What the New UCS Report on Nuclear Plants Means for Illinois

November 8, 2018 | 12:01 am
Photo: Montgomery County Planning Commission
James Gignac
Midwest Senior Policy Manager

Today UCS released a new report entitled The Nuclear Power Dilemma that examines the economic viability and performance of most of the 60 nuclear power plants operating in the United States as of July 2018.

The report also analyzes what electric generating resources are likely to replace these nuclear plants if some of them were to abruptly retire from service.

So what did the report find and what does it mean for a state with so much nuclear power like Illinois?

Illinois’ nuclear fleet is in sound financial shape

The economic viability of power plants is typically defined by how much revenue they earn compared to how much it costs to operate them. Our analysis defines “profitable” as making more than $5 per megawatt-hour (MWh) of electricity and “marginally profitable” as making somewhere between $0 (breaking even) and $5 per MWh.

Illinois is host to six nuclear plants (Braidwood, Byron, Clinton, Dresden, LaSalle, and Quad Cities) that total 11.6 gigawatts (GW) of electric generating capacity, the most nuclear capacity of any state. The plants provided 53 percent of Illinois’ electricity generation in 2017.

Our analysis found that Byron and Dresden—accounting for just over 4 GW combined—fell into the marginally profitable category. The rest of Illinois’ nuclear power plants were determined to be profitable. In the case of the Quad Cities and Clinton facilities, financial support they receive from the Illinois Zero Emission Credit program, established as part of Illinois’ Future Energy Jobs Act (FEJA) of 2016, pushed the plants up to profitable status. Without this support, Quad Cities and Clinton would have been listed as marginal and unprofitable, respectively.

Of the 30 states with nuclear power plants, 17 states have nuclear capacity that is unprofitable or scheduled to close.
Source: UCS.

Even though our analysis found that all Illinois nuclear plants are currently making money, low natural gas prices are one of the primary factors squeezing the economics of nuclear plants and could pose a long-term threat to the profitability of Illinois plants if prices stay at current levels.

Indeed, low natural gas prices are a major factor in the analysis’ finding that 22 percent of total U.S. nuclear capacity is slated to close or is unprofitable and at risk of closing prior to expiration of their operating licenses, including many plants across the Midwest.

Without new policies, and with continued low natural gas prices, our analysis found that early nuclear plant retirements are likely to be replaced primarily with output from natural gas and coal plants—and that means increased carbon emissions and the wrong way to go for addressing climate change.

Our report recommends that federal and state governments should enact a price on carbon or a low-carbon electricity standard, which would help level the financial playing field for carbon-free power generation like nuclear and renewables. Today these resources must compete with fossil fuel plants who are allowed to spew greenhouse gas pollution into our atmosphere for free—a carbon price or low-carbon electricity standard would help fix that.

The next generation of Illinois clean energy policies

The Clinton Nuclear Generating Station

As mentioned above, Illinois is no stranger to the debate over nuclear plant profitability. In late 2016 Illinois passed FEJA, which created a program to compensate the struggling Clinton and Quad Cities plants for the carbon-free attributes of their power generation.

UCS supported FEJA because it also included measures for significantly increasing investments in renewable energy and energy efficiency. But the debate over including the nuclear subsidy and providing electric ratepayers’ money to Exelon, the private corporation who owns those plants, was contentious and difficult to say the least.

The Nuclear Power Dilemma report shows that the Byron and Dresden plants are earning a small profit. And Exelon says the facilities are not at risk of early retirement right now. That’s good news.

Even better news is that the policies enacted in FEJA are spurring new clean energy development and expansion of efficiency programs that save consumers money and reduce emissions.

As these additional resources continue to grow, it’s time to develop the next set of policies to continue the momentum and keep Illinois and the Midwest moving toward a clean energy future. In addition to the carbon policies recommended above, Illinois should adopt stronger measures to accelerate investments in clean energy technologies like wind, solar, energy efficiency, and battery storage. These are exactly the kinds of policy conversations that the Illinois Clean Jobs Coalition is having right now through its Listen. Lead. Share. initiative.

The severity of the climate crisis demands that we consider all zero carbon energy sources—including nuclear power. But should any of Illinois’ existing nuclear plants be forced into an early retirement, let’s be ready to replace them with clean energy technologies, not dirty coal or gas plants.