The study, by Potomac Economics, says the country faces the prospect of well-running nuclear plants shutting down, right when they are needed the most in the fight against climate change.
The report assesses the economic realities facing nuclear plant owners in PJM, the largest electricity market in the US, serving 65 million customers in 13 states. PJM is home to 31 of the nation’s 94 nuclear plants, including many that are currently or have been financially threatened.
The study found that declining energy prices in recent years have substantially reduced net revenues of all PJM’s nuclear resources. “As energy prices have fallen to their lowest levels in decades in 2020, we find it unlikely that any of the nuclear resources in PJM are covering their costs,” the study says.
“Although all of the forward energy prices are significantly higher than the prevailing prices in 2020, we find that it is unlikely the market revenues will be sufficient to allow any of the resources to be viable to remain in operation, with the possible exception of very lowest-cost resources.”
If the PJM markets evolve to better reflect the value of carbon emissions, the economic outlook for nuclear resources would improve since they emit no carbon dioxide, the study adds.
The Washington-based Nuclear Energy Institute lobby group said the study paints a dim picture for the financial viability of most of the nuclear resources in the PJM region, describing it as a “wakeup call”.
It said federally regulated energy markets do not properly value carbon-free energy and thus are pushing nuclear plants out. “Policymakers need to enact policies that properly value our largest source of carbon-free energy in order to have any hope of achieving a clean electricity sector and protecting the climate,” a statement said.
Last week the Indian Point-3 nuclear plant was permanently shut down with operator Entergy saying one factor in the closure was sustained low current and projected wholesale energy prices that reduced revenues. Byron-1, Byron-2, Duane Arnold, Diablo Canyon-2, Diablo Canyon-2, Dresden-2, Dresden-3 and Palisades are also scheduled for closure by 2025.
Four plants have shut down since 2018. They are Indian Point-2, Three Mile Island-1, Pilgrim-1 and Oyster Creek.