Two views - Should troubled nuclear reactors be subsidized?

[kristopher]

From The Conversation
Today we offer two expert perspectives on subsidizing nuclear power. Here’s the argument against providing economic support.


Compete or suckle: Should troubled nuclear reactors be subsidized?
August 17, 2016 10.54pm EDT

Author
Peter Bradford
Adjunct Professor, Vermont Law School
This article was originally published on The Conversation and is republished here with permission.
https://theconversation.com/compete-or-suckle-should-troubled-nuclear-reactors-be-subsidized-62069

Since the 1950s, U.S. nuclear power has commanded immense taxpayer and customer subsidy based on promises of economic and environmental benefits. Many of these promises are unfulfilled, but new ones take their place. More subsidies follow.

Today the nuclear industry claims that keeping all operating reactors running for many years, no matter how uneconomic they become, is essential in order to reach U.S. climate change targets.

Economics have always challenged U.S. reactors. After more than 100 construction cancellations and cost overruns costing up to US$5 billion apiece, Forbes Magazine in 1985 called nuclear power “the greatest managerial disaster in business history…only the blind, or the biased, can now think that most of the money [$265 billion by 1990] has been well spent.” U.S. Atomic Energy Commission (AEC) Chair Lewis Strauss' 1954 promise that electric power would be “too cheap to meter” is today used to mock nuclear economics, not commend them.

As late as 1972 the AEC forecast that the United States would have 1,000 power reactors by the year 2000. Today we have 100 operating power reactors, down from a peak of 112 in 1990. Since 2012 U.S. power plant owners have retired five units and announced plans to close nine more. Four new reactors are likely to come on line. Without strenuous government intervention, almost all of the rest will close by midcentury. Because these recent closures have been abrupt and unplanned, the replacement power has come in substantial part from natural gas, causing a dismaying uptick in greenhouse gas emissions.

U.S. Nuclear Regulatory Commission

The nuclear industry, led by the forlornly named lobbying group Nuclear Matters, still obtains large subsidies for new reactor designs that cannot possibly compete at today’s prices. But its main function now is to save operating reactors from closure brought on by their own rising costs, by the absence of a U.S. policy on greenhouse gas emissions and by competition from less expensive natural gas, carbon-free renewables and more efficient energy use.

Only billions more dollars in subsidies and the retarding of rapid deployment of cheaper technologies can save these reactors. Only fresh claims of unique social benefit can justify such steps.

When I served on the U.S. Nuclear Regulatory Commission (NRC) from 1977 through 1982, the NRC issued more licenses than in any comparable period since. Arguments that the U.S. couldn’t avoid dependence on Middle Eastern oil and keep the lights on without a vast increase in nuclear power were standard fare then and throughout my 20 years chairing the New York and Maine utility regulatory commissions. In fact, we attained these goals without the additional reactors, a lesson to remember in the face of claims that all of today’s nuclear plants are needed to ward off climate change.

Nuclear power in competitive electricity markets

During nuclear power’s growth years in the 1960s and 1970s, almost all electric utility rate regulation was based on recovering the money necessary to build and run power plants and the accompanying infrastructure. But in the 1990s many states broke up the electric utility monopoly model.

Now a majority of U.S. power generation is sold in competitive markets. Companies profit by producing the cheapest electricity or providing services that avoid the need for electricity.

To justify their current subsidy demands, nuclear advocates assert three propositions. First, they contend that power markets undervalue nuclear plants because they do not compensate reactors for avoiding carbon emissions, or for other attributes such as diversifying the fuel supply or running more than 90 percent of the time.

Second, they assert that other low-carbon sources cannot fill the gap because the wind doesn’t always blow and the sun doesn’t always shine. So power grids will use fossil-fired generators for more hours if nuclear plants close.

Dry casks for storing irradiated nuclear fuel at the Diablo Canyon plant in Avila, California. The plant is scheduled to close within a decade, but taxpayers will pay to keep spent fuel stored on-site until a federal repository is ready to take it. U.S. Nuclear Regulatory Commission/Flickr, CC BY-NC-ND

Finally, nuclear power supporters argue that these intermittent sources receive substantial subsidies while nuclear energy does not, thereby enabling renewables to underbid nuclear even if their costs are higher.

Nuclear power producers want government-mandated long-term contracts or other mechanisms that require customers to buy power from their troubled units at prices far higher than they would pay otherwise.

Providing such open-ended support will negate several major energy trends that currently benefit customers and the environment. First, power markets have been working reliably and effectively. A large variety of cheaper, more efficient technologies for producing and saving energy, as well as managing the grid more cheaply and cleanly, have been developed. Energy storage, which can enhance the round-the-clock capability of some renewables is progressing faster than had been expected, and is now being bid into several power markets – notably the market serving Pennsylvania, New Jersey and Maryland.

Long-term subsidies for uneconomic nuclear plants also will crowd out penetration of these markets by energy efficiency and renewables. This is the path New York state has taken by committing at least $7.6 billion in above-market payments to three of its six plants to assure that they operate through 2029.

