Nuclear Energy Gets a Second Wind in Illinois

by | Dec 6, 2016

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exelon-quad-citiesNuclear Energy got a second wind in Illinois; the state legislature there passed a law that permits two of its existing nuclear plants to receive subsidies that will keep them alive. Exelon Corp., which has six nuclear plants in Illinois, will now keep open its Clinton and Quad Cities facilities that will save 4,200 jobs. They also generate 22 billion kilowatt/hours of carbon-free electricity.

It all happened last week. The rational is not just the saving of jobs but also the fact that the state has committed itself to generating more of its electricity from carbon-free sources. But collectively, the two plants have lost $800 million over the last seven years meaning that without subsidies the facilities would need to shut down.

The Chicago-based utility is the nation’s largest nuclear operator and part of its fleet is comprised of “merchant” facilities that compete on the open market. Exelon has been among the most vocal companies that say that while it is investing in green energies, it opposes the subsidies provided to them because they are giving green fuel sources a leg up over the competition.

At the same time, the company is unable to go head-to-head with shale gas, which is undercutting not just nuclear power but also green energies and especially coal. From the perspective of corporate America, the low prices mean business. But Exelon counters that thinking by saying that the market benefits by having ample fuel choices while the environment benefits by having lower carbon emissions.

Exelon has thus been petitioning the state to push for limits on carbon releases, which by extension give its nuclear fleet a leg up over fossil-fueled generation, especially natural gas. It has wanted the state to require that as much as 70 percent of all power purchases come from low-to-no carbon sources.

“These two plants were in jeopardy of closing because even at a low cost of five cents or so per kWh, they were losing a combined $100 million per year because they could not compete with cheap natural gas and wind energy that is subsidized at 2.3¢/kWh,” writes James Conca, a nuclear energy expert who contributes to Forbes. “Illinois taxpayers subsidize solar energy at 21¢/kWh. This bill provides these nuclear plants with just 1¢/kWh, and only until market conditions change …

“Nuclear power produces over half of Illinois’ electricity, all with no carbon or other polluting emissions. The enormous negative impact of shutting down nuclear plants because of an artificial market finally got through to the Legislature, since the generating capacity of these nuclear plants would have to be replaced by natural gas or coal, doubling the State’s total carbon emissions and ensuring that the state would not meet its emissions goals anytime soon,” Conca concludes.

Already, five nuclear units have either shut down or have announced that they will do so: Duke Energy and Southern California Edison closed their Florida and Southern California facilities, respectively, because of persistent technical issues. Meanwhile, Dominion has closed its Wisconsin unit, Exelon is shutting down a New Jersey plant and Entergy is ceasing its Vermont Yankee, all because they are unable compete with natural gas.

“It’s a lot of carbon reduction that needs to be made up for a long period of time,” says EPA Administrator Gina McCarthy, as quoted by the Chicago Tribune.

The plan should keep alive the nuclear plants for at least another decade.

Exelon praised the state legislature for keeping Illinois at the forefront of the movement to advance clean energy, as did industry analyst who said it would keep the nuclear operator’s program strong. Morgan Stanley said that while it has been long and tough road, the outcome reinforces its long-standing view that Exelon will low-carbon profile.

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