The following op-ed was co-authored by R Street Energy Policy Director Catrina Rorke.
At a meeting of the National Association of Science Writers in New York in 1954, the chairman of the U.S. Atomic Energy Commission laid out his vision for a nuclear-powered future. Famines would be the stuff of history, Lewis Strauss said; people would “travel effortlessly over the seas and under them and through the air with a minimum of danger and at great speeds”; they would “experience a lifespan far longer than ours.” That all went over well enough, and many of his prognostications have since come true (though not, alas, the bit where he forecast “an age of peace”). But the part of the speech that caused a sensation—and has come in for much scorn and mockery over the years—was when Strauss said, “It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter.”
His vision was indeed ambitious: Though nuclear power has been a uniquely low-cost, stable, and efficient source of power, it hasn’t come close to being free. Still, since the first commercial facility opened in 1958, nuclear plants have, on average, more than doubled their efficiency. Nuclear provides three times more electricity than wind, solar, geothermal, biomass, and all other nonhydropower renewable sources combined. In the face of public opposition, exhaustive regulation, and very limited new investment, nuclear plants have been making cheap, reliable energy for decades.
So why are so many nuclear power plants shutting down? The retirements of nine facilities have been announced or completed since 2013. These closures add up to nearly one-tenth of the total number of American nuclear plants. The trend has left many nuclear advocates nervous.
One factor driving the closures is that electricity demand has all but stopped growing, thanks to more efficient homes and businesses. And while mandates and tax incentives encourage the installation of new wind and solar power and other renewables, nuclear gets no such encouragement. But far and away the biggest factor has been low-cost natural gas. The fracking boom has transformed the domestic energy economy over the past decade, alleviating concerns about energy scarcity and dramatically depressing fuel prices. It has also largely eliminated the historic price volatility that made natural gas a risky fuel source for electricity. Natural gas is the new fuel of choice for power, squeezing out coal and nuclear. That may be a benefit to the climate as far as coal is concerned, but not so with nuclear.
When the state of Vermont shut down the Vermont Yankee nuclear facility and California retired San Onofre, the power from those plants was replaced by electricity generated using natural gas. They were no anomalies: Thanks to low fuel prices and the low cost of building natural-gas electrical plants, the power lost when a nuclear plant is shuttered is replaced almost entirely by power produced with natural gas. If these trends continue, the net effect of nuclear retirements will be to increase greenhouse gas emissions by more than 10 percent over the decade.
Of course, an even worse option is for nuclear facilities to retire without any replacement to fill the generation gap. Contrary to the forecasts of environmental activists, nuclear cannot be completely replaced by wind and solar, which are by nature intermittent. Cloudy or becalmed days can mean blackouts unless there is backup from the sort of on-demand power that nuclear and fossil-fuel facilities deliver.
Nuclear power is a necessary part of our electrical system. Losing too many facilities to low-priced natural gas will make it much more difficult to meet future carbon emissions targets and maintain low-cost, reliable electric service. Shut down a nuclear plant, and there’s no bringing it back. Recent examples suggest that nuclear plants are more likely to close if they’re victims of poor geographic circumstance. Consider Exelon’s two facilities in Illinois, Clinton and Quad Cities, slated for closure after enduring $800 million in losses since 2010. These facilities compete with natural-gas plants and a large number of wind farms, but suffer primarily from local transmission-related challenges. Power generated in this part of Illinois is persistently priced 20 percent lower than in neighboring areas. Prices are so low that if the facilities were located elsewhere, such as in the mid-Atlantic, they would have not just erased their losses, but would have likely turned a profit in the hundreds of millions of dollars.
Today’s market is tough for nuclear, but the industry won’t disappear. Facilities particularly exposed to low prices may close, but the majority of the nuclear fleet is well poised to weather stagnant demand and competition from low-cost natural gas and subsidized renewables. Markets should be left to adapt to these conditions, and piecemeal mandates, subsidies, or payments to keep these facilities afloat are unnecessary. Looking for government to prop up the nuclear industry would distort the market at exactly the point that customers have started to see the benefits of low prices. There’s still a role for nuclear to play as a reliable contributor to the power system, even if it isn’t too cheap to meter.