The nuclear industry has been anxiously waiting for a clear signal from the Trump administration with respect to support for nuclear power generation. There have been conflicting signals coming out of the Department of Energy under the new Secretary of Energy, Rick Perry.
The DoE has been conducting a study on baseload power and the reliability of the grid. The study was supposed to be released by now but the release has been delayed by at least several weeks. Now a draft of the report has been leaked and made public and it appears that the findings of the study do not agree with public statements made by the Trump administration.
The study was motivated by the desire of the Trump administration to provide support for claims by Perry that EPA regulations and renewable alternative energy sources such as solar and wind installations were undermining the reliability of the U.S. electrical grid. The supposed injury to the national grid was being blamed on the “premature” closure of baseload power which is available twenty four hours a day – seven days a week. Two of the primary sources of baseload power are coal and nuclear power plants.
The draft of the study’s report said that with respect to baseload power requirements, environmental regulations from the EPA and subsidies to renewable energy installations “played minor roles compared to the long-standing drop in electricity demand relative to previous expectation and years of low electricy prices driven by high natural gas availability.”
Since 2002, the report continued, “most baseload power plant retirements have been the victims of overcapacity and relatively high operating cost but often reflect the advanced age of the retiring plants.” The report from the study pointed out that many of the nuclear power plants in the U.S. are not economic to operate. Overcapacity is causing major problems in electricity markets. The growth in electricity demand has flattened since 2008. This makes it harder for less competitive power plants such as nuclear plants to survive.
Between 1970 and 2005, U.S. electricy generation grew annually by two and seven tenths percent. Since 2005, the annual growth rate has dropped to five one hundredth of a percent. For the near future, the price of natural gas will stay low due to energy efficiency and the price of renewables will keep dropping. It is just not good business to keep operating an uncompetitive power plant when you know that it will keep losing money.
The report from the study says that most of the announcements of nuclear power plant retirement say that the cause is bad market conditions. “The most unfavorable condition is that the marginal cost of generation for many nuclear plants is higher than the cost of most other generators in the market.” The report concludes that “as long as natural gas prices stay down and there is an oversupply of energy in many hours of the day and year [because of zero-marginal-cost renewable power] the typical nuclear plant will lose money on every kWh produced, and not be able to make it up on volume.” It is obvious that if it is not competitive to run an existing nuclear power plant, it will not be competitive to build a new one.
Critics of the DoE and Trump administration say that they fear that the report will be edited to remove the language that disagrees with the official position of the administration before it is formally published.
