The nuclear industry’s Earth Week assault on renewables, electricity markets

As we’ve warned several times over the past few weeks, the nuclear industry is not taking the threat of more reactor shutdowns lying down–not simply because many of their reactors can’t compete against renewables and gas anymore. With the recent formation of the front group Nuclear Matters, which exists only to defend operating reactors and appears to be funded solely by Exelon; in numerous and clearly coordinated op-eds placed in key media outlets in Exelon and Entergy’s service areas; in an increasing number of public appearances by top executives from nuclear and fossil fuel-dominated utilities; and in an unknown number of backroom lobbying visits, the nuclear industry is waging a full-press campaign to hang on to its aging dinosaurs as long as possible.

That campaign intensified this week, beginning on Earth Day, with a new and more explicit assault on renewables, some revised framing of their arguments, and at least some new details on the kind of bailouts and market-rigging the industry wants to support existing nuclear reactors at ratepayer expense.

Fortunately, the wind power industry, at least, has begun to fight back. Anti-nuclear activists need to do the same.

And, while probably not directly related, some big energy users like Google, the rooftop solar power industry, and the New York state government, all took major steps this week that undercut the nuclear industry’s arguments.

The industry’s amplified campaign began, ironically enough (not that the industry actually appreciates the irony) on Earth Day with the announcement that former EPA Administrator and Obama Administration climate “czar” Carol Browner is the latest big name to sign on with Exelon’s Nuclear Matters front group.

The industry used the occasion to stress, in speeches and op-eds, the false argument that shutting down a third of the nation’s reactors (yes, that’s how many the industry itself says are now in jeopardy) would make achieving U.S. climate goals impossible.

Here’s Browner on Earth Day: “Preserving our existing nuclear plants will be a key part of our efforts to reduce carbon emissions and build a cleaner-energy future and safer environment for our children.”

Here’s former EPA assistant administrator J. Winston Porter in an Earth Day op-ed in the Albany Times Union: “Recently, [DOE Assistant Secretary for Nuclear Energy] Lyons warned that if nearly a third of the nation’s nuclear plants are forced to close, there would be no way to meet the Obama administration’s goal of cutting greenhouse-gas emissions 17 percent below 2005 levels by 2020.”

Here’s William A. Von Hoene, Jr., Senior Executive Vice President and Chief Strategy Officer for Exelon, in a speech in Washington the next day: “Beyond its economic benefits, the U.S. nuclear fleet is key to advancing toward a clean energy future. We simply cannot achieve our climate change goals without them.”

Coordinated talking points anyone?

“Reliability” (and that polar vortex…) remains a top talking point as well.

Here’s Porter: “Yet the electricity market has no mechanism for recognizing the value of nuclear power as a reliable source of emission-free base-load electricity, delivered as needed.”

And here’s Von Hoene: “Removing a significant amount of baseload nuclear from the supply stack would seriously threaten reliability. That risk was highlighted by the severe and persistent cold this winter.”

And then they go into the “problem”: the system is stacked against the poor nuclear utilities.

Von Hoene: But the unfortunate reality for nuclear right now is that despite being the largest, most reliable and lowest-emitting power plants–and among the lowest cost–they are not getting recognized or compensated for those attributes. Major shifts in how we produce and consume energy are putting economic stress on nuclear facilities.”

Porter: “Yet the electricity market has no mechanism for recognizing the value of nuclear power as a reliable source of emission-free base-load electricity, delivered as needed.”

Nuclear Matters, in a statement announcing Brower’s joining them: “For a number of reasons, some of the nation’s existing nuclear energy plants face threats to their continued operation.”

As for solutions, as we’ve written about in these pages (here for example), the basic issue is this: for those utilities operating in deregulated electricity markets, which is about 2/3 of the country, nuclear reactors are increasingly uncompetitive with renewables and natural gas. Moreover, because reactors cannot ramp their power output up and down quickly, they cannot take advantage of fluctuations in the electricity market (for example, increased demand on a very hot or cold day) as can renewables and gas, which are much more flexible electricity providers.

As the entire electric grid moves further toward renewables, and especially rooftop solar (where people are not relying on the grid at all or only in times of extreme need), flexibility will become even more important and the kind of 20th century baseload power that nuclear and coal plants represent will become even more obsolete.

