A new threat could be looming for consumers' wallets, as the electric grid transitions from coal to natural gas, making nuclear power less economical, according to a new report on the economic benefits of nuclear energy.
"Absent nuclear, consumers would pay more for electricity, the economy would suffer both in terms of [gross domestic product] and jobs, and we would face substantially higher emissions of [carbon dioxide] and other pollutants," the study finds, citing natural gas as a primary threat to nuclear's survival. The study was done by the consulting firm Brattle for the pro-nuclear group Nuclear Matters.
The low cost of natural gas, due to a boon in shale gas production, has made nearly every other form or electricity less economical, undermining nuclear, renewables and coal-fired power.
Natural gas is now the dominant fuel for electricity, beating out coal for the first time as the top source in April, according to the Energy Information Administration. The U.S. is also now the top producer of natural gas in the world.
The report, issued earlier this month by Brattle, underscores that change in the energy mix as one of the main threats to nuclear power plants. The study examined the effects of having nuclear power compared with not having it. It warns that if nuclear power were allowed to fade away, so would low electricity prices.
"Without nuclear plants, the economy would rely more heavily on existing and new natural gas-fired generating plants, and to a lesser extent, additional generation from existing coal-fired plants," the study says. "This greater use of fossil generation would mean higher electricity prices — wholesale prices would be 10 percent higher on average; retail prices would rise about 6 percent."
"This effect on electricity prices … accounts for the majority of nuclear's overall incremental economic impact," according to the study.
The study was done for the nuclear energy advocacy group Nuclear Matters, which formed in recent years in response to the market challenges nuclear power plants face. The study finds that nuclear power plants represent $60 billion in economic activity and nearly a half million jobs.
"Nuclear power currently accounts for 19 percent of U.S. power production, but several factors are at play that may threaten some nuclear generators and could diminish the nuclear industry's contribution to our electricity supply and the U.S. economy," the study's executive summary begins.
"These factors include limited recognition of carbon [dioxide] as a social cost, as well as market factors such as low natural gas prices, flat electricity demand growth, and transmission constraints," it reads.
The report is meant to spur debate among policymakers on the future of nuclear power, according to Brattle.
The study also finds that with higher fossil generation comes higher pollution levels from sulfur dioxide and nitrogen oxide, as well as higher greenhouse gas pollution that most climate scientists say is causing the Earth's climate to warm.
The report highlights that nuclear power provides zero-emission electricity. It says renewable energy from wind and solar would not be sufficient to fill the gap in low-emission electricity if the reactors were closed. California and other states have shuttered more reactors in the last two years than in nearly two decades. And the utility company with the largest nuclear power fleet, Exelon, is contemplating closing half of its reactor fleet in Illinois due to poor market performance.
Nevertheless, the biggest issue for these power plants has to do with the price of natural gas and its impact on the generation mix, according to the report.
"Lower natural gas prices are a primary reason for the current threat to some nuclear plants, of course, but the sensitivity of this analysis to gas prices also points out that nuclear plants help to protect consumers and the economy from the volatility of gas prices," it reads. "These effects go well beyond what consumers pay for natural gas directly, and even beyond what they pay for electricity, since power prices have a significant effect on the larger economy, as is demonstrated by this study."
Natural gas producers — represented by the group America's Natural Gas Alliance — disagree with the Brattle study's findings, said Dan Whitten, the group's spokesman. "It talks about low natural gas prices having an impact on nuclear generators and then discusses a scenario where there are no nuclear plants. Nobody thinks that's a realistic scenario. We share an interest in fuel diversity and believe that natural gas is contributing to that diversity," he said in an email.
The group said that diversity can be credited for recent reductions in carbon dioxide emissions.
"As recently as 2000, more than half (52 percent) of electricity generated in our country came from one source — coal. Nuclear and natural gas accounted for roughly 20 percent each, with renewables making up the rest," said Sam Harper, the gas group's digital strategy director in a Thursday blog. He was commenting on natural gas beating out coal in providing 31 percent of the nation's power needs, compared with coal's 30 percent.
"It's natural gas that is now driving the trend toward greater fuel diversity," with the benefit of "increasingly reliable electrical system that ensures the lights turn on when we flip the switch." He also said that more gas on the grid will help integrate solar and wind, because it can fill in for renewables quickly when the wind is not blowing and sun is not shining.
In a Friday interview with Midwest Energy News, John Rowe, the former CEO of Exelon, said, "It's pretty clear to me the generation system is moving in the direction of blends of natural gas and renewables."
It's a system devoid of new nuclear power plants, he said. Without new nuclear plants, some of the nation's 99 existing nuclear reactors are asking for license extensions to continue running or are being slated for retirement, Rowe said.
In the meantime, coal is fading and renewables are being built only because they get federal subsidies, he said.
"It's clear old coal will be around for a while, but it's shrinking," he said. "New coal is not economic, new nuclear is not economic. Wind and solar will be subsidized even when they're not economic."
"So we're looking at blends of gas, wind and solar that are driven more by politics than by markets. Just where they come out I cannot say," Rowe said.
If it's left to the market, the energy mix would be "mostly gas." After that, "the issue is how much wind and solar will be subsidized and required. Solar continues to get more economic. Wind too, but I believe it's getting close to asymptotic."
As for the nation's nuclear fleet, "these plants could see the same fate as the old coal plants" if it doesn't receive "recognition" for the benefits it provides, including zero-emission electricity.
Nuclear power "remains the only way to produce zero-carbon electricity that is not dependent on wind, solar or rain to operate [meaning hydro-electric dams]," Rowe said. "Even if we could pair renewables with massive storage, the cost will be multiples of the cost of electricity from nuclear energy. That makes nuclear a very unique animal."