POV: A State Regulator Perspective on the Future of Nuclear Energy

Written by Former Commissioner Sadzi Martha Oliva, Legal and Policy Advisors Alejandro Mateos and Kealie Vogel, and Policy Intern Haley Bracken of the Illinois Commerce Commission

May 17, 2021

Disclaimer: All views expressed within this article are the authors’ own and do not necessarily represent the views of the Illinois Commerce Commission or the Illinois state government.

Introduction

Since the Illinois Commerce Commission last held a public policy session on issues surrounding nuclear energy, much has changed in the world including a global pandemic, racial tensions highlighting social inequities, extreme weather challenges in February 2021, and a new administration in the United States.  This article will highlight the recent benefits, challenges, and successes of nuclear energy from the perspective of a state regulator.  In October of 2019, a panel of six industry experts gathered at the Illinois Commerce Commission’s Chicago office to discuss the current and future role of nuclear power in our country as well as the world. This is an especially relevant issue in Illinois given that we have the largest number of nuclear power plants in the U.S. In fact, nuclear power produces over 50% of our electricity in Illinois.

Exelon’s Bryon, IL, Generating Station

The first nuclear power plants opened in the 1950s, but 70 years later they are still widely considered to be integral to our goals for future power generation, namely reducing carbon emissions. Here in Illinois, Governor J.B. Pritzker is committed to 100% carbon-free energy by 2050. In the U.S. as a whole, utilities are demonstrating commitments to lower emissions as they aim for smaller carbon footprints. Consumers are increasingly concerned about the effects of climate change and the future of our planet; therefore, utilities are under pressure to move towards carbon-free energy. In recent years, solar and wind power have received much of the attention in the move towards carbon-free energy. However, the reality is that more than 50% of the low carbon energy produced in the U.S. comes from nuclear power. Solar and wind power are fantastic technologies that will continue to develop alongside financially viable energy storage technology to counter intermittency issues.  Nuclear power plants produce carbon free energy day and night year-round. They have proven to be an integral part of our power grid with technology advances making nuclear safer and more efficient and reliable.  This has been underscored recently during extreme weather challenges facing the country, although the South Texas Project-1 nuclear unit in Bay City, Texas did go offline from February 15-17, 2021 due to issues arising from extreme cold weather.

Innovations in Nuclear Power

Exciting innovations in nuclear power right now are new reactor designs. Specifically, small modular reactors (SMR), like those emerging from partnerships between NuScale in Oregon and the Utah Association of Municipal Power Suppliers (UAMPS), are making nuclear power possible in places where larger plants simply cannot meet the community’s needs. In 2020, NuScale’s SMR became the first of its kind to be approved by the U.S. Nuclear Regulatory Commission, while UAMPS secured a major cost-share award from DOE for the project.

During the ICC’s 2019 policy session, Suzanne Jaworowski, then Senior Advisor for the U.S. Department of Energy, discussed the flexibility and promising potential of small modular reactors.  The small size and enhanced safety of modular reactors mean that their emergency planning zone could be at the site boundary. An emergency planning zone (EPZ) marks the area where the off-site response to emergencies need to be pre-planned, and for today’s reactors the EPZ extends for 10 miles around the plant. SMRs will have safety profiles that would allow smaller EPZs, and some could be as small as the site boundary. While these SMRs could not need to pre-plan off-site emergency response, they would have the capability to provide an off-site response if it were necessary to address an emergency. The enhanced safety of modular reactors is actually passive safety. This is important because passive safety means that during an emergency a modular reactor will be able to shut itself down without power and without any input from a person or computer.  Additionally, the fuel rods will stay cool for an indefinite amount of time without any additional water or interaction. This enhanced and passive safety would allow modular reactors to be placed just about anywhere.  They can also be combined with renewables as part of an integrated clean energy solution to provide consistent power to people in remote areas with harsh environments.  In one example, a modular reactor could be integrated alongside windmills as part of a clean energy solution for people in a remote Arctic village. In another example, a city in the desert could use solar panels integrated with a small modular reactor to provide clean energy for its residents. One of the most ambitious possibilities of this new technology is a clean energy transit hub powered by a large advanced reactor in an urban environment. In this example, the transit hub could power unmanned vehicles and electric trains with zero carbon emissions and zero pollutants.

The Department of Defense is also looking into nuclear micro reactors to provide power to military bases independent of the national power grid. Micro reactors would be a reliable and clean alternative to diesel generators and coal boilers that need frequent refueling and release harmful pollutants. With micro reactors providing power independent of the power grid and only needing refueling once every decade, military bases would be able to continue operating even in the event of a power grid failure. The positive national security implications of our military bases shifting to micro reactors is notable. Preparedness is the cornerstone of our national defense and that means keeping our bases and fighting men and women operational even through power outages and catastrophic infrastructure damage.

