By focusing on next generation technologies and unleashing the power of competition, we can support a lower emissions future, continue America’s tradition of innovation and enterprise, and build a reliable grid at a cost that consumers can afford.
Last week’s Senate Energy & Natural Resources Committee hearing on nuclear energy raised three key points about how the U.S. can best advance the future of nuclear technology and our electric grid by unleashing innovation through competitive power markets. Competitive policies such as carbon pricing or a well-designed Clean Energy Standard (CES) can also appropriately support and unlock the environmental and reliability benefits of existing nuclear generation without unduly burdening customers or undermining future progress.
EPSA supports nuclear power and continued innovation as a part of America’s lower carbon future. In fact, EPSA member companies currently own and safely operate competitive nuclear power plants. But subsidies to existing nuclear resources and mature technologies undercut market-driven innovation, create inefficiencies and raise consumer costs – and direct dollars away from new investment and research and development. Americans have made clear they do not want to pay more to bail out struggling power plants.
Rather, the following three approaches will position the U.S. for future success.
- Unleash innovation through competition. Hearing witnesses made clear that innovation will lead to the development and deployment of advanced nuclear resources. Competitive generators know a lot about innovation and deploying new technologies; it is central to how they operate their businesses today. Through competition-driven innovation, EPSA members have deployed cutting-edge technologies such as highly efficient combined cycle natural gas generators and globally leading grid-scale battery storage projects in response to market signals. As advanced nuclear technologies achieve scalability and commercial viability, and ultimately as new resources come online, competitive generators will be ready to deploy those resources to ensure grid reliability, keep costs to consumers affordable and meaningfully reduce emissions.
- Establish a price on carbon or well-designed CES. Nuclear generation has well-known reliability and environmental benefits. But we must advance competitive and cost-effective energy solutions that benefit customers as well as the environment and reliable electric service. For the nation’s existing nuclear fleet, an economy-wide price on carbon would value the zero emissions benefits of nuclear resources in the market. Alternatively, a well-designed clean energy standard (CES), would have a similar effect and achieve nearly the same outcomes. The existing wholesale electricity markets value the reliability benefits provided by nuclear – as they were designed to do. A carbon price or well-designed CES would price the environmental benefit in a technology-neutral fashion consistent with those existing markets. Research by Energy + Environmental Economics shows that implementing these market-based approaches could significantly reduce carbon emissions while saving consumers up to $2.8 billion annually in D.C. and the 13 states served by PJM Interconnection.
- Avoid inefficient and costly subsidies. On the other hand, subsidies for existing nuclear resources such as Zero Emissions Credits (ZECs), will distort market outcomes, inhibit private development of clean energy alternatives and divert government funds away from research and development for nascent advanced nuclear technologies. While potentially appealing in the short run, these subsidies are often unnecessary and unsustainable. By investing in next-generation technology and allowing the market to drive private investment and innovation, we can make sure that resources go to solutions that forward the energy transition.
This is a politically challenging issue. If the questions raised in last week’s hearing need to be solved, a price on carbon or well-designed CES would put us on the right path while still retaining the many benefits of restructured markets – providing the market certainty that private capital and market participants need to deliver affordable, reliable, and increasingly cleaner power to American families and businesses.
The federal government has a role in supporting the research and development of advanced nuclear technologies; we support that effort. By placing the focus on next generation technologies, we can support a lower emissions future, continue America’s tradition of innovation and enterprise, and build a reliable grid at a cost that consumers can afford. That’s a winning formula everyone should be able to support.
More competitive policy recommendations from EPSA: America’s Competitive Electric Future: 100-Day Roadmap for Cleaner, Reliable, Affordable, and Innovative Power Generation