Consider, if you will, two basic facts about clean energy in the United States.
Nuclear power is the country’s largest source of carbon-free energy, supplying about 19 percent of our electricity, but it’s barely growing. Wind and solar are smaller, at about 8 percent, but they’re growing much more rapidly.
Put those together, and you get an intuitive blueprint for reducing US carbon dioxide emissions: Protect the nuclear base, and then scale up wind and solar on top of that, displacing fossil fuels as you go. Seems reasonable, no?
Yet, oddly enough, many states have struggled with this simple concept. Even as policymakers have stepped up subsidies for renewable energy, they’ve been letting their nuclear plants shut down prematurely — to be replaced by dirtier natural gas. We’ve already seen this in California, Vermont, Wisconsin. And it’s going to keep happening in the years ahead without serious policy changes. These early nuclear retirements are poised to wipe out many of the impressive gains made by renewables.
So it’s significant news that, this week, New York state offered a fresh approach to this problem. On Monday, the state’s public service commission approved an extremely aggressive clean energy standard that will require utilities to get 50 percent of their electricity from wind, solar, hydro, and other renewable sources by 2030.
But — importantly — New York will also offer subsidies to keep open three large existing nuclear power plants that are suffering economically in this shifting energy landscape and were in danger of shutting down prematurely. This way, the state isn’t just taking one step forward, two steps back, on climate change.
It’s a potential template for other states with reactors in danger of closing before the end of their life span. New York’s move contrasts sharply with California, where regulators are mulling a proposal to close the state’s last nuclear plant, Diablo Canyon, and replace it entirely with renewables and efficiency. It will be interesting to compare the two states in the years ahead and see which approach yields better results.
More broadly, New York’s plan offers a model of how renewables and nuclear might work together to fight global warming. This notion has been surprisingly controversial of late, particularly after the Diablo Canyon fight. Eduardo Porter of The New York Times recently wrote a column arguing that the growth of subsidized renewables is hurting nuclear in energy markets — a perverse outcome.
Yet as Jesse Jenkins, an energy researcher studying low-carbon electricity systems at MIT, put it to me: “It’s important to unpack this. It’s not renewables killing nuclear. It’s policies that fail to recognize the contributions of both renewables and nuclear. But those policies can change — as they did this week in New York.”
Why New York state wants both renewables and nukes
Let’s start with a graph of New York’s electricity mix, circa 2014. It’s mostly natural gas, nuclear power, and hydro — with a bit of coal, solar, and wind mixed in:
Under Gov. Andrew Cuomo, the state is trying to reduce greenhouse gas emissions 40 percent by 2030 and become a leader on climate change. With the cost of solar and wind falling dramatically, renewables were a natural focus. The state is embarking on a radical plan to revamp utility models to accommodate renewables. Hence the proposal to grow hydro, wind, solar, and biomass from 27 percent today to 50 percent by 2030. That’s a daunting goal, and we’ll see if it’s doable. (You can read a skeptical take here.)
At the same time, New York’s other big source of clean energy — nuclear — was in danger. A combination of cheap natural gas from the US fracking boom and stagnating electricity demand has caused nuclear revenues to plummet. As a result, reactors at three upstate plants — Fitzpatrick, Ginna, and Nine Mile — were in danger of shutting down prematurely, squeezed between high fixed costs and declining revenues:
(I’ll get to the fourth plant, Indian Point, below: it’s in better financial shape due to higher revenues from downstate markets, but it’s facing political pressure to close.)
One reaction here might be: “Fine, let the dinosaur reactors die. If they can’t compete in the market, who needs ’em?” But as it turns out, the state does need them if it wants to cut emissions.
Among other things, New York’s Public Service Commission concluded that wind and solar wouldn’t be able to scale up fast enough to replace the lost reactors. If nuclear vanished, the state would end up burning more natural gas and greenhouse gas emissions would rise. What’s more, replacing the steady baseload power from reactors with intermittent renewables could create reliability problems in upstate regions. (Plus, of course, there were the lost jobs upstate from the plant retirements.)
The clock was ticking: Entergy said it would shut down Fitzpatrick by the end of 2016. Exelon, which already owns Ginna and Nine Mile Point, has offered to buy Fitzpatrick and keep all three open — but only if New York provided financial support for the reactors. Pro-nuclear environmentalists, including NASA climate scientist James Hansen and Michael Shellenberger of Environmental Progress, urged the state to do just that.
