Notwithstanding years of safe and reliable operation of power reactors in the United States, now is the time to pull the plug on nuclear energy. Cheaper electricity from natural gas and renewables is now widely accessible and can replace nuclear.
For decades, nuclear-generated electricity was more cost-competitive than power from natural gas, solar and wind, or even coal. Today, that cost calculus has changed. Thanks to two new revolutionary Made-in-the-USA technologies — horizontal drilling and hydraulic fracturing — the shale revolution has made abundant natural gas available as a low-cost fuel. And a dramatic drop in the costs of solar and wind power mean that both are now stand-alone energy sources that are starting to compete in electricity markets without the need for taxpayer support.
Something else: Reduced demand for electricity due to improvements in demand management has made shutting down conventional base-load nuclear plants easier and practical for financial reasons.
Consequently, nuclear energy is gradually being displaced. Since 2013, five nuclear plants have closed, and six more are scheduled to shutter operations within the next five years, while many others are at risk of closing. Energy experts warn that more than half of the nation’s nuclear-generating capacity could be shut down in the next decade. Meanwhile, an initiative by Energy Secretary Rick Perry to provide government assistance for financially-troubled nuclear and coal plants never got off the ground.
The nuclear industry knows that it can’t survive on its own.
In New Jersey, owners of the Salem and Hope Creek nuclear plants – Public Service Electric & Gas Company and Exelon — are seeking $300 million a year in subsidies from state taxpayers to keep the nuclear plants operating. Proposed legislation would have ratepayers foot the bill. But the state legislature has yet to approve the plan, and the owners have responded by cutting off investments in the reactors, placing their future very much in doubt. Surplus electricity in neighboring states could be transmitted to New Jersey at a lower cost. And pipelines could be built to transport cheap natural gas from the Marcellus Shale in neighboring Pennsylvania to replace nuclear energy for power generation.
In Ohio, FirstEnergy is trying to get a bailout in the guise of zero emissions credits for its troubled Perry and Davis-Besse nuclear plants. With the credits, it plans to sell the plants and get out of competitive generation altogether. Given the firm’s terrible business decisions and ongoing safety problems at both nuclear plants, FirstEnergy should have probably exited the power market years ago.
Nationally, the production of shale gas has shown stunning growth in recent years — and consumers and businesses have benefited from cheap electricity. Over the longer term, it’s possible that gas prices may rise gradually, but certainly not fast. By contrast, the cost of repairs at nuclear plants has already gotten out of hand.
A study by the financial firm Lazard shows that cost of energy for nuclear generation in the United States has jumped 35 percent in one year, reflecting increased capital costs at nuclear plants.
Nuclear energy’s life-cycle cost ranges from $112 to $183 per megawatt hour, whereas the life-cycle cost of a combined-cycle gas plant ranges from $42 to $78. The problem with nuclear energy is that the U.S. fleet of about 100 nuclear plants is aging, and many things can go wrong at an older plant. Besides, there hasn’t been a new order for a U.S. nuclear plant that has produced electricity in more than 35 years.
Cost advantages aside, natural gas has provided some remarkable environmental benefits. According to the U.S. Energy Information Administration, between 2007 and 2017 annual carbon emissions from electricity production dropped by 28 percent and are now the lowest since 1987. Credit for this goes largely to the shift from coal to natural gas. Also, sulfur dioxide emissions have fallen by more than 70 percent and nitrogen oxides by more than 50 percent over approximately the same period.
Trying to adjust, the nuclear industry is relying on taxpayer support to develop a new generation of small modular and advanced reactors. The compact reactors would be built for a fraction of the cost of existing nuclear plants, and prototypes of traveling wave and molten salt reactors being built under a joint program with China show promise. If successful, these advanced reactors could help turn the situation around for nuclear energy. But it’s time to face reality: The era of conventional nuclear plants is over.
Mark J. Perry (@Mark_J_Perry) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a scholar at the American Enterprise Institute and a professor of economics and finance at the University of Michigan’s Flint campus.
