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The Cost of Replacing Nuclear Power with Natural Gas

The Pennsylvania Legislature’s Nuclear Caucus released its 2017 – 18 Bicameral Nuclear Energy Caucus Report in November, making the case for preserving our state’s existing nuclear power plants and to outline potential policy solutions. While their report is more of an advocacy piece in support of nuclear generation than a neutral assessment of the issues, it raises important issues around the role of nuclear power in meeting our climate goals and their part in a reliable power grid.

Currently, Pennsylvania has five operating nuclear plants and ranks second in the nation in nuclear generating capacity. Of those five plants, two are scheduled for closure—the 819 megawatt (MW) Three Mile Island Generating Station (TMI) in Dauphin County and the 1,826 MW Beaver Valley Nuclear Power Station in Beaver County.

Unlike fossil fuel plants, where up to 90 percent of the marginal operating costs can be for fueling its boilers, turbines, etc., with coal or gas, nuclear plants have high fixed costs (i.e. a plant is expensive to build) and relatively low marginal operating costs (i.e. nuclear plants cost almost as much when they are idle as when they run.) They are well designed for the traditional role of “baseload” generation where they run at or near their capacity as often as possible, but this also means that they rarely set the price of the electricity market. Rather, natural gas plants that can ramp their electricity output up and down to reflect demand most often sets the market price. As a result, nuclear plant profits are strongly influenced by external factors, such as the glut of natural gas prices driving down market prices.

The most at-risk plants are single-unit nuclear reactors, like TMI or the Davis-Besse and Perry Nuclear Power Stations in Ohio. These have higher operating costs per megawatt-hour than plants with multiple units and, not surprisingly, all three of these plants are scheduled to retire. 

We should not minimize the impacts on jobs and the local communities as these plants retire, but our state’s nuclear fleet is aging with no real prospect of any new plants being built to replace them—these are not problems we can avoid indefinitely. It makes sense that the legislature is concerned, but the big question though is what, if anything, they should do about it? Beyond the jobs issue, two major concerns are the impacts on climate change and electric reliability.

Climate Change

The Caucus report makes the claim that, “Existing nuclear plants are a critical component of limiting greenhouse gas emissions, and nuclear plant closures are devastating to greenhouse gas goals.” That’s a strong statement, but looking at the data, it’s fair.

In our region, most of the carbon pollution comes from the electricity generating sector. Those emissions have declined 24 percent between 2005 and 2016, but that doesn’t mean the problem has been solved. Thanks to the retirement of a number of large coal-fired power plants, greenhouse gas (GHG) emissions from coal dropped more than 53% or 68 million tons over the period. Unfortunately, to make up for the lost generation, GHG emissions from natural gas rose by more than 25 million tons over the period. If that trend continues, replacing all the remaining coal with gas generation may only reduce emissions another 25 million tons.

Replacing the zero-carbon generation from the TMI and Beaver Valley nuclear plants with more carbon-intensive natural gas generation will, on the other hand, increase carbon pollution in Pennsylvania more than 9 million tons per year. If we were to lose all five nuclear plants and replace them with natural gas, that would more than eliminate any gains from retiring the remaining coal fleet.  

While clean, renewable generation has the technical potential to replace the lost nuclear generation, the problem is timing. Three Mile Island, for example, is scheduled to close on September 30, 2019. To take its place alone, we would need to more than double—and maybe much more than double—our renewable energy generation. That is just not going to happen in time. 


The other strong claim from the Caucus Report is that, “While today’s grid can withstand extreme conditions, tomorrow’s grid without the reliability and resiliency of nuclear power could, ‘result in material levels of generation unavailability and load shedding.’” In other words, losing nuclear generation could result in power shortages resulting in blackouts. In this case, “could” is the operative word. The real issue isn’t if the loss of nuclear generation—the source of almost a third of our in-state generation—could cause reliability issues. The question is if that is likely to create problems that our existing grid and other tools can’t handle. 

Our grid operator, PJM Interconnection, conducts a reliability analysis when any power plant retires. If they find the plant is needed, PJM can request it remain in operation temporarily until system upgrades, like new generation or improved transmission lines, can be completed.  In exchange for this temporary continued operation, such plants can receive above-market rates for their energy. While tools like this are out there to address potential reliability issues, they are often not needed. In the case of TMI and Beaver Valley, PJM has completed analysis and found that they can retire as scheduled.

Barring some unforeseen incident, we’ll probably have at least three-years notice before any of the other three plants retire and maybe much more than three years. This doesn’t mean that these plants don’t provide some added reliability, but without quantifying this benefit more precisely, it’s hard to judge what it is worth to ratepayers.  

Policy Choices Moving Forward

Balancing these fundamental truths in upcoming policy choices is critical. In the short run, replacing nuclear plants with natural gas severely hurts efforts to address climate change. Nonetheless, in the long run, replacing nuclear and fossil fuel generation with clean, renewable energy and greater energy efficiency is the only sustainable pathway. Finding a middle ground depends on whether there are ways to extend the life of these nuclear plants in a cost-effective manner, buying valuable time to deploy even more cost effective and clean renewables sources.

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