New York and Illinois have already approved as much as $10 billion in subsidies to keep struggling reactors open for the next decade as part of a plan to limit fossil fuel consumption. Lawmakers in Ohio, Connecticut and New Jersey are debating whether to do the same.
The reactors, which are being squeezed by low natural gas prices, offer a singular advantage in the fight against global warming because they produce round-the-clock electricity without emitting greenhouse gases. Yet renewable energy operators including NRG Energy Inc. and Invenergy LLC say keeping nuclear plants open will leave grids awash with excess power, leaving little demand for new wind and solar farms.
“It’s the wrong policy — and whether it proliferates or not is going to be a really big factor,” Invenergy Chief Operating Officer Jim Murphy said during a panel discussion at the Bloomberg New Energy Finance conference in New York Monday.
Executives from companies on both sides of the debate, including reactor owner Public Service Enterprise Group Inc. and Invenergy, are attending the conference. One point is clear: greenhouse gases will increase if nuclear plants close.
In Connecticut, Dominion Resources Inc.’s 2.1-GW Millstone nuclear plant produces 98 percent of the state’s low-carbon power. In New Jersey, reactors produce 97 percent of clean energy.
“Every time you close a nuclear plant, emissions go up,” Chris Gadomski, New Energy Finance’s lead nuclear analyst, said in an interview. “Reactors are replaced not by wind or solar — but by natural gas.”
Many environmentalists remain leery of supporting nuclear power, citing terrorism risks, the problem of dealing with spent nuclear fuel, and more. Instead of propping up struggling reactors, states should promote energy efficiency and encourage development of wind, solar and power storage, said John Coequyt, the Sierra Club’s director of climate campaigns.
Nuclear’s economic woes comes as wind and solar are starting to show they’re cheap enough to compete with traditional generators, after years of help from subsidies. The push to aid reactors began last year after Exelon Corp. successfully argued in New York and Illinois that since nuclear does not contribute to global warming, its plants should receive a premium to help level the playing field with wind and solar.
“The fossil generators sell electricity with air pollution,” Joseph Dominguez, an Exelon executive vice president, said in an interview. “We sell electricity without air pollution — and that’s a different product.”
There are key differences between wind and solar subsidies and those for nuclear, according to clean-energy developers. Renewable energy credits have spurred an emerging industry, whereas nuclear subsidies are to preserve aging plants. And while wind and solar developers compete against each other for subsidies, those for nuclear benefit a single technology.
“The renewables industry has been playing by competitive market rules that have helped to produce good prices,” Amy Francetic, an Invenergy senior vice president, said in an interview. “This is picking winners and losers in a way that’s troubling.”
Propping up nuclear plans won’t be cheap. If every reactor across the northeast and mid-Atlantic wins subsidies at the same level as those in New York, ratepayers would need to pay an additional $3.9 billion annually, according to Bloomberg Intelligence. The subsides are being challenged in federal court by power generators including Dynegy Inc. and NRG Energy.
“This has taken a lot of wind from the green economy’s sails,” Abraham Silverman, an attorney for NRG, said in an interview. “We see an enormous lost opportunity to invest in truly clean infrastructure.”
It’s not certain that the demise of nuclear plants would spur development of wind and solar, said William Nelson, a New Energy Finance analyst. While closing reactors would boost energy prices, the states debating nuclear subsides have layers of overlapping incentives — including renewable energy quotas and subsidies — that are far more influential at driving development.
The push to save nuclear plants isn’t just about global warming. It’s also about jobs. Dominion’s Millstone plant employs 1,000 people. FirstEnergy Corp.’s two plants in Ohio together employ 1,300. And in New Jersey, the nuclear industry employs 2,700.
“These plants aren’t going to be around forever,” Dominguez said. “They are going to hit their natural retirement age in the 2030s. We’re going to need every bit of this time to develop the replacement resources. It can’t happen overnight.”