Despite aging nuclear plant retirements, the U.S. nuclear industry continues to support new development and advanced nuclear technologies.
The Administration supports continued federal nuclear energy program funding in its “all of the above” energy strategy. Despite aging plants challenged by low-cost natural gas-fired generation and several off-schedule new plant constructions, the nuclear energy industry will continue its vital role in the domestic energy mix. In addition, nuclear energy is particularly embraced by Republicans, including Sen. Lamar Alexander (R-TN), chair of the Senate Appropriations Subcommittee on Energy and Water Development, which will determine spending appropriations for federal energy projects.
High Operational Costs and Competitive Substitutes Challenge Domestic Nuclear Generators
In the U.S. nuclear power industry, aging plants are retiring and opting out of license renewals due to high maintenance costs, price competition from natural gas-fired generation, and unfavorable wholesale electricity market structure. On December 29, 2014, the Vermont Public Service Department (PSD) announced the official closure of Entergy’s Vermont Yankee Nuclear Power Station, despite its operating license being valid through 2032. The plant began operations in 1972. In closing the plant, Entergy cited financial considerations related to the plant’s high cost structure, low natural gas price impacts, and wholesale market design flaws. The company says the market design flaws resulted in artificially low energy and capacity prices in the region, and that the design does not provide adequate compensation to merchant nuclear plants for the fuel diversity benefits they provide. The plant operated in the New England Independent System Operator (ISO-NE) region, which experienced record low average wholesale energy prices of $36.09/MWh in 2012. The ISO approved the retirement, but the loss of capacity adds to New England’s winter electric reliability challenges, as the region continues to struggle to adequately supply its gas-fired generators in times of prolonged extreme winter weather. Regional economic activity is expected to decline by approximately $500M annually as a result of Vermont Yankee’s closure.
New England has not been the only region to lose nuclear capacity over high operational costs. Dominion’s closure of its single unit Kewaunee plant (Wisconsin) in May 2013 was also due to low wholesale electricity prices; natural gas-fired generation is both cheap and abundant compared to nuclear. San Onofre (California) and Crystal River (Florida) plants closed due to problems related to steam generator replacements. There are currently 99 operating reactor units with approximately 100 GW of total summer capacity. The majority of nuclear plants are located along the eastern coast and Great Lakes regions.
Despite Retirements, Nuclear Plant Construction and Research Ensues
Despite aging plant retirements, new nuclear development continues with licensing processes underway and ongoing nuclear plant constructions in Tennessee, Georgia, and South Carolina. According to the Department of Energy’s (DOE) January 2015 Quarterly Nuclear Deployment Scorecard, 18 Combined Construction and Operating License (COL) applications have been docketed; two have received COLs; eight (totaling 12 nuclear reactors) remain under active Nuclear Regulatory Commission (NRC) review. Eight COL applications were suspended due to utility economic considerations. Georgia Power’s Vogtle Units 3 and 4 and South Carolina Electric & Gas (SCE&G) VC Summer Units 2 and 3 have received COLs. Vogtle Units 3 and 4 are expected to come online in late 2017 and 2018, respectively. Georgia Power has notified the Securities and Exchange Commission that the Vogtle Construction Consortium has submitted a revised forecast for completion of Vogtle units 3 and 4, which would delay substantial completion of the units by 18 months. However, Georgia Power has not agreed to the proposed schedule change, stating that additional efforts may be possible to mitigate the potential for delay. SCE&G’s VC Summer Units 2 and 3 are expected to come online in late 2017 and 2018, respectively, with a possible 12-month delay. The Tennessee Valley Authority is proceeding with the Watts Bar 2 and expects to be complete by late 2015.
The NRC is also considering DTE Electric’s application for a combined license (under 10 CFR Part 52) to build and operate a General Electric Hitachi Economic Simplified Boiling Water Reactor (ESBWR) at the Enrico Fermi Generating Station near Newport, Michigan. This is the third time an applicant has reached the final step in the 10 CFR Part 52 reactor licensing process. The ESBWR features an innovative passive safety system, enabling it to cool itself over more than seven days with no electric or human interaction.
