Crippled by a historic, game-changing fracking revolution that has imploded energy markets across the world, the U.S. nuclear industry is trying harder than ever to market itself as an irreplaceable ally in the war against climate change.
It is eager to get going on a new generation of plants that are smaller, leaner, faster, easier to manage, and more attractive to private investors.
At stake could be the degree to which electricity ratepayers in Ohio and other states end up subsidizing the nuclear industry.
“There’s an important and continuing role for nuclear power in achieving these goals,” Kenneth N. Luongo, president of the Washington-based Partnership for Global Security, said at the start of a recent discussion between his group and the nuclear industry’s chief lobbying group on Capitol Hill, the Nuclear Energy Institute.
The Partnership for Global Security, originally incorporated in 1997 as the Russian-American Nuclear Security Advisory Council, is a think tank that promotes the convergence of 21st-century security, technology, and economic issues that affect the global nuclear industry. It has been working with the NEI on an effort called the Global Nexus Initiative, which promotes stronger public-private collaboration on nuclear issues.
“This is not a one-country issue,” Mr. Luongo said.
The NEI wants the public to reconsider how it views nuclear power in the aftermath of last December’s historic agreement in Paris, in which 193 countries pledged to collectively reduce climate-altering carbon dioxide and other greenhouse gases.
The United States has agreed to reduce greenhouse gases 27 percent by 2025.
The NEI’s marketing campaign, though, took another hit in late October when Omaha Public Power announced it is giving up on its Fort Calhoun nuclear plant.
It is the seventh site in three years where a utility said it can no longer justify high operation costs.
Chicago-based Exelon, which owns the most nuclear plants, announced in June it will shut its single-unit Clinton and its twin-unit Quad Cities plants in Illinois in 2017 and 2018, respectively, because of poor economics.
Although Akron-based FirstEnergy Corp. has said repeatedly that its Davis-Besse and Perry plants in Ohio are safe from early closure, Davis-Besse appeared on another list of at-risk plants in a Nov. 3 report issued by the Nuclear Information and Resource Service, an anti-nuclear group in Takoma Park, Md.
Three years ago, Davis-Besse was one of several plants cited at-risk for early closure in a Vermont Law School study.
FirstEnergy’s chief executive officer, Charles “Chuck” Jones, said in a conference call with analysts earlier this month that the utility giant is undertaking a 12 to 18-month “strategic review” of its competitive generation business that could lead to selling off as many as 13 power plants, including Davis-Besse and plants at its other two nuclear complexes. The latter are the Perry nuclear plant east of Cleveland, and the twin-reactor Beaver Valley nuclear complex west of Pittsburgh.
“The fact is, competitive generation is weighing down the rest of the company,” Mr. Jones said. “We do not think competitive generation is a good fit.”
Though showing a profit for its third quarter, FirstEnergy lost millions of dollars during the first nine months of 2016 and expects to end the year with a loss as well.
“We are at a crossroads,” Mr. Jones said. “We have to make some tough decisions.”
In a highly contentious rate request argued for months before the Public Utilities Commission of Ohio, FirstEnergy originally sought a guaranteed cash flow of up to 15 years to ensure the viability of Davis-Besse and the utility’s massive coal-fired Sammis plant in southern Ohio.
Last month, after the Federal Energy Regulatory Commission struck down a modified plan, state regulators unanimously agreed to let FirstEnergy impose $132.5 million a year in new surcharges on its 1.9 million customers over the next three years. That comes to about $3 more a month for a typical residential customer. The deal is substantially less than FirstEnergy’s attempted compromise for an eight-year deal at $558 million per year for a total of $4.5 billion.
Critics have decried each proposal as a bailout, while the utility argued the money is necessary to help stabilize it.
But Ohio’s handling of FirstEnergy requests has been watched closely by other states which are undecided about the degree to which they should support nuclear power.
California, Mr. Luongo noted, has taken the position of gradually phasing out its nuclear plants, while New York decided late this summer to spend $7.6 billion over 12 years to ensure continued operation of three upstate nuclear plants.
New York is doing that to help meet its carbon-reduction goals.
“There isn’t any uniformity regarding this issue at the moment,” Mr. Luongo said. “The market seems to be distorted, in that it is disincentivizing nuclear power.”
The discussion focused on the mix of old and new: How an investment in advanced nuclear reactors that are smaller but more efficient than today’s existing fleet could bring back the nuclear industry and, in so doing, generate more low-carbon energy for a world growing in population and electricity needs.
The hope is to achieve better economies of scale with advanced nuclear reactors, standardized designs, greater involvement from private investors, and global partners.
“They’re unlikely to be wholly government financed,” Everett Redmond, NEI fuel cycle and technology policy senior director, said. “It’s key to be able to export this technology.”
Todd Allen, senior visiting fellow for a Washington think tank called Third Way, said the industry needs to remake itself because “nuclear energy stands at a crossroads.”
“Nuclear energy must evolve to keep up with changes in the energy sector,” he said.
Armond Cohen, co-founder and executive director of the Boston-based Clean Air Task Force, which advocates for climate change solutions, said the benefits of nuclear power need to be taken into account with renewable energy and other carbon-reduction strategies because nuclear produces about 19 percent of America’s electricity and about 11 percent of that across the globe.
“We really don’t have the luxury of choosing,” he said. “To take any of these options off the table is probably condemning ourselves to failure.”
Renewables are “coming on strong,” Mr. Cohen said.
“That’s great. But let’s not lose our heads over it,” he said. “The problem right now is natural gas. Almost nothing can compete against it now.”
In a separate event last week, Tim Judson, Nuclear Information and Resource Service executive director, discussed findings of a report he authored called “Too Big to Bail Out,” in which he argued that subsidizing the nuclear industry will have deep consequences.
He said his research shows half of the current fleet of nuclear plants could be uneconomical as early as 2020.
The nation should invest in other technologies instead of “obsolete infrastructure,” Mr. Judson said.
“Renewable energy and efficiency can be done for less,” he said.
Peter Bradford, a former U.S. Nuclear Regulatory Commission board member and a former state utility regulator in Maine and New York, said New York’s bailout is “the clearest example of a state capitulating” to the industry.
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