EPA’s Clean Power Plan Ignores New Nuclear as a Compliance Option

Institute for Energy Research
JUNE 15, 2015

The Energy Information Administration (EIA) in its analysis of EPA’s Clean Power Plan had to consider new nuclear capacity as a separate case analysis because construction of new nuclear capacity other than what is currently under construction or at risk for retirement is not a major compliance option based on EPA’s proposed rule despite nuclear power’s zero carbon dioxide emissions. EIA found that if new nuclear power generation were treated in the same manner as new renewable generation in EPA’s compliance calculations, more nuclear generation would result and electricity prices would be the same or less than with EPA’s preferential treatment of renewable power. By 2030, an additional 12 gigawatts of nuclear capacity would be built over compliance case results, and by 2040, it would rise to 19 gigawatts of additional nuclear capacity. EPA’s Clean Power Plan clearly limits electric utility options despite its touted target of 30 percent reduction in carbon dioxide emissions from the electric generation sector by 2030 from 2005 levels.

Nuclear Power in the United States

The United States generates almost 20 percent of its electricity from nuclear power despite the closure of 4 nuclear reactors in 2013 and a 5th unit in 2014. The five shuttered reactors total 4.2 gigawatts[i]. A sixth reactor, the 615-megawatt Oyster Creek unit, is expected to retire by December 31, 2019. Five of the six units are retiring before the expiration of their operating licenses. These retirements are either due to the units not be able to compete with merchant plants in deregulated generation markets or due to rate-regulated retirements where extended outages occur and the repair costs exceed other supply alternatives or the Nuclear Regulatory Commission has not allowed the unit to restart.

The 104 reactors operating in the United States in 2012 accounted for more than 60 percent of the nation’s zero carbon-emissions generation, according to a 2014 report by the Center for Climate and Energy Solutions in Virginia. Without the nuclear plants, U.S. carbon emissions would have been 289 to 439 million metric tons higher in 2014 depending on the replacement technologies, and 4 to 6 billion metric tons higher over the period from 2012 to 2025.[ii]

Nuclear power has advantages over wind and solar power in that it can operate 24/7 and can be dispatched by the system operator. Wind and solar power, the preferred EPA options, are at the whim of the wind and the sun and thus cannot provide the reliable power that nuclear provides 24/7. But despite its benefits, the EPA has ruled new nuclear capacity out as a compliance option. The EPA focuses on what it regards as the two most promising sources of additional nuclear output: 1) plants currently under construction, and 2) preservation of existing plants that might otherwise be retired–about 6 percent of the share of nuclear capacity termed “at risk of retirement” (5.7 gigawatts).

Nuclear power’s major challenge is that it can take between $7 and $10 billion and eight to 10 years from planning to construction to build a typical nuclear plant.[iii] Although some countries like Germany are worried about nuclear safety because of the nuclear accident in Japan due to the tsunami, plant safety enhancements (e.g. passive cooling features that do not rely on generators to keep water flowing to reactor cores) make future accidents like Fukushima unlikely. And, the nuclear industry is working on developing a new generation of small modular reactors that can provide power for cities or local communities at a much lower cost.

Many countries in Asia, the Middle East and other places are pursuing new nuclear programs, with 70 plants under construction in China and India, and 160 more planned, according to the World Nuclear Association. In the United States, five new reactors are currently under development, but no more are expected in the next 10 to 15 years, according to EIA.

EIA Nuclear Scenario Results

New nuclear capacity represents another zero‐carbon technology that can reduce carbon dioxide emissions. EIA’s nuclear sensitivity case allows credit for generation from unplanned new nuclear plants in EPA’s compliance calculations. The primary result is that the new nuclear displaces some of the renewable capacity additions as a means of compliance. The additional 12 gigawatts of nuclear capacity constructed by 2030 and the 19 gigawatts (7 gigawatts more) constructed by 2040 allow nuclear power to retain its 19 to 20 percent generation share through 2040 as electricity demand grows somewhat.[iv]

Electricity prices in the nuclear sensitivity case are the same or slightly less than in the compliance case where new wind and solar capacity are the major compliance options.[1] In 2030, residential electricity prices in both the nuclear case and the compliance case are 14.2 cents per kilowatt hour in real prices—16 percent higher than in 2013. By 2040, residential electricity prices are 14.9 cents per kilowatt hour (22 percent higher than in 2013) in the compliance case and 14.8 cents per kilowatt hour (21 percent higher than in 2013) in the nuclear case.

Conclusion

EPA’s analysis and formulae for its Clean Power Plan is biased toward new wind and solar power that can cause reliability problems because the wind and sun are not available 24/7. EIA’s analysis of a nuclear scenario shows that additional nuclear power can be competitive with the renewable alternative and should be allowed to give utilities more flexibility. That said, in either case, the EPA Clean Power Plan will result in much higher electricity prices for American consumers and gain less than a .02 degree Centigrade benefit in temperature based on EPA models. It is not a good policy for the American public.

[1] For a summary of the compliance case results, see http://instituteforenergyresearch.org/analysis/how-to-kill-the-coal-industry-implement-epas-clean-power-plan/

[i] Fitch Ratings, US Nuclear Capacity on the Decline, January 7, 2015, https://www.fitchratings.com/gws/en/fitchwire/fitchwirearticle/US-Nuclear-Capacity?pr_id=964315

[ii] Center for Climate and Energy Solutions, Climate Solutions: The Role of Nuclear Power, April 28, 2014, http://www.c2es.org/publications/climate-solutions-role-nuclear-power

[iii] Albuquerque Journal, Nuclear could be a key resource in global warming fight, June 1, 2015, http://www.abqjournal.com/592440/biz/nuclear-could-be-key-resource-in-global-warming-fight.html

[iv] Energy Information Administration, Analysis of the Impacts of the Clean Power Plan, May 2015, http://www.eia.gov/analysis/requests/powerplants/cleanplan/pdf/powerplant.pdf