Exelon plans to shut down two Illinois nuclear power plants that it previously sought to keep afloat with state subsidies—and the reasons behind the shutdown raises questions as to the competitiveness of the nuclear industry as a whole.
The parent company of Commonwealth Edison, which last year agreed to pay $200 million to settle bribery charges, had filed documents for the shutdown of the two nuclear power plants with federal regulators, it said in a statement.
“The filings are among the final steps in retiring the plants, which face revenue shortfalls in the hundreds of millions of dollars due to low energy prices and market policies that give fossil fuel plants an unfair competitive advantage,” Exelon said, adding, “Absent a legislative solution, these same market inequities will force the company to close its Braidwood and LaSalle nuclear facilities sometime in the next few years”.
According to the Center for Nuclear Science and Technology Information, nuclear power plants are “one of the most economical forms of energy production”. In fact, according to the Center, the cost of operating a nuclear plant is on par with or below that of fossil fuels.
This raises the question regarding the need for nuclear subsidies. But those figures were from 2012, and much has changed since then.
Cheap natural gas from the shale formations has been a curse for the U.S. nuclear industry. Nat gas has faithfully provided cheap electricity at a much lower cost. On top of that, renewables are undermining the competitiveness of nuclear power, too, thanks to strong government support and generous subsidies.
But authorities such as the International Energy Agency note that nuclear is a necessary component in the low-carbon energy mix of the future and that net-zero plans would be hard to make work without it. In fact, two years ago, the IEA said the decline in global nuclear power generation capacity was “disastrous” for the climate change effort.
Earlier this year, media reported that the Biden administration was aware of the role nuclear had to play in the net-zero drive. Reuters, quoting unnamed sources, reported in May that the White House was mulling over subsidies for nuclear power that could probably take the form of another production tax credit.
Nuclear power plants have generated around 20 percent of America’s annual electricity since 1990. As of December 31, 2020, 94 nuclear reactors were operating at 56 nuclear power plants in 28 states.
By Charles Kennedy for Oilprice.com
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