Last updated: December 22, 2017
Aging nuclear plants that cannot compete with low-cost energy sources are closing around the country. In some cases, states are subsidizing them in a bid to save jobs, avoid increasing emissions and protect local sources of tax revenue. As more nuclear plants become uncompetitive, more states will face this decision on the fuel source that the country relies on for about one fifth of its electricity, its largest low-emissions energy source.
Why U.S. Nuclear Plants Are Closing
The current boom in U.S. natural gas production has flooded the markets with a cheap new source of energy, driving down wholesale electricity prices. The rapidly falling costs of wind and solar power in many regions of the country, along with flat electricity demand due to decreasing energy consumption, have also made the cost of nuclear power uncompetitive.
A significant regulatory restructuring over the last 20 years introduced even more competition with nuclear power in wholesale electricity markets. In the 1990s, for the first time, deregulation in some states allowed non-utility generators to sell electricity to utilities, fundamentally disrupting the monopoly utility model. New cheaper sources of energy drove down prices and made nuclear energy less economically competitive.
- After closing the San Onofre Nuclear Generation Station in California in 2013, the utilities Southern California Edison and San Diego Gas & Electric procured up to 1,500 megawatts of new generating capacity (including renewables, efficiency and natural gas) through 2022.
- The 2013 closing of the Kewaunee nuclear plant in Wisconsin prompted utilities to burn more fossil fuels.
- Duke Energy closed the Crystal River nuclear plant in Florida in 2013 due to the high cost of renovation, replacing most capacity with natural gas.
- The Vermont Yankee nuclear plant closure in 2014 resulted in an increase in natural gas generation and some imported hydropower from Canada.
- Fort Calhoun in Nebraska, the most recent nuclear plant to close in the U.S., shut down operations in 2016 largely because of abundant wind and natural gas in the area.
Four more nuclear plants are slated to retire over the next ten years: Pilgrim in Massachusetts and Oyster Creek in New Jersey by 2019; Indian Point in New York by 2021; and Diablo Canyon in California by 2024-2025. All nine of these plants (five that have closed since 2013 and four that plan to retire within ten years) total over ten gigawatts of generation, representing approximately ten percent of total U.S. nuclear capacity.
Policies Affecting the Future of Nuclear
Climate policies mandating emissions reductions are also having an impact on the future of nuclear power. Federal emissions policy is in flux, however, as the Trump administration has proposed repealing the Clean Power Plan and proposed a “resiliency” rule through the Federal Energy Regulatory Commission that would benefit nuclear plants. In deciding whether to maintain or retire their nuclear power plants, several states have each chosen different paths:
- New York, which has committed to produce 50 percent of its power from renewables by 2030, is keeping three upstate nuclear plants open in part because if it allowed them to retire wind and solar power might not be able to scale up fast enough to replace the lost nuclear capacity, leaving a void that could be filled by natural gas. The subsidies will total $7.6 billion over 12 years.
- California will close Diablo Canyon, its last remaining nuclear power plant, by 2024-2025. The plant provides about 9 percent of California’s electricity, but is losing revenue due to the rapid growth of gas and renewables. Utility PG&E said it will replace the plant’s capacity with investment in a greenhouse-gas-free portfolio of energy efficiency, renewables and energy storage.
- Illinois passed a sweeping energy bill in December 2016 that includes $235 million annually for ten years in financial support for two nuclear power plants that were at risk of closing. Exelon, the owner of the Clinton and Quad Cities nuclear plants, warned regulators of the potential relocation of 1,500 jobs out of state should the plants close.
New Jersey lawmakers advanced a bill that would cost ratepayers about $300 million a year to subsidize the Salem and Hope Creek plants nuclear plants that could otherwise close because of competition from low natural gas prices.
The Future of the U.S. Nuclear Fleet
Status of three plants in different phases of construction:
- South Carolina Electric & Gas Company stopped construction on its V.C. Summer Nuclear Station in July 2017 citing cost, uncertainty over production tax credits, the Westinghouse bankruptcy and other causes. Construction to date has cost $9 billion, and estimates to complete the project would add another $7 billion. As of December 2017, federal investigators were probing whether the plant owner withheld a damning report from investors that revealed critical problems in the plant’s construction.
- In December 2017, Georgia regulators put forth a set of conditions that, if met by Georgia Power, would allow construction of the Plant Vogtle to continue despite bankruptcy of its main contractor Westinghouse earlier in the year. The plant’s total cost has risen to $27 billion.
- Duke Energy said in August 2017 it would not build the Levy County Nuclear Plant in Florida. Duke also announced $6 billion in clean energy and grid modernization investments as part of the same agreement. Duke never began construction on the plant, but the falling cost of natural gas made the company fear it would never recuperate its investment in the nuclear plant.
Possible future closures:
- Three Mile Island Nuclear Plant in Pennsylvania failed to win enough bids at a PJM capacity auction in May 2017. Owner Exelon says the plant will close by 2019 unless the state steps in.
Announced closure reversals:
- The Palisades Nuclear Plant in Michigan was going to close in 2018, but now is allowed to maintain its power purchase agreement and close in 2022.