DOE Budget Request Prioritizes Advanced Nuclear and Small Modular Reactor Technologies
The DOE FY 2016 Budget proposal requests $908M for its Office of Nuclear Energy (NE) — an approximate 9 percent increase from the FY 2015 enacted level. Republican appropriators will likely want to go further with the budget increase. The funding increase reflects increased focus on research and development (R&D) in advanced reactor and fuel cycle technologies and priority for commercialization and deployment of SMR technologies. SMRs use the same fission technology as larger-scale plants, but are approximately one-third the size, or approximately 300 MW. The DOE aims to deploy SMRs by 2022, and several small modular reactor (SMR) vendors have initiated contact with the NRC regarding their reactor designs; four are in active discussions with the NRC. The funding also supports cross-cutting initiatives under DOE’s Clean Manufacturing Initiative.
Major Increases for Nuclear in the FY 2016 Budget Request
- +$20.8M for Fuel Cycle Research and Development to continue ongoing emphasis on researching responses to Nuclear Energy fuel safety and waste streams
- +$5.8M for Idaho National Laboratory Idaho Facilities Management and +$22.2M Idaho Sitewide Safeguards and Security to ensure efficient and effective research R&D services
- +$8.0M for the SMR Licensing Technical Support program
- +$2.0M for NE Traineeships, a new subprogram under Nuclear Energy Enabling Technologies to prioritize DOE science, technology, engineering, and mathematics (STEM) nuclear energy workforce needs. NE traineeships will focus on advancing critical STEM disciplines and competencies related to radiochemistry to support NE mission responsibilities.
Overall, the nuclear energy program budget requests (Table 1) amount to about $6M lower than the 2015 enacted amount, however the DOE requests more than $80M of previously rescinded funds.
The Budget proposal’s funding increases for Fuel Cycle Research and Development reflects support for advancement of R&D of nonproliferation technologies, field tests related to high-level waste, expansion of integrated waste management system activities, and INL facility modifications. The increase for the Idaho Sitewide Safeguards and Security will support critical safety infrastructure for the Idaho National Laboratory. The funding increases will help continue spent nuclear storage research, a critical and growing national safety concern as more nuclear plants retire.
A decrease in funding for Reactor Concepts Research, Development and Demonstration (RD&D) reflects the transfer of system studies related to hybrid energy systems development to nuclear energy enabling technologies and completion of the FY 2015 industry-led advanced reactor concept development. The Reactor Concepts RD&D program will focus on the most important research activities in the materials aging and degradation area. This research will support the first subsequent license renewal applications expected to be submitted by industry to the NRC in 2018. The funding reduction request will not affect existing or ongoing programs.
Administration Supports Nuclear Waste Program Funding
To support long-term nuclear waste management, the Obama Administration has sought reforms in the current funding arrangement, emphasizing that the funding system should include key elements pertinent to “ongoing discretionary appropriations, access to annual fee collections provided in legislation (through reclassification from mandatory to discretionary or as a direct mandatory appropriation), and eventual access to the balance or “corpus” of the Nuclear Waste Fund.” The FY 2016 Budget request includes a proposal to implement such reform. It includes discretionary appropriations that continue for the duration of the effort, primarily found in the UNFD subprogram. Discretionary funding would support regular and recurring expenses, such as program management costs. Mandatory appropriations in addition to the discretionary funding are proposed and would be provided annually, beginning in 2019, to fund the balance of the annual program costs. The Administration states in its budget request: “The sooner that legislation enables progress on implementing a nuclear waste management program, the lower the ultimate cost will be to the taxpayers. This proposal is intended to limit, and then end, liability costs by making it possible for the government to begin performing on its contractual obligations.”
Insights to Industry: Despite Aging Plants, Bipartisan Efforts Will Continue to Support New Nuclear Development
In recent years, abundant natural gas supplies leading to depressed regional power prices have challenged the domestic nuclear and coal energy industries. The low prices have forced aging power plants to assess operating costs and the need to upgrade systems for safe, efficient operation. According to the Nuclear Energy Institute, in 2011 the industry invested $7.6 billion for routine maintenance, upgrades, and license renewals. On average, license renewal applications take more than two years for Nuclear Regulatory Commission review. Nuclear energy will continue to play a vital role in the U.S. energy mix, especially as new plants come online and others extend licenses. Per the DOE goals, the first SMRs could also being to proliferate over the next decade, serving small-scale reliability needs and/or microgrid development.
Originally published by EnerKnol.
EnerKnol provides U.S. energy policy research and data services to support investment decisions across all sectors of the energy industry. Headquartered in New York City, EnerKnol is proud to be a NYC ACRE company.