Nuclear power vs. other carbon-free fuels

While power markets do indeed undervalue low-carbon fuels, all of the other premises underlying the nuclear industry approach are flawed. In California and in Nebraska, utilities plan to replace nuclear plants that are closing early for economic reasons almost entirely with electricity from carbon-free sources. Such transitions are achievable in most systems as long as the shutdowns are planned in advance to be carbon-free.

In California these replacement resources, which include renewables, storage, transmission enhancements and energy efficiency measures, will for the most part be procured through competitive processes. Indeed, any state where a utility threatens to close a plant can run an auction to ascertain whether there are sufficient low-carbon resources available to replace the unit within a particular time frame. Only then will regulators know whether, how much and for how long they should support the nuclear units.

If New York had taken this approach, each of the struggling nuclear units could have bid to provide power in such an auction. They might well have succeeded for the immediate future, but some or all would probably not have won after that.

Local opposition to the Vermont Yankee nuclear plant after its original license expired in 2012. The plant obtained a license extension, but the owner decided to close it in 2014 based on economic factors. (Click for larger image) James Ennis/Flickr, CC BY-NC

Closing the noncompetitive plants would be a clear benefit to the New York economy. This is why a large coalition of big customers, alternative energy providers and environmental groups opposed the long-term subsidy plan.

The industry’s final argument – that renewables are subsidized and nuclear is not – ignores overwhelming history. All carbon-free energy sources together have not received remotely as much government support as has flowed to nuclear power.

Nuclear energy’s essential components – reactors and enriched uranium fuel – were developed at taxpayer expense. Private utilities were paid to build nuclear reactors in the 1950s and early ‘60’s, and received subsidized fuel. According to a study by the Union of Concerned Scientists, total subsidies paid and offered to nuclear plants between 1960 and 2024 generally exceed the value of the power that they produced.

The U.S. government has also pledged to dispose of nuclear power’s most hazardous wastes – a promise that has never been made to any other industry. By 2020 taxpayers will have paid some $21 billion to store those wastes at power plant sites.

Furthermore, under the 1957 Price-Anderson Act, each plant owner’s accident liability is limited to some $300 million per year, even though the Fukushima disaster showed that nuclear accident costs can exceed $100 billion. If private companies that own U.S. nuclear power plants had been responsible for accident liability, they would not have built reactors. The same is almost certainly true of responsibility for spent fuel disposal.

Finally, as part of the transition to competition in the 1990s, state governments were persuaded to make customers pay off some $70 billion in excessive nuclear costs. Today the same nuclear power providers are asking to be rescued from the same market forces for a second time.

Christopher Crane, the president and CEO of Exelon, which owns the nation’s largest nuclear fleet, preaches temperance from a bar stool when he disparages renewable energy subsidies by asserting, “I’ve talked for years about the unintended consequences of policies that incentivize technologies versus outcomes.“ However, he’s right about unintended and unfortunate consequences. We should not rely further on the unfulfilled prophesies that nuclear lobbyists have deployed so expensively for so long. It’s time to take Crane at his word by using our power markets, adjusted to price greenhouse gas emissions, to prioritize our low carbon outcome over his technology.


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Penn State University nuclear engineering professor Arthur Motta provides a contrasting view:

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Nuclear power deserves a level playing field

August 17, 2016 10.54pm EDT
Author
Arthur T. Motta
Professor of Nuclear Engineering and Materials Science and Engineering, Pennsylvania State University

This article was originally published on The Conversation and is republished here with permission.
https://theconversation.com/nuclear-power-deserves-a-level-playing-field-62149

In one of the courses I teach at Penn State, we discuss the characteristics of an ideal electricity production portfolio for the United States and consider what form of energy policy would best achieve it. The class typically identifies the most important factors as cost, reliability of supply, public safety and environmental impact. Students also cite other characteristics, such as national security, domestic availability of fuels and technologies, and electric grid stability.

Because no real-world energy source fulfills all of these characteristics, we have to make compromises to find an optimal combination of energy sources. Ideally a well-designed national energy policy would give us a framework for making these choices by balancing short-term goals, such as cost, against long-term goals, such as environmental protection.

However, there really is no coherent long-term energy policy in the United States. What exists instead is an ad hoc hodgepodge of subsidies, taxes and regulations differing across regions of the country, that, along with the free market, end up determining what energy sources are used for the production of electricity. In particular, we have no carbon tax to penalize carbon-emitting technologies.

As a result, long-term goals are often neglected.

Under this ad hoc approach we currently reward some sources, such as renewables, for providing carbon-free electricity, but not others, such as hydro and nuclear power. In my view this is wrongheaded and inconsistent. The United States would do better by following the example of New York, which recently decided to support nuclear power plants to keep them from closing because of competition from cheap natural gas.


Natural gas: A mixed blessing

In the past decade U.S. domestic natural gas production has increased by 50 percent. Natural gas, which emits half as much carbon dioxide as coal when burned, is replacing coal for electricity generation. As a result, U.S. greenhouse gas emissions from electricity generation have actually decreased over the last decade, even as electricity consumption has increased.


