An August 17, 2024 article, at oilprice.com, entitled, “A New Era for Nuclear Power in the US” describes US government funding and intervening to reopen closed or closing nuclear power electric generating plants (nuclear) to support their green transition policies from the 2022 Inflation Reduction Act (IRA).
The IRA provides $6 billion financial support to nuclear power plants at risk of closure—$1.2 billion per year from FY2022 through FY2026. The new federal program is another example of government intervention through a subsidy or incentive to keep a nuclear plant operating when it is losing money.
The article states, “The US government is supporting the reopening of the Palisades (Palisades) nuclear power plant in Covert, Michigan, the first such effort in the country’s history.”
Palisades shut down after 40 years of operation in May 2022, largely from the electricity production cost increase compared to cheap and abundant natural gas encouraging a shift away from nuclear energy. The plant lost an electric power purchase agreement leading to no available electric power buyer.
Palisades was sold from Entergy to Holtec in June 2022 to be responsible for decommissioning this site. Thanks to a $1.5 billion conditional commitment for a loan guarantee from the US Department of Energy to Holtec, which announced in March 2024 the Palisades plant would be repowered thanks to, “The federal financial backing of the restart…” This federal intervention with a corporate benefactor is crony capitalism.
Between 2013 and 2021, 12 US nuclear plants, with a combined electric generating capacity of 9,436 MW, closed which is nearly 10 percent of the total capacity of current US reactors. Some nuclear plants due for closure remained online from state and federal economic subsidies when companies could not afford to keep many plants running. US nuclear plants have annually produced about 20 percent of the nation’s electricity since the mid 1990s.
Many state government-subsidized nuclear plants are located in states that enacted green energy policies that made generating electricity more expensive. Allowing wholesale electric generation competition could drive down electric prices.
The US nuclear power industry in recent years has faced economic and financial challenges like increased operating costs, where nuclear plants located in competitive power markets have natural gas and renewable power generators influencing wholesale electricity prices.
Table 1 from page seven of a February 2022 Congressional Research Service (CRS) report of nuclear plants shutting down between 2013-2021 listed five plants shutting down from operating losses, three shutting down from low electricity prices, and three from costs of major repairs. Further review found some state governments are using taxpayer dollars for nuclear plants operating in their state from Table 3 of a February 2022, CRS report. State subsidies benefiting nuclear power include zero emissions credits (EC) for sixteen nuclear plants in four states and power purchase agreements for two nuclear plants in one state which can be $100 million per year for each reactor.
Seven nuclear plants of the sixteen granted an EC subsidy are in Illinois. Three of the seven nuclear plants granted the state EC would cost the Illinois taxpayer $360 million per year for ten years for a total of $3.6 billion. Four nuclear plants in New York were granted an EC for $483 million for the program’s first two years, with adjustments to be made every two years.
State taxpayer dollars are used to keep several money-losing nuclear plants operating. Each nuclear plant should be viewed as a stranded asset, not needing a state subsidy to operate when the Austrian economic approach is to apply no state subsidy and let each company shut down each nuclear plant from not being profitable.
The state subsidies impacted approximately 19,800 megawatts of nuclear electrical generation capacity representing about 21 percent of total US nuclear-generating capacity identified for shut down.
The words “nuclear option” have one definition as a noun from dictionary.com as, “the use of or power to use a measure considered to be particularly drastic.” Each federal and state subsidy can be a “nuclear option” for the economic intervention in nuclear electric generation leading to incredible cost to electric ratepayers in several states and wasted taxpayers dollars in several states benefiting each privately owned electric utility company. These federal and state interventions should not get any glowing economic support.
