The U.S. government is pumping money into nuclear energy despite the uncertain revenue outlook. While many criticize Biden for supporting an industry with such high costs when the money could be put towards developing the renewable energy sector, the state is adamant that this is a necessary move to meet net-zero targets and bridge the gap in the energy transition. The Department of Energy (DoE) has announced it will be investing billions into keeping existing nuclear power plants open over the next few years in a bid to support the U.S. aim to develop its clean energy sector. Several nuclear plants are losing too much money to stay open without government support. But the government sees this as a worthwhile investment as nuclear power is key to helping Biden meet his pledge of reducing greenhouse gas emissions by 50 percent by 2030. The funding comes from the Bipartisan Infrastructure Law that came into effect in November, with a $6 billion Civil Nuclear Credit Program.
Deregulation is largely blamed for nuclear power plants’ struggling finances, as selling power on an open market means buyers often opt for the cheapest option, typically natural gas. At present, there are 10 states with deregulated power plants. And based on the current low price of natural gas, as much as one-third of nuclear power could be lost as it simply cannot compete. This would mean a decrease from 96 gigawatts to 60 gigawatts by 2030.
While deregulation drove competition in the past, new climate change targets could mean that the government needs to change its energy strategy to push people to switch to cleaner energy sources. Under current market rules, nuclear power will remain uncompetitive as new, lower-cost energy sources arrive, such as wind and solar power. But as neither of these are as reliable in providing stable power as nuclear, the U.S. cannot give up on its power plants.
Secretary of Energy Jennifer M. Granholm stated, “U.S. nuclear power plants are essential to achieving President Biden’s climate goals and DOE is committed to keeping 100% clean electricity flowing and preventing premature closures.” Further, “The Bipartisan Infrastructure Law makes this all possible by allowing us to leverage our existing clean energy infrastructure, strengthen our energy security and protect U.S. jobs. DOE is facilitating the development of next-generation technologies that can ultimately lower emissions and bolster the clean energy workforce”, she said.
So, does nuclear power present a viable way to achieve net-zero? In the U.K., alongside wind and solar energy, nuclear and emerging technologies such as hydrogen are all integral parts of the government’s energy transition strategy. The International Atomic Energy Agency (IAEA) explains that “nuclear power can help complement and integrate the expected large shares of renewable generation by ensuring 24/7 energy supply reliability and dispatchability.” The IEAE believes that maintaining nuclear energy output is therefore vital to the shift towards renewables.
While the disposal of nuclear waste continues to be a key concern for many, others are questioning the exorbitant costs related to nuclear energy production. Green energy advocates say the money being spent on keeping nuclear power plants running could be better invested in developing renewable alternatives. A report by the IDLES program at Imperial College, London suggested: “Nuclear energy would need to halve in cost to warrant major new builds within a cost-optimal [net-zero] system.”
But these concerns haven’t stopped big coal states from getting on board. Some of the historically most important coal states in the U.S. are now embracing alternative energy projects as many towns and cities across the country stand to lose huge amounts of revenue and thousands of jobs as America moves away from fossil fuels.
West Virginia recently passed a bill getting rid of a ban on nuclear plant construction that has been in place for a century. Similarly, Indiana passed a bill incentivizing the construction of nuclear plants on existing fossil fuel sites. Wyoming and Montana made similar moves during the last two years, and Missouri is looking to do the same. This suggests that many states that once staunchly opposed nuclear power are now embracing it as a means of conserving their energy industries.
This new trend is becoming known as the coal-to-energy transition. Many coal-reliant regions see it as a means of maintaining economic stability during times of uncertainty. Alice Caponiti from the U.S. Department of Energy explains, “Coal and other fossil sites offer substantial value as potential sites for new nuclear plants in terms of their existing power grid and other infrastructure, ready access to water sources, and a local skilled workforce.”
While many have fears about overinvestment in an industry that will continue to have much higher costs than renewable alternatives, the U.S. and several other countries see nuclear power as vital to the transition away from fossil fuels. The DoE is propping up the industry to ensure that the U.S. meets its net-zero targets over the coming decades. And now coal-dependent states are welcoming nuclear power as a means of conserving their long-standing energy industries, thereby replacing jobs, and supporting the local economy.
By Felicity Bradstock for Oilprice.com
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