Policy Briefs
March 2014
Key Points
· Electricity markets must accord value to nuclear energy’s
attributes—including large-scale electricity production, clean air,
price stability and the highest reliability of any electric generating
source—or these benefits may gradually disappear. By undervaluing
nuclear power plants, current market policies and practices threaten the
diversity of our nation’s generating portfolio and our ability to meet
environmental goals.
· The U.S. electric sector is experiencing a period of sustained
economic stress because of stagnant electricity demand, low energy
prices and the need for large capital investments to replace aging
infrastructure. The situation is particularly difficult for nuclear
power plants in merchant markets that are experiencing price
suppression. Particularly at risk are the older, smaller plants—like
Kewaunee in Wisconsin, which closed in 2013, and Vermont Yankee in
Vermont, which will shut down late this year. However, large nuclear
energy facilities also may be at risk in some markets.
· Competitive electricity markets are not producing price signals to
stimulate investment in new generating capacity—with the exception of
natural gas—or to support continued operation of existing power plants.
This is clear from assessments of these markets in New England, the
Midwest, Texas and elsewhere by independent firms commissioned to
monitor market performance. Inefficient pricing may stem from actions by
regional transmission operators, weaknesses in market design, or
government policies that enable low or negative pricing for some types
of electric generation.
· America’s 100 nuclear power plants generate 20 percent of the
country’s electricity—and nearly two-thirds of its carbon-free
electricity. Shutting down a nuclear plant means a loss of hundreds of
jobs, a sharp drop in tax revenue for nearby communities, and a surge in
greenhouse gas emissions as other power sources (usually natural gas)
fill the gap in electricity generation. Most mainstream analyses of
climate change policy show that nuclear energy is essential to reduce
carbon emissions.
· The continued economic viability of nuclear power plants depends on
several factors, including electricity and capacity prices, natural gas
prices, regional growth in electricity demand, economic growth in the
region, and political sentiment. The outlook also depends on what
actions, if any, policymakers take to address market defects.
http://www.nei.org/Master-Document-Folder/Backgrounders/Policy-Briefs/Electricity-Markets-Undervalue-Nuclear-Power-Plant
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