How politics saved America’s nuclear power plants

Nuclear power has been on shaky ground across the United States for the past decade, but recent federal and state policies have come to its rescue.

Nuclear plants have been reliable workhorses for the past half century, producing large amounts of electricity without polluting the atmosphere. However, the rapid rise of low-cost renewables and the intermittent availability of low-cost natural gas have squeezed the profit margins of nuclear plants, forcing dozens to consider an early shutdown.

Several states have stepped in to keep their nuclear plants online, citing the benefits they provide for clean air, reliable energy and local jobs. Congress then passed two bills in 2021 and 2022 to bail out the remaining plants, and the Biden administration is now implementing those laws.

Together, these policies are already saved 22 reactorswith some financial support not even kicking in until 2024. These laws would keep America’s existing nuclear fleet online until at least 2032, giving state clean electricity goals time to ramp up while energy storage comes online, the each provides long-term price support for factories that are able to continue to meet high safety standards.

Federal policies also include funding to build the next generation modular, more flexible nuclear plants. These could complement renewable energy and storage technologies in cleaning up our electricity system.

Phasing out nuclear power would be a shot in the arm for fossil fuel energy, worsening air pollution and the climate while increasing consumer costs. Policymakers allayed those fears, acting in time to save most of the US nuclear fleet and lay the groundwork for advanced nuclear technologies.

The fight for clean energy

Nuclear power plants supply about half of the US’s net electricity supply and one-fifth of all electricity. They have historically played a central role in curbing climate and harmful air pollution from the electricity sector, buying time for other sources of clean energy to fall in cost.

On the one hand, we are now seeing a rapid deployment of low-cost wind and solar resources, cleaning up the US electricity system. On the other hand, this trend has reduced energy prices, reducing the revenue that nuclear plants can earn, resulting in dozens of reactors early retirement.

Many more nuclear plants have indicated that they may have to follow suit.

In 2018, the Union of Concerned Scientists—longtime opponents of nuclear power—recognized the emissions risk from an early shutdown and reversed course. They found a third of nuclear power plants they were probably uneconomical or scheduled to be closed, at the expense of the climate and public health.

Any nuclear power plant that retires—or diverts energy to another purpose such as bitcoin—will force fossil fuel power plants to fill that supply gap. Although we’re adding wind and solar at a record pace, we can’t afford to lose these clean energy sources if we want to achieve our 2030 clean energy targets on time.

A nuclear phase-out will slow or reverse progress toward a climate-safe future at a time when it needs to accelerate.

Policy for the rescue

States were the first to recognize the danger posed by their nuclear plants, passing legislation to keep them alive. Starting with New York in 2016, six states intervened with programs designed to supplement the revenue that nuclear plants could earn in electricity markets and make them “whole”. These laws saved 20 reactors from premature death.

However, there are nuclear power plants across the country, and help was not always available. Recognizing this, Congress created $6 billion relief fund in the bipartisan Infrastructure Investment and Jobs Act (IIJA) in November 2021, which was intended to preserve the existing nuclear fleet and its jobs through 2031.

First round of up to $1.1 billion in funding brings California’s Diablo Canyon power plant behind the lip. Pacific Gas
GAS
& Electric had agreements to shut down the two reactors in 2024 and 2025, but this new financial injection led PG&E and the California state government to change course. PG&E is now applying through the Nuclear Regulatory Commission to extend the reactors’ license for 20 years, provided strict safety requirements are met.

That bailout fund is a critical safeguard to avoid early retirement for the nation’s most dangerous reactors, but by itself it won’t stop the bleeding for the rest of the fleet. However, in 2022, President Biden’s Inflation Reduction Act (IRA) created a tax credit available through 2032 for all existing reactors, designed to supplement power plant revenues without overpaying and causing taxpayer waste.

These two federal programs are just getting started—the first just issued its first award, and the second doesn’t begin until 2024—but they’ve already underpinned the next decade of fleet sustainability. This is reflected in the outlook of expert meteorologists, with the National Renewable Energy Laboratory predicting no nuclear power plants are retired for economic reasons. Investor confidence has also increased, with Constellation announcing the purchase of an ownership interest in the South Texas Project Electric Generating Station.

As it stands, no US nuclear plant has announced plans to withdraw from the IIJA.

Rising status and utility ambition on clean energy and electrification portend the continued longevity of the existing US nuclear fleet, as greater demand for clean energy will mean more buyers of nuclear power, either through direct contracts or increased clean energy credit prices. Higher energy storage penetrations will also provide price support by absorbing excess wind and solar power at times that would otherwise cause nuclear power plants to operate at a loss.

It paves the way for advanced nukes

The overwhelming majority of US nuclear power plants came online before 1990. Since then, a series of factors prevented the development of new conventional reactors. A nuclear renaissance likely depends on developing more advanced, modular, flexible reactors better suited to a heavy renewable energy grid and providing funding to redevelop supply chains and domestic know-how.

Two recent federal laws themselves offer significant such support. IIJA includes a series of provisions that support research, development and demonstration projects for new nuclear reactors, such as funding the Advanced Reactor Demonstration Program and reducing investor risks associated with the US Department of Energy (DOE) Loan Program.

The IRA expanded eligibility of an existing tax credit—accounting for much of the success of wind and solar over the past decade—to include new nuclear facilities. This provides an investment subsidy of up to 50% of the capital cost or a production subsidy worth up to twice the maximum available for existing reactors.

The law too includes additional funding through two programs in DOE’s Office of Loan Programs: One could support up to $250 billion in financing to replace or reuse existing fossil fuel infrastructure with lower-emitting resources, and the other authorized $40 billion in guarantees loans for the demonstration of new clean energy technologies.

Crisis averted

Nuclear power has played and continues to play an important role in cleaning up the grid, maintaining climate and harmful air pollution while supporting local economies. The success of renewables threatened the viability of the reactors, but in the end, states, Congress and the Biden administration acted in time to protect the nuclear industry from financial disaster.

While some reactors fell through the cracks in the 2010s, the policy has sustained the fleet for the next decade. Then, existing nuclear plants that continue to meet high safety standards will benefit from a more favorable clean energy economic environment, and these same policies will have cultivated the ground for the next generation of advanced reactors.

Today’s nuclear power plants will not last safely forever. We need to plan for a future beyond our aging units that still achieves a net zero emissions economy. But bridge funding that policymakers have provided will keep this carbon-free resource as we build the grid of the future.