In Illinois, the University of Illinois Urbana-Champaign has submitted a proposal to the Department of Energy to develop and install a nuclear micro-reactor on its campus. The micro-reactor, the first of its kind to be installed on a university campus, would provide about 10% of total campus energy needs while also serving as a research and educational tool. If the project proposal successfully secures funding and receives the necessary licenses and operational approval, it is expected to be brought online by 2025.

Ensuring Safety in Nuclear Generation

A major goal for the U.S. is to continue leading the world in advancing nuclear technology. Remaining influential in the global market is one of the key ways the U.S. will stay energy dominant. Russia and China are becoming increasingly focused on building nuclear reactors and two thirds of reactors being built today are their designs. Russia and China are bringing complete solutions along with a financing package. This component of a financing package is an element that is important to other countries given the expenses needed to build and develop nuclear infrastructure. If the U.S. can recalibrate its financing options to be more competitive and able to support U.S. industry working around the world, other countries are absolutely prepared and would prefer to work with the U.S., according to the Department of Energy. Other countries like Poland are looking at the U.S. as a key partner for national security. For Poland, national security includes the ability to provide their own power that they can control and they trust the U.S. to help them achieve that. These are situations of opportunity as well as responsibility for the U.S.

While the U.S. is focused on remaining a leading country in nuclear power, Steven Swilley, from the Electric Power Research Institute, pointed out how important it is that countries share operating experiences and lessons learned to ensure we are making nuclear energy safe around the globe. There is a hunger for knowledge on nuclear power throughout the world. The U.S. has the oldest fleet of nuclear plants in the world and there are decades of knowledge and lessons that come with that. For that reason, countries like the Czech Republic and Hungary want to learn from the U.S. With this large base of knowledge and experience the U.S. has in nuclear power, there is a responsibility to impart this knowledge and experience to other countries for the good of all, especially on topics related to nuclear safety or nuclear waste issues.

Several highly publicized nuclear accidents within recent decades have highlighted the importance of ensuring the safe generation of nuclear energy worldwide. Since nuclear reactors utilize radioactive materials to produce energy, the unintentional release of these materials poses a risk to both the environment and humans. To address the risk of unintentional release of radioactive materials during the generation process, all operational nuclear reactors are designed with multiple fail-safe mechanisms to prevent and contain the release of radioactive materials into the environment.

Additionally, the importance of safe disposal and storage of spent nuclear fuel used in power generation must be emphasized. This high-level radioactive waste must be treated and isolated from the broader environment for long periods of time to prevent environmental contamination. Currently, most radioactive waste storage is highly decentralized, with spent fuel from power generation often stored on-site at nuclear plants. Some nuclear waste management experts have suggested that carefully managed, centralized underground storage facilities would be a better storage alternative, although there are currently no operational commercial-scale centralized underground storage facilities for high-level radioactive waste.

Nevertheless, the World Health Organization (WHO) reported in a 2010 study that nuclear power still ranks amongst the safest forms of energy in the world, with improvements to accident prevention and waste storage further strengthening nuclear power’s reputation for safety.

Current Challenges within the Nuclear Industry

Despite the strides being made towards deploying and improving the safety of nuclear power, there are several major challenges that remain.  One significant problem that the country is facing is the fact that many existing nuclear plants are shutting down. In Illinois, Exelon’s Byron and Dresden nuclear plants are set to close prematurely in the fall of 2021, despite having licenses to operate for another 10-20 years. Together, these two generating stations provide power to around 4 million homes.

Exelon’s Dresden, IL, Generating Station

Exelon says the two plants have faced hundreds of millions of dollars’ worth of revenue shortfalls due to declining energy prices and electricity market rules that render nuclear power less competitive than fossil fuels. Independent financial analysts from Morgan Stanley and Barclays have also asserted that market revenues are insufficient to provide breakeven economics for the plants and that retirement of the units would add to Exelon’s earnings.  However, some Illinois lawmakers have cast doubt on these claims of revenue loss, pointing to a different analysis performed by the independent monitor of the regional electricity market these plants are contained in indicating that Exelon’s plants were economically stable and not at risk of early retirement. A recent study, conducted by the Brattle Group on behalf of Exelon and Illinois AFL-CIO, found that prematurely closing the Byron and Dresden plants would increase electric costs for Illinois ratepayers by around $313 million annually. Conversely, the plants may also cost ratepayers more per year if lawmakers decide to subsidize the generating costs of the plants via higher electricity rates, through current legislative proposals suggest other mechanisms exist.

In order to come to a final, unbiased conclusion on what should be done about the Byron and Dresden nuclear power plants, Governor Pritzker’s administration has hired an independent consulting firm to review Exelon’s claims that the two plants are losing money. The consulting firm, Massachusetts-based Synapse Energy Economics, delivered a final report on the financial status of the power plants in April of 2021.  The findings of this report will inform the governor and lawmakers’ decision on whether to provide financial support to Exelon’s remaining nuclear power plants (those not receiving Zero Emission Credits) to avoid closure. However, due to time constraints, Illinois legislators will only have about two months after the delivery of the report to make their final decision regarding the fate of Exelon’s nuclear plants.

