Nuclear plant closures already hurting CO2 reduction efforts, Brattle Group official says

Nuclear plant retirements are already hurting United States efforts to reduce carbon dioxide (CO2) emissions, a Brattle Group official told a nuclear conference Oct. 24 in Washington, D.C.

Brattle Group Principal & Utility Practice Area Leader Frank Graves addressed the Center for Strategic and International Studies (CSIS) Nuclear Energy at a Crossroads conference in the early afternoon. Energy Secretary Ernest Moniz spoke at the conference earlier in the day.

The decisions by Dominion (NYSE:D) to close the Kewaunee (566 MW) and Entergy (NYSE:ETR) to retire Vermont Yankee (604 MW) nuclear units account a small sliver of the domestic generation fleet, but have already increased CO2 emissions by about 6.4 million tons per year, Graves said.

Of course, utility holding companies typically don’t get compensation for avoiding emissions by running baseload nuclear plants, Graves said.

Roughly 13.3 GW of domestic nuclear capacity retirements have been either completed or announced. States About another 4 GW are considered “on the bubble,” Graves said.

This does not bode well for carbon reduction efforts, Graves said.

Policy-wise, the Environmental Protection Agency (EPA) Clean Power Plan is very weak in terms of providing an “uplift cost” for nuclear power, Graves said.

Upstate nuclear generation in New York avoids 16 million tons of CO2 emissions annually, Graves said. The financial impact of avoiding CO2 is significant when you factor in the “social cost of carbon” calculated by U.S. government at more than $42/ton.

New York officials are trying to give nuclear plants financial credit for avoiding CO2 through zero emission credits or ZECs. The ZEC payment of $17.48/MWh is expected to be adjusted every two years depending on the Regional Greenhouse Gas Initiative (RGGI) market. 

The economics of nuclear power is growing more difficult, Graves indicated. Nuclear companies might find themselves operating in environment where the market is incredibly volatile.

To justify construction of a new nuclear plant, an investor would need to put several billions of dollars at risk and then wait more than a decade to see how it is going to perform financially, Graves said. Renewables developers, by contrast, only need to make projections “three-to-four years ahead,” Graves said.

The operating costs of existing nuclear units went up incrementally after 2002 due to a variety of factors – including expenses of power uprates, license renewal and increased security after Fukushima. “Since then, things have tapered off,” Graves said.

Meanwhile, the market “hasn’t been terribly friendly as you’re aware,” Graves said.

Cheap natural gas, weak growth in electric power demand and renewable portfolio standards (RPS) policy complicate the economic case for nuclear power.

Unconventional shale gas is “nearly as cheap as nuclear fuel” in certain areas and combined-cycle gas plants have much lower operation and maintenance costs, than nuclear plants, Graves said.

Nevertheless, nuclear energy still provides more carbon-free energy than renewable sources, Graves said.

Spent fuel is a “scary barrier” for politicians, although the technology is well qualified, Graves said. “You could put all the nuclear waste from the U.S. fleet on a 200-acre site.”

“This is something that has much more fear factor than substance behind it,” Graves said. Graves added, however, that the fear factor should not be dismissed.

The event was webcast on the CSIS website.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.