Clean Power Plan Causes Stir in Nuclear Industry

iStock_000017116815SmallOn August 3, the White House and the Environmental Protection Agency released the final version of the Clean Power Plan, a regulation establishing the framework for the future of the U.S. energy sector. The Plan focuses on energy efficiency and carbon pollution reduction, aiming to set the United States on track to play its part in the international effort to mitigate climate change by 2030, while allowing states some flexibility in determining how they reach these goals.

In the nuclear industry, however, reception of the Plan has been mixed. On one hand, the Nuclear Energy Institute expressed appreciation for the fact that plants under construction will count toward compliance once they are operational. In earlier drafts, the EPA had counted in-progress plants as part of the emissions baseline for the states in which they are located, indicating that the states would not receive credit for the carbon-free power they will provide once online. This misrepresentation has been corrected in the final Plan, and states will be able to count these new plants as part of their strategy for achieving their emissions-reduction goals.

Furthermore, the industry is optimistic about the pricing future of advanced nuclear technologies such as SMRs, especially in conjunction with renewable technology. Ideally, advanced nuclear will be able to provide new base load capacity in the future under the CPP. A particularly promising prospect is the dispatch of highly-responsive SMRs to load-follow large-scale wind farms, ensuring reliable, carbon-free matching of electricity demand. With the “best system of emission reduction” (BSER) identified in the CPP, these measures would be credited and supported by the Plan.

On the other hand, the greatest frustration of the nuclear industry is how the Plan addresses existing nuclear capacity. Although the EPA acknowledges that nuclear constitutes a carbon-free electricity source, and that the current nuclear fleet “helps make existing CO2 emissions lower than they would otherwise be,” it does not allow existing nuclear power plants to contribute to the carbon-abatement calculation. This means that existing nuclear is not included in the BSER.

NEI asserts that the rule therefore fails to consider that U.S. CO2 emissions would be significantly higher without the existing nuclear fleet. As was noted in an earlier draft of the CPP, several plants are at risk of premature shutdown, largely due to cost considerations. By excluding existing nuclear capacity from the BSER, the risk of these plants closing prematurely increases, which will ultimately have an extremely detrimental impact on emissions levels in the United States.

Already, the effects of these cost considerations are pressing on the nuclear industry. Just this week, three Exelon units failed to clear PJM’s capacity auction, meaning that they will not receive capacity revenue, though they will still be able to sell power into the market. The price competition field is changing as more renewables and natural gas plants come online. One of the reactors, Oyster Creek, is already scheduled for early closure in 2019, and Exelon has expressed consideration of closing further non-profitable nuclear units, putting reactors such as Byron, Clinton and Quad Cities at risk.

In all, the reaction of the U.S. nuclear industry to the CPP has been mixed. There is recognition that the EPA took a significant step by recognizing the contribution of future nuclear capacity and incentivizing it as a tool in achieving climate goals. By neglecting to recognize the contributions of existing nuclear plants, however, the industry asserts that the Clean Power Plan puts its own objective at risk. Without the support of the CPP, the extension of existing plants’ operating licenses is less likely, with an increased threat of early closures as financial competitiveness with technologies supported by the Plan decreases. Should this trend continue, nuclear experts warn that U.S. emissions will inevitably rise as base load capacity of nuclear plants is filled by carbon-emitting alternatives, undoing so much progress already accomplished.