The value of nuclear

Thursday, 11 September 2014

Liberalized electricity markets fail to appreciate the value nuclear power provides as a reliable, clean and cost-effective fuel that helps keep the grid stable, Marvin Fertel of the Nuclear Energy Institute (NEI) said today.

Fertel spoke at the World Nuclear Association's annual Symposium & Exhibition being held in London this week (Image: WNA)

"What we find is that nuclear energy is not necessarily treated in the way it should be from the standpoint of recognizing all of the value attributes that it is bringing to a market. And because of that we in the US shut down one plant last year, have another that will be shut down at the end of this year, and we have probably somewhere between five and ten plants at risk of shutdown in competitive markets," Fertel said.

The plant closed due to market issues that Fertel was referring to was Kewaunee in Wisconsin.

In June 2013 the two 30-year old PWR reactors at the San Onofre nuclear plant in California were retired permanently due to regulatory delay and uncertainty following damage in the steam generators of one unit. Two months later Entergy announced that its 635 MWe Vermont Yankee reactor would be closed down at the end of this year as it had become uneconomic. Ten other nuclear plants - comprising 13 reactors - are considered to be at risk of closure, all but one of these in the northeast of the country, in deregulated states.

"Nuclear plants provide electricity 24/7, 365 days a year. In the US they provide about 20% of our electricity, which is just under 800 billion kWh a year. For about 15 years now we have been operating a fleet-wide capacity factor of about 90%," Fertel said. "We are seeing that nuclear plants are the foundation for our baseload capacity. It's recognized but not appreciated and not necessarily valued the way it should be and that's part of the battle that we have."

Price stability

Another aspect that NEI is advocating about the value of nuclear energy is price stability.

"We all hear how expensive initial capital costs [of constructing new nuclear power plants] are, but when you look at it as a 60-year life - and in America we have 40 year [operating licences] – and when you look at price, nuclear plants are very stable, both for consumers and for business," Fertel said. "Nuclear power plants provide extremely important grid stability. Right now in competitive markets they get almost zero value for what they do and they are not known to do it until they lose it," he said.

Nuclear facilities account for more than 60% of the USA's non-greenhouse gas emitting generation, but the industry "gets no value for that either right now," he said.

NEI is in talks with the Environmental Protection Agency (EPA) on the role nuclear power can play in helping the USA to meet its climate targets.

In June, the EPA called for requiring the USA's existing power plants to cut their greenhouse gas emissions by 30% from 2005 levels by 2030. States will have until June 2018 to submit their final plans for complying with the rule.

"We think there is hope there, in talking with the White House, in talking with the EPA, that there is recognition of how important nuclear plants are to meet the President's desire to reduce GHGs," Fertel said. "We are optimistic that if the rule goes anywhere, which is questionable legally, that nuclear will be treated much better," he said.

Diversity

NEI is also calling for recognition that diversity of power supply is crucial and that the USA should not rely too heavily on shale gas.

"We have a wonderful supply of shale gas – it is relatively inexpensive, and we are producing more and more so that domestically it has become the staple to go to," Fertel said. "We have shut down about 40,000 MW of coal plants and there will probably be another 30,000 MW that will be shut down over the next few years because of environmental requirements. They are all being replaced by gas essentially. However, overreliance on any fuel supply or technology has risk."

Fertel cited a study issued in July by IHS - the Colorado-headquartered market and economic information provider. NEI, the Edison Electric Institute, and the Institute for 21st Century Energy at the US Chamber of Commerce supported the study, titled The Value of US Power Supply Diversity.

The study compared a base case - reflecting the current generation mix in regional US power systems during the 2010-2012 period - with a reduced diversity case involving a generating mix without meaningful contributions from coal and nuclear power and with a smaller contribution from hydroelectric power along with an increased share of renewable power. The remaining three-quarters of generation in the scenario come from natural gas-fired plants.

In this comparison, IHS found that the cost of generating electricity in the reduced diversity case was more than $93 billion higher per year and the potential variability of monthly power bills was 50% higher compared to the base case, Fertel said. As a consequence, the study calculates that the typical household's annual disposable income to be around $2100 less in the reduced diversity scenario, there would be around one million fewer jobs compared to the base case and US gross domestic product would be nearly $200 billion less, he said.

"We are using the study, not to argue against gas, but to argue for diversity," Fertel said.

The importance of diversity was made clear last winter by the impact of the North Polar Vortex, Fertel said. Spot natural gas prices increased tenfold to more than $30/MMBtu, pushing up wholesale electricity prices to $100/MWh, he said.

"We couldn't get gas up to New England due to limited pipelines and transmission lines," Fertel said. That region had switched to increased use of dual fuel from plants able to generate electricity from oil and natural gas. "That's another example where nuclear plants got very little value," he said.

The NEI in March launched its Nuclear Matters public affairs campaign to inform key audiences about nuclear energy's full value proposition and to raise awareness of the economic challenges to nuclear energy that threaten those benefits. Through state-based events, the campaign will reach out to stakeholders to hear directly from them about the importance of nuclear energy to their communities and to find the solutions that will help to preserve this essential energy resource.

"We could shut down plants before their value is actually appreciated by the markets that those plants are operating in. That would be tragic," Fertel said.

The global nuclear community has "both the phenomenal opportunity and an important responsibility", Fertel said, to provide electricity to "not only the people that currently have it, but to the two billion around the world that don't."

Researched and written
by World Nuclear News