The end of the nuclear renaissance?
BRATTLEBORO -- During a press conference on Aug. 27 announcing the closure of Vermont Yankee nuclear power plant in Vernon, Bill Mohl, the president of Entergy Wholesale Commodities, said the decision to stop producing power at the plant was based on the economics of the plant, and not operational performance, litigation risks or political pressure.
"Simply put, the plant costs exceed the plant's revenues and this asset is not financially viable. Despite its excellent track record, Vermont Yankee is a single, small-unit nuclear station operating in a very challenging marketing environment."
Energy market analysts have concluded that innovations in hydraulic fracturing that helped drive down the costs of natural gas have doomed the short-lived nuclear renaissance that had been trumpeted by the nuclear industry and its advocates.
In recent months, four other older nuclear power plants have closed -- two reactors at San Onofre in California, Kewaunee in Wisconsin and Crystal River in Florida.
In addition, on Aug. 1, Duke Energy announced it is abandoning the Levy reactor project in Florida and nuclear power plant operators have canceled uprates at five other power plants.
A concern about over-reliance on natural gas has many market analysts concerned, as is ISO New England, which regulates the wholesale energy generation market in the six states, to the point that it is considering offering market incentives to encourage energy producers to diversify energy sources and construct new power plants.
"At every moment in time, the grid operator needs to have enough electricity to keep the lights on," said Mark Cooper, a senior research fellow at the Institute for Energy and the Environment at Vermont Law School and the author of "Nuclear Safety and Nuclear Economics." "Some people have electricity to sell and their operating costs are very low. Nuclear power used to say that. It was their biggest selling point and they wore it on their sleeve, but now there are other producers whose operating cost are very low because the price of natural gas is fairly inexpensive."
Cooper said the current market conditions in New England and around the country are part of the deregulation craze that swept through the United States in the mid-2000s. At that time, energy producers were all gung-ho for deregulation because at the time it meant incredible profits, said Cooper.
"They loved it as long as the price was high," he said. "But markets tend to correct. When prices are high, new sources come online. Now that prices are low, the producers are complaining. The free marketeers don't like the free market when they are not getting rich."
Cooper said the market incentives ISO New England is considering are not much more than bribes, costs for which will end up being paid for by ratepayers in the form of a surcharge. But ISO can't just tack a surcharge onto electric bills to pay market incentives; it needs to get the OK from the Federal Energy Regulatory Commission, a process that could take several years.
In Cooper's opinion, fracking innovations and advances in solar and wind power are tolling the death knell for the nuclear industry.
"At four cents, old reactors are losing money," said Cooper, and the billion-dollar investments necessary to build megalithic nuclear power plants just doesn't make economic sense unless regulators such as ISO New England offer extravagant market incentives.
Cooper also writes off the notion that nuclear power plants and fossil-fuel-fired generators are the only way to supply baseload power, a continuous source of energy that isn't connected to the vagaries of the wind or the sun.
Cooper believes the world is in the midst of a technological revolution that hasn't reached the power production sector and contends that the concept of baseload capacity "is so 20th century. It's antiquated. This is the 21st century. We have information and control technology. We have had a revolution in technology which ought to make us more able to manage and integrate variable renewables. There is also a tremendous amount of interest in storage. But utilities don't want that. They prefer a world with humongous baseload. We have to overcome that inertia."
And the fracking revolution has just begun, said Cooper. With the United States set to export the technology, the global supply of petroleum based products is about to expand.
While that raises serious environmental concerns, he said, for the next couple of decades, fracking will drive energy prices, as will advances in energy efficiency and building construction that will lower the use of power in general.
"The question then becomes are we going to add other capacity. Will people build solar or wind and how much is demand going to grow anyway?"
Bob Audette can be reached at email@example.com, or at 802-254-2311, ext. 160. Follow Bob on Twitter @audette.reformer.
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