REPORT: Bailing Out Nuclear Plants Doesn’t Make Sense

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Andrew Follett Energy and Science Reporter
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A new report by a right-leaning think tank says there’s no economic justification to bail out U.S. nuclear power plants slated to shut down in the coming years.

The R Street Institute report blames the nuclear industry’s woes on market changes driven by natural gas, government green energy policies, and costly regulations. The report acknowledges nuclear power provides various reliability benefits while generating electricity without producing carbon-dioxide (CO2), but argued further government intervention to save nuclear power plants is counter-productive and unnecessary.

“To whatever extent market design fails to account for certain reliability attributes, that failure concerns reliability service procurement alone, not an inherent need to procure a certain type of fuel or technology,” Devin Hartman, the author of the R Street study, said in a press statement. “Any such failure should be corrected via market-design reforms, not out-of-market compensation. Furthermore, there is no evidence of an imminent threat to bulk reliability to justify interim subsidies.”

The nuclear industry admits that government intervention in the market made its electricity uneconomical, but says that reactors provide valuable benefits that aren’t being factored into their margins.

“Plants are closing because nuclear energy competes on an uneven playing field,” John Keeley, a spokesperson for industry group the Nuclear Energy Institute (NEI), told The Daily Caller News Foundation. “We’ve got a system that’s a combination of quotas for some other emission-free sources, and a price for electricity regardless of whether the supply is clean or dependable. The market isn’t delivering to us what we actually want.”

Both R Street and NEI concur that nuclear power provides valuable benefits to the public, but they disagree vehemently on the potential consequences of losing nuclear.

“The most important message for policymakers is to stay disciplined,” Hartman noted. “The notion that the economic and environmental consequences of nuclear retirements are ‘incredibly detrimental’ is overblown. By contrast, the adverse consequences of out-of-market policies to prevent nuclear retirements are potentially severe.”

State governments such as Illinois and New York have already taken action to save their nuclear reactors, citing the same benefits as NEI. Each Illinois taxpayer will have to pay between $0.25 to $4.54 a month to keep the nuclear plants open, according to The Chicago Tribune.

NEI thinks these bailouts are worth it because “their value proposition is unmatched on the grid,” Keeley told TheDCNF. “Nuclear energy is—and must remain—part of our nation’s critical infrastructure.”

Unions, business groups and some environmentalists strongly supported saving reactors in Illinois, citing their environmental benefits. A coalition of free market groups came out against the government intervention in the economy and other environmental groups opposed the measure on grounds that it takes resources away from wind and solar power.

NEI also intends to further highlight the economic and job creation benefits of nuclear power when discussing how the Trump administration could potentially save the industry.

“Nuclear plants are 60-to-80-year assets supplying clean, affordable, and dependable electricity that meets about 20 percent of U.S. demand,” Keeley said. “Our plants are tremendous economic engines, annually contributing $60 billion to U.S. GDP while directly employing more than 100,000 people and supporting nearly 400,000 additional jobs across the economy.”

America operates 99 nuclear reactors across 61 commercially operating nuclear power plants, according to the Energy Information Administration.

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