Saturday, July 30, 2016

Addressing the Plight of Existing Nuclear Retirements, Part 2

RPS Policies by State (Credit: Lawrence Berkeley National Laboratory) Click to Enlarge.
This is the second article in a three-part series on existing nuclear in the United States.  Part 1 identified and discussed major economic and policy challenges. Part 3 will look at other state, regional, and federal policy solutions.

  1. Although the economic struggles of the existing US nuclear fleet are clear, potential solutions to these challenges remain somewhat undefined and unanalyzed.
  2. Any solution must provide sufficient incentives to generators, reduce uncertainty, and be politically feasible.
  3. This is a clear situation where a one-size fits all approach will not work – instead, planners will likely have to consider many different policy and regulatory avenues.
  4. Short term policy fixes may be sufficient to protect the most vulnerable nuclear reactors but more systemic policy reforms are needed for the long-term sustainability of the entire nuclear power fleet.
Nuclear Retirements Under Increased Scrutiny
In the last several months, the announcement of planned retirements at 5.1 GW of nuclear capacity in Illinois and California underscored the challenges facing the U.S.’s nuclear fleet.

While there are many factors at play there are four dominant issues:
  • Restructured electricity markets structurally favor short run marginal costs and largely ignore long term considerations
  • Low natural gas prices reduce electricity prices in these markets and also challenge the cost effectiveness of nuclear plants in regulated markets
  • Continuing growth in renewable energy, especially solar, will only exacerbate these two issues in the long term
  • The nuclear fleet is aging, leading to multiple issues including the need for large additional capital expenditures
Unless market or policy design changes, a large portion of the existing nuclear fleet faces retirement in the short term, resulting in increased national carbon emissions.  As renewable energy continues to grow rapidly and plants continue to age, the rest of the fleet will also face retirement risks if current market design persists.

Although policymakers are increasingly recognizing these issues, questions remain about how to address them.

Read more at Addressing the Plight of Existing Nuclear Retirements, Part 2

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