For Nuclear Matters and the industry generally, that “baseload” power–the ability of a power plant to provide power 24/7 just about all the time–is, or at least should be, a selling point and is what the industry basically means when it stresses “reliability.” After all, it was a strong selling point in the 1970s and 1980s….

But the era of baseload power, and huge power plants of all kinds that require equally huge amounts of backup power when they aren’t operating, is ending. It’s not over yet, but it’s getting there faster than most believed possible just a few years ago, and certainly much faster than planned for by utilities still trapped by their 20th century business model.

The backup power issue needed for large power plants is growing more troubling. When a large reactor shuts down unexpectedly, it puts a major stress on the grid to make up that power, something that has to happen immediately. Indeed, in the past, providers of other power sources reserved some of the electricity they could have been selling just to be able to compensate for reactors unexpectedly shutting down. But in a competitive marketplace, where every kilowatt sold makes a difference to the bottom line, many providers are no longer doing that. To make matters worse, as reported today by Union of Concerned Scientists, the Federal Energy Regulatory Commission reports that utilities are having a harder time recovering from reactor scrams than they were twenty years ago, making the overall grid more fragile.

More threatening than the backup power issue to the nuclear utilities is that the baseload power model doesn’t work at all in a grid dominated by renewables. In that system, which is developing quickly, the grid has to be much more nimble in its ability to obtain and dispatch power than the 20th century grid. Indeed, the presence of large baseload power plants actually prevents a renewables-dominated grid. Up to 30% renewables or so, the grid can handle both types of power relatively easily. But to bring renewables up beyond that point the large baseload plants become an interference–and increasingly a very expensive interference since they’re providing power at a higher cost. To take full advantage of lower-cost renewables will require a restructuring of the grid and an end to large baseload plants. The inevitable alternative if that isn’t done will be, within the next decade or so but already beginning, a growing percentage of “grid defectors”–people and businesses installing rooftop solar, soon with battery backup to operate 24/7, or at least close enough for most people, and choosing to disconnect from the larger grid. In that alternative, the utilities ultimately not only lose the grid battle, they lose their customers permanently. But if high-cost nuclear and coal plants are not retired in time, that process will only accelerate. When going off-grid becomes cheaper than staying on and just as reliable, why not?

As for reliability of renewables, which nuclear advocates have long attacked, the proof is in the pudding as they say. Consider this very different Earth Day announcement: Google said it reached an agreement with Warren Buffett’s Mid-American Energy to buy, for itself, more than 400 Megawatts of wind for Google’s data center in Iowa. There is no business on Earth more dependent on reliability of electricity than a data center–without electricity they don’t operate and neither does Google. This week Google also put up $100 million in a deal with SunPower to expand that company’s ability to provide leases for rooftop solar installations–that’s on top of $350 million in similar deals Google has made with SolarCity and Clean Power Finance.

When the companies that require reliability the most opt for renewables, the nuclear industry’s claim about its own reliability begins to sound a little pathetic.

What Nuclear Matters wants–and that means really, what Exelon and Entergy–which own many of the aging reactors most threatened by competition, want, has been pretty obscure so far beyond a desire to either rig or re-regulate the marketplace so that people will be forced to pay more for nuclear powered-electricity than alternatives simply because of nuclear power’s alleged virtues. Not a very compelling argument.

But as their campaign intensifies (some might say as their desperation intensifies), we’re beginning to see a few specifics.

In his piece, Porter argues for including nuclear power in New York’s Renewable Portfolio Standard, which requires that the state receive at least 30% of its power from renewables by 2030. Of course, putting existing reactors in that standard would completely undermine the entire intent of the law, which is to encourage development of clean new energy sources in the state. Nor is nuclear power in any way “renewable.” That concept has been tried before, in many states, and almost universally has failed.

And, though it is surely coincidence, New York Governor Andrew Cuomo this week didn’t sound like a guy who plans to try to claim the Indian Point reactors he wants closed should be considered “renewable” energy. Instead, Cuomo unveiled a new $1 Billion plan to accelerate solar power development in New York. He separately announced a new plan to create a 21st century grid in New York; as part of that, the New York Public Service Commission “…will also examine how the State’s regulatory practices could be modified to incentive utility practices that best promote energy efficiency, renewable energy, least cost energy supply, fuel diversity, system adequacy and reliability, demand elasticity, and customer empowerment.”

