Matthew Kandrach – President, CASE
August 13, 2019
Is it time to shut down nuclear power plants?
Some opponents of nuclear power say the plants never should have been built in the first place. I disagree.
Nuclear power is safe, reliable and emission-free. Over the years, nuclear power has been an engine of economic growth, with wide impacts on jobs, manufacturing, and the competitiveness of American industry. And it has facilitated this growth in an environmentally sound way.
But let’s say it plainly: Nuclear power has become prohibitively costly. You don’t need economics to know that. According to the financial firm Lazard, nuclear power’s life-cycle cost ranges from $112 to $189 per megawatt-hour. Combined-cycle natural gas ranges from $41 to $74 per megawatt-hour. And onshore wind ranges from $29 to $56 per megawatt-hour.
You might consider, for starters, that 93 percent of the uranium needed for national defense and electricity production is imported from foreign countries, much of it from Russia, Kazakhstan and Uzbekistan, and it’s expected to go even higher by the end of this year.
What’s more, over half of the U.S. nuclear plants are losing money, according to an analysis from Bloomberg New Energy Finance. Seven nuclear plants have folded since 2013, and several others are slated to close in the next few years. In many parts of the country, it’s now cheaper to build a new gas plant than to keep a nuclear reactor operating. The shale revolution has caused natural gas production in the U.S. to increase by more than 50 percent since 2005. The production of electricity from natural gas has grown steadily — it now accounts for about one-third of U.S. power production. And it’s increasing, with the gas industry poised for very rapid supply expansion over the next few decades.
There is, in short, an overwhelming case for shutting down most of the nation’s nuclear plants and switching to natural gas or renewables. As nuclear plants age, key components such as steam generators and turbines must be replaced, and utility profits will come under immense strain. A wave of more nuclear plant closures is one likely consequence.
For example, in Pennsylvania, with the availability of cheap natural gas, the economic value of nuclear power is highly questionable. Nuclear power supplies 35 percent of Pennsylvania’s electricity, one of the largest shares in the country. But its nuclear plants have been battered by rising costs and competition from cheap gas — and the net effect is that Three Mile Island Unit One and the Beaver Valley units are likely to close. Pennsylvania can afford to lose the plants, since the Marcellus Shale that underlies large parts of the state holds enough natural gas to meet Pennsylvania’s energy needs for the rest of this century and beyond.
True, natural gas is a fossil fuel and no panacea, but nor is it worth getting exercised over. Natural gas emits about half the carbon dioxide of coal. With the switch from coal to natural gas for electricity generation, carbon emissions are at mid-1980s levels and air quality has improved.
So it’s startling to realize that some utility executives bristle at the idea of switching to natural gas, preferring instead to push for financial assistance from state governments to keep financially-ailing nuclear plants open.
And energy policy aside, why such a commitment to nuclear power that still raises questions about safety and waste disposal and appears even more politically suspect in the face of higher electricity bills?
The effect of subsidizing the continued operation of nuclear plants, as several states, including New York, New Jersey, Illinois and Ohio, are doing, is to further politicize the economy and reduce economic efficiency. The net effect is to reduce the competitiveness of a state’s economy, not increase it. The recent history of Japan is ample illustration of this situation. Its economy has been in the tank for more than a decade and many economists blame Japan’s support of nuclear power for the failure of Japanese utilities to adapt and adjust to changing market conditions.
The right way for U.S. utilities to proceed is to hasten the switch from nuclear power to natural gas and renewables. Further decline in the cost of gas and solar and wind energy and commensurate growth in deployment offer promise.
The wrong way is to rely on hundreds of millions of dollars in government subsidies a year, as nuclear utilities in New York and Illinois have. These subsidies are likely to grow into the billion-dollar range within a decade, a sum that amounts to a major industry bailout with minimal public scrutiny — even though it is the public’s utility bills that will grow.