How New York saved its troubled nuclear reactors
In the end, New York’s regulators decided to think about the problem this way: We know that these existing nuclear reactors help New York avoid a certain amount of planet-warming CO2 each year. Based on federal estimates of the “social cost of carbon,” New York decided to value this benefit at around $32 a ton in the near term (and rising over time to above $60 per ton).*
Right now these reactors aren’t fully compensated for this climate benefit. So, the commission decided, let’s start with that $32 a ton and then subtract out what these reactors already receive from power markets, capacity markets, and RGGI, the Northeast’s cap-and-trade system. Then we’ll pay the reactors for the difference — call it a “zero-emission credit” (ZEC):
This essentially creates a “price floor” for New York’s upstate reactors. If electricity prices fall, the zero-emissions credit will be there to make up the difference, allowing the nuclear plants to stay profitable.
This zero-emission credit won’t be cheap. New York’s ratepayers will pay up to $965 million to Fitzpatrick, Ginna, and Nine Mile for the first two years of the program, with adjustments made thereafter through 2029 as the social cost of carbon rises and electricity prices change. (The credit will shrink if electricity prices go up, per the formula above — or vice versa.)
Some green groups are displeased that the nuclear fleet is getting so much money. But Jenkins offers a way to put this in context. The nuclear credit will come to $17.48 per megawatt-hour of electricity for the first two years. By contrast, in recent years, procuring renewable power has cost New York about $22 to $35/MWh under state mandates. So keeping these reactors open looks like a cost-competitive way of adding zero-carbon power, at least in the short term.
New York’s plan isn’t perfect — and still leaves plenty of questions
To be clear, this is not necessarily the optimal way of saving New York’s nuclear power plants. As energy researcher Alex Gilbert explains in wonky detail here, these subsidies are vulnerable to legal challenge and could prove economically dubious if electricity prices shift unexpectedly. Nor are they the most cost-effective way to save these plants. Zero-emissions credits are a hasty workaround to a looming reactor shutdown and are considerably less elegant than, say, a simple carbon tax would be.
Meanwhile, it’s unclear what will happen to New York’s reactors after 2029. They may physically still be capable of operating, but will policymakers keep supporting them? (As Shellenberger points out, getting rid of nuclear in 2030 could prove nearly as damaging for climate efforts as phasing it out today.) The commission still has to work out a long-term plan here.
Finally, this week’s order leaves unclear the fate of New York’s fourth reactor: Indian Point, which sits 40 miles north of New York City and is operated by Entergy. This plant is in better financial shape than the Fitzpatrick, Ginna, and Nine Mile Point. But Cuomo has long pushed to close this reactor due to concerns that it could be a target for attacks and is so close to the city. On the other side, New York’s Independent System Operator, which manages the grid, has argued that doing so could endanger the state’s climate goals.
Those concerns aside, what’s notable about this plan is that New York is at least thinking about how to value all low-carbon sources, rather than just favoring renewables and letting nuclear power die. In this, New York is ahead of other states.
California and other states have let money-losing reactors close — and emissions have often risen
New York isn’t the only state grappling with nuclear woes. Back in 2013, the United States had 104 nuclear reactors supplying one-fifth of its electricity. Since then, five reactors have been retired early and at least seven more are slated to close — victims of cheap natural gas, unfavorable economics, costly maintenance requirements, local opposition, or some combination of those factors.
When reactors do shut down early, it’s usually awful news for climate change. After Southern California Edison retired two reactors at the San Onofre nuclear power plant in 2013, they were largely replaced by natural gas generation, leading to higher CO2 emissions. The same thing happened when Vermont Yankee closed in Vermont in 2014.
All told, a recent analysis by Bloomberg found that closing those seven endangered plants could cause overall US emissions to rise as much as 2 percent — like putting another 7 to 10 million cars on the road.
Recently, California has been exploring a more creative way to tackle this dilemma. The state’s last nuclear plant, Diablo Canyon, which supplies 9 percent of California’s electricity, has been hurt by falling revenues — and is getting squeezed by policies to boost renewables. So plant owner PG&E, backed by various environmental groups, has proposed closing it down by 2025 and replacing it entirely with renewables and energy efficiency:
It’s still unclear whether PG&E can pull off this tricky swap. Some analysts worry that PG&E could end up using natural gas to fill the gap left by renewables, causing emissions to rise. The jury’s still out on how this goes. The optimistic scenario is that California manages to supplant Diablo Canyon’s two reactors entirely with zero-carbon sources — replacing one zero-carbon source with another.