Hmm, we don’t see any mention of nuclear power in there….

Ok, so nuclear power as a renewable energy source isn’t going to happen, especially in New York. But this lengthy article looks at some of the things Exelon does want to happen, especially at the Federal Energy Regulatory Commission (FERC). It’s rather wonky, but worth understanding. In essence, Exelon wants to inhibit the ability especially of wind power–its biggest problem–but also natural gas, to be able to provide electricity more cheaply than nuclear power. For example, one of its proposals is that FERC should require that a certain amount of capacity has to have its fuel onsite–which nuclear and coal plants do, of course. Natural gas doesn’t; it’s typically piped or trucked in. And wind requires no fuel at all; neither does solar.

Still, even taken together, the proposals Exelon makes in this article don’t appear sufficient to overcome nuclear’s economic disadvantages.

Exelon’s Van Hoene offered a few, but only a few, more ideas in his speech. One eye-popping statement he made: “But we as an industry can’t continue to deny that subsidies for generation distort energy prices and threaten the continued investment in non-subsidized supply, including nuclear.”

What he means is that Exelon wants to see the Production Tax Credit for wind power ended (right now Exelon is most focused on wind because of the rapid growth of wind in the Midwest, but count on it, as solar grows Exelon will go after it well). The claim that nuclear power is “non-subsidized” flies hard into the face of reality. Depending on how you count, nuclear is either the most or second-most (behind fossil fuels as a group) subsidized energy source in the U.S. and historically has been since the day the government first began to support development of nuclear power.

The graph to the right, reprinted from this article in Utility Dive, shows just how far off-base Exelon is in arguing that nuclear is a “non-subsidized” energy source.

So, in a nutshell, to deconstruct Exelon’s arguments, what it wants is all government support for renewables to end but for subsidies for nuclear power to continue and even expand. That is the gist of Exelon’s message to policymakers.

The American Wind Energy Association has issued a lengthy and compelling rebuttal to all of Exelon’s claims about not only the wind Production Tax Credit, but that somehow wind power is competing unfairly with Exelon’s reactors. You can (and should) read it here. And the Utility Dive article cited above notes that “Executives of both NextEra and Xcel, both of which have generation portfolios broadly comparable to Exelon, told this reporter that low natural gas prices play a much bigger role than the PTC in negative pricing and current nuclear plant economics.”

In other words, Exelon’s claims are self-serving nonsense. The same holds true for Entergy and Nuclear Matters. The nuclear utilities operating in competitive marketplaces can’t keep up with the competition and are falling farther and farther behind. Rather than adjust to the changing arena and retire its reactors quietly, these entities want someone, anyone, to bail them out and make ratepayers suffer higher rates until these aging behemoths fall on their own.

But meanwhile, Nuclear Matters and the industry generally, are stepping up their efforts. Next up is a major event Monday in Washington, where a nuclear-funded phony “environmental” group, The Center for Climate and Energy Solutions, is holding a half-day conference at the National Press Club titled, CLIMATE SOLUTIONS: THE ROLE OF NUCLEAR POWER.

The speaker’s list is a nuclear industry dream team, including DOE Assistant Secretary for Nuclear Energy Pete Lyons; the industry’s freshest face, Carol Browner; and representatives from Areva, Exelon and Entergy, all on one stage. Not too difficult to guess how this group is going to come down on the issue, despite the years of research and study after study after study showing conclusively that not only is nuclear not needed to address climate change (and thus there is no reason to suffer its safety issues, radioactive waste problems, devastation caused by uranium mining and processing, proliferation, and on and on), but that it is actually counterproductive because it is so expensive, thus getting in the way of cheaper and cleaner sources, and it prevents full development of the 21st century grid that is a prerequisite to a clean energy system.

Just last month, by the way, Browner was named chair of the board of the League of Conservation Voters (LCV), the nation’s leading environmental political action committee, dedicated to the election of pro-environment candidates. At least, LCV was that. At this point, to our sorrow and dismay, NIRS can no longer support LCV or its work. Not until its board chair is no longer funded and supported by the nuclear power industry. If you feel the same way, you might want to let them know. We did.

Michael Mariotte

April 25, 2014

Permalink: https://www.nirs.org/2014/04/25/the-nuclear-industrys-earth-week-assault/

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