Moniz: Closing Nuclear Plants Poses ‘Huge Problem’
May 19 — Energy Secretary Ernest Moniz called the growing number of closures of nuclear reactors in competitive, deregulated markets a “huge problem.”
“The importance to incentivizing continued operation [of nuclear plants], I think, is very clear, but the solutions are less clear,” Moniz said at a May 19 Energy Department summit in Washington titled “Improving the Economics of America’s Nuclear Power Plants.” The conference featured presentations by members of the nuclear industry, lawmakers and officials from the DOE and the Federal Energy Regulatory Commission.
The economics challenging existing nuclear plants in competitive markets, which are leading to early plant retirements, have unintended consequences of shutting down some of the most reliable, carbon-free baseload generation in the country, Moniz said.
“We are supposed to be adding zero-carbon sources, not subtracting or simply replacing by building to just tread water,” he said.
There is an urgency to save these existing nuclear plants as a carbon-free energy source to meet state renewable energy standards and the Clean Power Plan initiative, which is currently stayed by the U.S. Supreme Court, Moniz said.
Eight reactors in the U.S. are either in the decommissioning process or planning to close in the coming years, primarily due to difficulty competing in unregulated wholesale energy markets (206 ECR 206, 10/26/15).
Valuation of Nuclear Debated
Summit participants debated how nuclear power should be valued in the wholesale electric markets today.
Marvin Fertel, president of the Nuclear Energy Institute, said that markets today aren’t structured to recognize the value of the resources, are operated so that not all costs are reflected in prices, and are distorted by out-of-market revenues and state and federal policy mandates.
FERC and the regional transmission operators, which oversee the electric grid, “need to demonstrate a greater sense of urgency and recognize that sustainable market design demands consideration of all the factors that constitute a robust and resilient market,” Fertel said.
He said FERC needs to work faster on its energy price formation rulemaking, which aims to better align the pricing for generation in the wholesale electricity markets. FERC has been working on this rulemaking for the past two years (223 ECR, 11/19/15).
However, Craig Glazer, vice president of markets at PJM Interconnection LLC, a regional transmission operator in 13 mid-Atlantic states, said markets are operating as they should be, and that PJM is making changes to reward generation sources by performance.
“I don’t want people to walk away with the sound bite I kind of hear today, that the markets are not valuing the attributes of nuclear power,” Glazer said. He said PJM’s capacity market has a specific new feature “that looks at and values the performance of units, and awards units that are there year-round, day after day.”
He said nuclear units are a “prime candidate” for clearing these markets.
Next Review to Focus on Electricity
Moniz said the second installment of the DOE’s Quadrennial Energy Review will focus on electricity—from generation to end use—and the valuation of nuclear will be a part of this review.
“Some of the value streams that nuclear plants provide, like carbon-free electricity, availability, reliability services, these are not systematically valued across different jurisdictions,” he said.
“These kinds of valuation issues are in many ways the heart of the analysis going on right now in developing the Quadrennial Energy Review next installment,” he added.