Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options

Journal Article · Fri Aug 18 00:00:00 EDT 2017 · Energy Policy

DOI:https://doi.org/10.1016/j.enpol.2017.08.023· OSTI ID:1469398

Haratyk, Geoffrey ^[1]

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1. Massachusetts Inst. of Technology (MIT), Cambridge, MA (United States)

Here, electricity prices have fallen significantly since 2008, putting commercial nuclear reactors in the United States under substantial financial pressure. In this market environment driven by persistently low natural gas prices and stagnant electricity demand, we estimate that about two thirds of the 100 GW nuclear capacity are uncompetitive over the next few years under the current trajectory. Among those, 18 GW are retiring or are merchant plants at high risk of retiring prematurely. The potential consequences of the hypothetical withdrawal of 20 GW of nuclear capacity include: 1) a ~3.2% increase in carbon emissions if replaced by gas-fired units or 2) a significant increase in cost if replaced by renewables. Without a carbon price, out-of-the-market payments would be needed to effectively maintain merchant nuclear capacity. Filling the revenue gap would come at a fleet-average cost of 3.5-5.5/ MWh for these plants, which is much lower than the cost of subsidizing wind power. The policy support could take the form of direct zero-emission credits, renewable portfolio standard expansion, or clean capacity market mechanisms. As a last resort, the exercise of a new mothballing status could prevent the irreversible retirement of nuclear power assets.

• Research Organization: Idaho National Laboratory (INL), Idaho Falls, ID (United States)
• Sponsoring Organization: USDOE; USDOE Office of Nuclear Energy (NE)
• Grant/Contract Number: AC07-05ID14517
• OSTI ID: 1469398
• Alternate ID(s): OSTI ID: 1549873
• Report Number(s): INL/JOU--17-42292-Rev000
• Journal Information: Energy Policy, Journal Name: Energy Policy Journal Issue: C Vol. 110; ISSN 0301-4215
• Publisher: Elsevier
• Country of Publication: United States
• Language: English

Related Subjects

22 GENERAL STUDIES OF NUCLEAR REACTORS
29 ENERGY PLANNING, POLICY, AND ECONOMY
carbon
deregulated markets
energy policy
mothballing
nuclear
nuclear power plants
zero-emission credit