Note, however, that California didn’t have to take this path. PG&E has explicitly said that Diablo Canyon was being hurt by state policies that expressly favored wind and solar over nuclear. The company argued it would have been cheaper overall for California to credit nuclear for its zero-emissions electricity, the way New York did, and keep Diablo Canyon open, expanding renewables alongside the atomic base.
That said, when it comes to nuclear, there’s often more than pure economics at play. In California’s case, environmental groups like Friends of the Earth have long wanted to shut Diablo Canyon for other, non-climate reasons. Fights over things like the reactor’s location near an earthquake fault have been the source of fights for many decades.
So it’s always a question of priorities. Do we want to get off fossil fuels as quickly and cheaply as possible? Or do we want to be selective about what energy sources we use — even if it risks making the fight against climate change harder?
Can nuclear power and renewables learn to work together?
The big-picture question, meanwhile, is whether nukes and renewables can ever learn to work side by side. You often see heated arguments over whether large reactors are inherently incompatible with wind and solar in the long run. This merits a closer look.
The basic idea here is that wind and solar are variable — they operate when the wind is blowing and the sun peeks out. So if we want to use a lot of them, we’ll need a flexible grid that can juggle and accommodate these distributed sources. And, the logic goes, large nuclear power plants, which tend to operate 24/7 and don’t easily ramp up and down, don’t play well in a flexible grid.
California would seem to offer a case in point. One reason Diablo Canyon faces financial woes is that the state’s grid is getting saturated with solar power in the afternoon. Since the nuclear power plant can’t easily ramp down during the midday, there’s a surplus of electricity, depressing prices. This problem, known as the “duck curve,” is set to get worse as solar expanded. So, the thinking goes, the state would have to either curtail excess solar in the afternoon or push Diablo Canyon out of the way.
MIT’s Jesse Jenkins, for his part, is skeptical of the notion that renewables and nuclear are destined to be foes. For starters, he notes, it’d be quite possible to retrofit existing nuclear reactors to ramp up and down more easily. France already does this. US nuclear regulations just tend to limit this — as Jenkins notes, it was never an issue before wind and solar started making big inroads.
Second, if we’re ever going to expand renewables significantly, then we’re likely going to need a lot of energy storage and demand-response management tools that can more precisely align supply and demand. And yet, as Jenkins explored in a recent paper he co-authored for Applied Energy, if you assume a world with lots of storage, then you’re in a world where nuclear can more easily fit into a flexible grid. After all, if you have a surplus of nuclear power at any given point, you can store it for later.
So the notion that nuclear and renewables can’t coexist is still very much unproven. And that’s true of a lot of current renewable-versus-nuclear arguments. Right now, for instance, there are heated academic debates about whether it’d be best to go 100 percent renewable or opt for some mix of renewables plus nuclear or what have you. Those are fascinating debates! But we’re also still a long, long way off from that point. “It’s hubristic to think we know the answer to that question today — and very premature to think we need to decide it now,” Jenkins says.
After all, we’re still living in a world where fossil fuels dominate the grid, where nuclear plus renewables provide just 33 percent of US electricity. In New York, solar and wind are just 5 percent of the grid. So, for the time being, the main task for halting climate change is to reduce fossil fuel’s share as quickly as possible, however possible. “If we do get to the point where we actually do need to chose between nuclear and renewables, great, that’s a good position to be in,” Jenkins says. “But we’re not there yet.”
Yet despite the fact that nuclear and renewables are the two most promising sources of zero-carbon energy we have today, they often get cast as opponents. Various environmental groups that care about global warming have been actively working to shut down existing nuclear plants. In turn, nuclear advocates have often lashed out at wind and solar, criticizing the support they get.
New York’s new clean energy standard offers one possible way to bridge that divide. We’ll see if it can happen elsewhere, too.
* Correction: The value for the social cost of carbon that New York will start out for the first two years is $32.47 per ton (not nearly $50, as I initially wrote). It will then rise to $46.79 for the next tranche of zero-emissions credits, then $50.11, and and so on.
- Here’s New York State’s full order for its new clean energy standard.
- Separately, here’s a comment by New York’s Independent System Operator, which manages the grid, noting that scaling up renewables that dramatically will require major new investments in transmission — which could prove tricky.
- Alex Gilbert, who co-founded Spark Library, is writing an invaluable series on why nuclear power plants are closing prematurely — and what can be done about it.
- Gavin Bade recently wrote an excellent piece on the role of nuclear energy in decarbonization for Utility Dive. He also argues that we’re a long way from having to decide between nuclear and renewables.