentives for renewables and efficiency. Other states, like Ohio and Pennsylvania, are considering such moves. The UCS report cautioned that any policy solution should come with strings attached: nuclear plant owners should be required to be fully transparent about their finances and demonstrate need, support should be limited and adjusted over time to reduce costs to ratepayers, and regulators should ensure that the same level of carbon free power cannot be provided during the relevant time period with less costly options.
Policy support also should be contingent on nuclear reactors meeting strong safety and performance standards, UCS said. Under those terms, the Davis-Besse plant in Ohio and the Grand Gulf plant in Mississippi, which are at-risk of early closure but violated Nuclear Regulatory Commission (NRC) safety standards last quarter, would not be eligible for support until those problems are corrected. The Clinton plant in Illinois, which is currently receiving financial support from a state law passed in 2016, was not in full compliance with NRC safety standards earlier this year.
Support should also be combined with policies that increase renewable energy and energy efficiency programs and require owners of nuclear power plants to develop worker and community transition plans to prepare for their plants’ eventual retirement, according to the report.
As of early July, when UCS researchers finished their calculations for this report, five of the 21 at risk plants, including Diablo Canyon in California, Indian Point in New York, and Pilgrim in Massachusetts, were scheduled to retire in the coming decade for economic, safety or performance reasons. Since then, the owner of the Duane Arnold plant in Iowa announced plans to shut it down by 2020, bringing the number of plants slated for closure in the next 10 years to six. The other 15 plants, primarily located in the Midwest and Mid-Atlantic, are at risk largely because of low natural gas prices and high operating costs. Five of those plants have a higher risk of early closure because they are owned by merchant generators that sell their power in competitive markets where power providers purchase the lowest-cost electricity. The other 10 plants are also at risk due to cheaper alternatives, but less so because they are owned by regulated utilities that can recover their costs from ratepayers.
The analysis found the average cost of bringing unprofitable nuclear plants to the break-even point is $814 million per year. This figure includes the recently-announced-for-retirement Duane Arnold plant, as does the above projected emissions increase that would occur if the at-risk plants were closed.
Since its founding nearly 50 years ago, UCS has served as a nuclear safety watchdog, and it will continue to do so, pushing the NRC to ensure plants meet the highest safety, security and performance standards.