As the state with the most nuclear power plants in the U.S., the ongoing debate in Illinois surrounding Exelon’s nuclear plants has broader implications for nationwide discourses regarding the profitability and subsidization of nuclear power resources. It is clear that the nuclear industry in the U.S. is facing increasing financial challenges as time goes on. Several studies have concluded that that nuclear plant revenues have been dropping over the past decade as a result of declining electricity prices. And those revenue prices are declining despite significant cost savings achieved across the nuclear fleet. From 2012 to 2020, the nuclear industry reduced overall generating costs by over 30%.

The threat of early nuclear plant closures due to profitability concerns is not unique to Illinois: it has been reported that over 75% of extant nuclear plants in the Midwest and Northeast face the possibility of early closure without financial subsidies.  

Although nuclear power has historically produced around 20% of the electricity used in the U.S. since the 1990s, plans for new, large-scale nuclear projects have become increasingly uncommon. In 2021, the only new nuclear construction underway is the Southern Company’s Vogtle nuclear plant expansion in eastern Georgia. The new nuclear reactors at the Vogtle plant are also the first new reactors built in the U.S. in more than three decades. If we want to assure nuclear energy is available moving forward, one first step could be to preserve the plants that exist today.

Preserving today’s plants and approving second license renewals of existing plants can be a cost-efficient way to limit carbon emissions. Marilyn Kray, Vice President of Strategy and Development at Exelon Generation, stated that instead of building new power plants, Exelon has upgraded several of their units as a cheaper way to possess additional nuclear plants. Exelon also implements methods of cost reduction such as long-term asset management, restructuring the organization to cut down on operating and management costs, and fostering innovations to make the plants run more efficiently while upholding safety.

State subsidies in the form of Renewable Energy Credits (RECs) are applied to solar and wind power but not to nuclear power. Nuclear advocates assert that this puts a strain on the economics of deploying nuclear energy. Proponents of nuclear are working to move away from things like renewable portfolio standards or renewable energy credits and change the conversation to clean energy standards and clean energy credits. During the ICC’s policy session, Maria Korsnick, President and CEO of the Nuclear Energy Institute, stated “it should not matter what type of technology is being used, what should matter is that the clean power is being delivered”.

Nuclear supporters feel that a lack of federal policy recognizing the carbon-free benefits of nuclear is problematic and states need the ability to make decisions about their energy resources in order to meet their climate goals. Supporters further believe that federal and state policy makers must recognize and value nuclear for its reliability, resiliency, and lack of emissions.

However, in recent months there have been several developments that support the development of advanced reactors and could indicate increased federal recognition of the benefits of nuclear power. The Senate Environment and Public Works Committee recently passed the American Nuclear Infrastructure Act of 2020 to support both the deployment of advanced nuclear reactors and provide for plants at risk of early retirement due to market conditions.

In December 2020, the Energy Act of 2020 was enacted into law and supports the development of advanced reactors. Also in December of 2020, U.S. Representative Adam Kinzinger of Illinois introduced the Preserving Existing Nuclear Energy Generation Act of 2020, the House companion bill to the Senate’s bipartisan American Nuclear Infrastructure Act. Together, these congressional bills are designed to provide financial assistance to struggling nuclear power plants in the form of financial credits through an Emissions Avoidance Program and have received bipartisan support in both the House and Senate.

Nuclear Energy and the Biden Administration

Additionally, the nascent Biden administration’s stated focus on decarbonizing the energy sector by transitioning to clean energy sources has given supporters of nuclear power hope for increased industry support by the federal government. President Biden, who entered the White House with what has been called “one of the most explicitly pro-nuclear agendas” of any sitting president, has previously supported research and development for innovative nuclear technologies, and has integrated nuclear energy into his plan for addressing climate change through carbon-free energy resources. Even under the most aggressive scenarios, however, it will take several years for federal climate policies to be developed, adopted, and implemented, and in the meantime some nuclear supporters fear that most of Illinois’ nuclear fleet will have been lost unless the State acts to preserve the plants.

Conclusion

Looking towards the future, as nuclear technology improves, new markets for its success will open around the globe. We have already seen that our national labs are powerful incubators for innovations and we have companies that are putting incredible advancements to work. To continue this success and stay dominant, industry players will need to finance advanced technologies, international exports, and investigate the preservation of the existing fleet of nuclear reactors within the country. Utilities must also invest in the human capital and the safety considerations that drive the nuclear industry. This is great opportunity for the nuclear industry to train and develop a diverse clean energy workforce by reaching out to students and universities as well as obtaining and crafting the talents of people already in the industry.  If we can put all these pieces together nuclear power can light the way to a future of 100% clean energy in the U.S.


 POV pieces are the opinion of the authors and do not necessarily reflect an official position of FRI or the University of Missouri