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

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.
Authors:
 [1]
  1. Massachusetts Inst. of Technology (MIT), Cambridge, MA (United States)
Publication Date:
Report Number(s):
INL/JOU-17-42292-Rev000
Journal ID: ISSN 0301-4215
Grant/Contract Number:
AC07-05ID14517
Type:
Accepted Manuscript
Journal Name:
Energy Policy
Additional Journal Information:
Journal Volume: 110; Journal Issue: C; Journal ID: ISSN 0301-4215
Publisher:
Elsevier
Research Org:
Idaho National Lab. (INL), Idaho Falls, ID (United States)
Sponsoring Org:
USDOE Office of Nuclear Energy (NE)
Country of Publication:
United States
Language:
English
Subject:
22 GENERAL STUDIES OF NUCLEAR REACTORS; 29 ENERGY PLANNING, POLICY, AND ECONOMY; nuclear power plants; deregulated markets; energy policy; nuclear; mothballing; zero-emission credit; carbon
OSTI Identifier:
1469398

Haratyk, Geoffrey. Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options. United States: N. p., Web. doi:10.1016/j.enpol.2017.08.023.
Haratyk, Geoffrey. Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options. United States. doi:10.1016/j.enpol.2017.08.023.
Haratyk, Geoffrey. 2017. "Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options". United States. doi:10.1016/j.enpol.2017.08.023. https://www.osti.gov/servlets/purl/1469398.
@article{osti_1469398,
title = {Early nuclear retirements in deregulated U.S. markets: Causes, implications and policy options},
author = {Haratyk, Geoffrey},
abstractNote = {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.},
doi = {10.1016/j.enpol.2017.08.023},
journal = {Energy Policy},
number = C,
volume = 110,
place = {United States},
year = {2017},
month = {8}
}