U.S. Energy Information Administration.
This is very good news for the environment. Also, the low price of natural gas puts money in people’s wallets. However, natural gas is still a carbon-emitting technology and contributes to climate change. Thus, as concerns about climate change have grown, Congress and the states have adopted subsidies and tax credits to expand electricity production from low-carbon and carbon-free renewable fuels in an effort to reduce greenhouse gas emissions.

Such subsidies acknowledge that the monetary cost of energy production – which is now the primary factor in whether an energy source is developed and used – is in fact an imperfect tool for shaping medium- and long-term energy policy.


A long-term energy policy to achieve environmental goals

At a recent Department of Energy summit on improving the economics of U.S. nuclear power plants, speakers noted that, along with cost, factors such as production of carbon-free electricity, reliability, grid stability and diversity of fuel supply should influence decisions about energy supply. But energy sources do not consistently receive credit for helping to attain these goals, and are not consistently penalized if they fail to do so.

The subsidies and tax credits mentioned above are a step in that direction, and have increased development of renewable energy sources. As a result, the percentage of electricity from renewables has significantly increased in recent years, which is great. Solar and wind together currently provide about five percent of U.S. electricity.


Unfortunately, increasing reliance on renewable energy also has a downside. The intermittency of renewable energy and unavailability of energy storage means that the installed capacity of renewable sources has to be considerably higher than the desired output (by a factor of three or more). In other words, we have to build more than we need, and other energy sources are needed to provide backup when the wind is not blowing or the sun is not shining.

The Shepherds Flat wind farm in Oregon has 338 turbines over 32,100 acres and a maximum generating capacity of 845 megawatts. Such a plant would generate an average of 205 megawatts over a year at a capacity factor of about 25 percent, which is the level that the Department of Energy forecasts for Shepherds Flat. A typical nuclear power plant generates about 1,000 megawatts with capacity factors over 90 percent. U.S. Department of Energy

Moreover, at present renewable sources are not economically competitive without subsidies, but they become very competitive with them. With subsidies, wind power is practically free in some markets. This distorts the market because utilities have to produce less energy in cheaper nuclear power plants so they can use subsidized renewable energy. This causes utilities to operate nuclear power plants in an up and down mode rather than their normal baseload operation, making them even less competitive.


Recognizing the benefits of nuclear power properly

However, subsidizing carbon-free sources is justifiable to provide for the future greater good of the country because they provide climate change and clean air benefits. Perversely, however, the U.S. Environmental Protection Agency and most states have declined to consider rewarding the same benefits from existing nuclear power plants.

The main argument for not including existing nuclear power plants – as well as electricity from large hydropower dams – in clean air mandates and subsidies is that contributions from these conventional sources would dwarf new renewable generation, which the federal government wishes to encourage.

According to this twisted logic, environmental benefits from new nuclear power plants do receive proper credit under the Obama administration’s Clean Power Plan. But the plan includes no economic rewards for keeping existing efficient, well-run plants in operation.

This makes no sense.

If these plants are shuttered, their output will be replaced in many cases by natural gas generation, which will increase greenhouse gas emissions, as has occurred after recent nuclear plant closures in Vermont and Wisconsin.

Nuclear power provides other benefits in addition to clean air. Nuclear plants also provide stability to the electrical grid, as their output is constant and reliable. They are available at nearly all times and especially in times of need – for example, during severe winter weather when coal deliveries may be disrupted.

Additionally, nuclear power is a technology-intensive industry in which the United States has traditionally led the world. With each closure of an operating U.S. nuclear power plant, the infrastructure built over the past 50 years – including suppliers, vendors, operators, maintenance and manpower – becomes increasingly imperiled as it serves a dwindling number of plants. If the industry disappears here, it will be very difficult to rebuild as China and Russia becomes world leaders in nuclear technology.

Reactor Unit 3 under construction at the V.C. Summer nuclear plant in South Carolina, 2014. U.S. Nuclear Regulatory Commission/Flickr, CC BY

Finally, nuclear power is also one of the rare industries that generates many high-paying jobs for engineers and technicians, as well as blue-collar jobs for plant workers – all of which must be sited in the United States. This is one reason why regulators in New York recently adopted a Clean Energy Standard that will provide significant yearly subsidies through 2029 to keep several existing reactors operating. Other states should consider taking similar steps to recognize the benefits of nuclear power and prevent premature plant closures. This would support their environmental goals.

In sum, there is a case for government intervention to improve the economic competitiveness of nuclear plants and avoid early closures. The nuclear industry does not need handouts, but a coherent U.S. energy policy should provide a level playing field in the electric markets by recognizing the essential contributions that nuclear power plants make toward reducing greenhouse gas emissions, ensuring reliable electricity and preserving grid stability. Failure to act could foreclose the nuclear power option in this country and make the road to clean air and energy independence in the future that much harder.

[msongs]

1. obsolete technology on welfare. nt

[Tikki]

2. There can be no environmental goals until the issue of 'nuclear waste' is addressed...

and by burying the waste, they mean burying the issue.


p.s. thank you for the articles...
Tikki