Matt Wald at the Nuclear Energy Institute wrote an important piece this week about energy policy and the current state of electricity markets. (He gets added points for working in a Joni Mitchell reference). The post is anchored around a Department of Energy summit on nuclear energy economics taking place today.
Unlike other energy sources, nuclear power plants get no special credit for being carbon-free. In fact, they have not even been included when states establish minimum quotas for clean electricity (although New York and Illinois are considering changing this). As a result, they provide a benefit of global importance, carbon emissions reduction, as well as a reduction in the pollutants that cause smog and other problems. But while the climate benefit is shared globally, other well-intended programs to conserve electricity or to promote renewable energy have skewed local electricity prices. The programs were supposed to cut carbon emissions but they have created the unintended consequence of threatening existing reactors, which produce 62 percent of all U.S. carbon-free electricity.
Two news items this week made Wald’s point and then some. They have to do with how this nation views subsidies for energy generation – and also how we value our energy generation resources.
(Note: this is not about wind versus nuclear as generation resources. We need both and companies that invest in such resources should be applauded for helping us all breathe easier).
First, details came out on a proposed 600-megawatt wind farm in Colorado at a cost of $1 billion. Platts reported the project will be eligible for the federal Production Tax Credit ($23/megawatt-hour) which pencils out to $55-65 million a year for 10 years. That’s as much as $650 million in taxpayer subsidies for the project.
According to the Denver Post, the project will create “…350 construction jobs, and then six to 10 permanent jobs.”
Now let’s go to Illinois where many people are working hard to save existing nuclear energy facilities.
The Environmental Progress organization (via Crane’s) says a plan to subsidize two nuclear plants (Clinton and Quad-Cities, owned by Exelon) would cost $250 million a year. Sounds like a lot of money and it is.
The plan to save the nuclear plants pencils out to $10/megawatt-hour, or less than half the federal wind subsidy. The reason is the plants produce so much clean energy. And in terms of employment, 1,455 high-paying jobs would be saved.
From a carbon standpoint, the Colorado wind farm is firmed by natural gas, a carbon-emitter. Nuclear is carbon-free. An earlier Platts article said, “Clinton’s shutdown also would … raise carbon emissions in Illinois by almost 8 million mt/year, the company said.”
Hearings and summits
On Tuesday, the Senate Energy and Natural Resources Committee had a hearing on advanced nuclear energy technology where the subject of wind energy subsidies came up.
Sen. Lamar Alexander of Tennessee (an opponent of the subsidy and a proponent of nuclear) used the occasion to continue his call for an end to the subsidy. From E&E:
The senator, citing Congressional Budget Office reports, complained that the government spent $9 billion in 2015 and 2016 to subsidize wind energy, and only $5 billion on energy research.
Alexander called for scrapping the tax incentives and doubling expenditures on energy research to $10 billion to spur the development of new reactor designs, as well as carbon capture and sequestration from coal-fired power plants.
At the DOE summit today the subject of challenges to the economic sustainability of nuclear plants brought about the question: “Is that a flaw in the market or a flaw in subsidies?”
The answer from a panelist: “yes.”
Which means there is a lot of work to be done on both fronts to maintain (and expand) the energy resource that now provides more than 60 percent of our clean energy.
As Matt Wald concluded:
Nuclear reactors provide carbon abatement, a hedge against future changes in the price of natural gas or other fuels, “always on” reliability, electric grid stability and other benefits.
In a word, nuclear energy provides value. The time has come to recognize that value.
(Posted by John Dobken)