Biden Launches $6B Effort to Save Distressed Nuclear Plants
TThe Biden Administration is planning to launch a $6 billion rescue effort for nuclear power stations at high risk. They cite the necessity to keep nuclear energy as an environmentally friendly source of power and a means to fight climate change.
The certification and bidding process were opened Tuesday for a civil nuclear credit program. It is designed to rescue financially insolvent owners or operators of reactors. The U.S. Department of Energy spoke exclusively with The Associated Press shortly before making the official announcement. It’s the largest federal investment in saving financially distressed nuclear reactors.
To avoid premature shutdowns, owners and operators of nuclear power plants that have been shut down due to economic reasons may apply for funding. Priority will be given to reactors with plans for closure.
Second round of funding will open up more facilities that are economically vulnerable. The program was funded through President Joe Biden’s $1 trillion infrastructure deal, which he signed into law in November.
“U.S. nuclear power plants contribute more than half of our carbon-free electricity, and President Biden is committed to keeping these plants active to reach our clean energy goals,” Energy Secretary Jennifer Granholm said in a statement. “We’re using every tool available to get this country powered by clean energy by 2035, and that includes prioritizing our existing nuclear fleet to allow for continued emissions-free electricity generation and economic stability for the communities leading this important work.”
A strong majority of states — about two-thirds — say nuclear, in one fashion or another, will help take the place of fossil fuels. In the United States, twelve commercial nuclear power plants have been closed since the beginning of the last decade. This was due in part to lower electricity prices, large operating losses, rising costs and the need for major repairs.
The DOE states that this has resulted in an increase in the emissions from these areas, poorer quality air and loss of thousands in high-paying job opportunities, which have had a negative economic impact on local communities. According to the DOE, 25% of the fleet could be at serious risk. Owners of seven reactors currently in operation have made plans to retire them by 2025.
Most U.S. nuclear plants were built between 1970 and 1990 and it’s costing more to operate an aging fleet. Georgia is the only state that has a nuclear power plant in construction. The costs have risen and a second delay was announced by the Georgian government in February.
Indian Point Energy Center (New York), Pilgrim Nuclear Power Station (Massachusetts), Fort Calhoun Nuclear Generating Station (Nebraska), and Duane-Arnold Energy Center (Iowa) are the shuttered nuclear reactors. Entergy noted that Indian Point had been closed because of low natural gas prices. Also, higher operating costs were key reasons. New York officials requested the shut down of Indian Point, claiming that the plant was too dangerous for millions of residents and workers living nearby.
Twenty more reactors faced closure in the last decade before states stepped in to save them, according to the Nuclear Energy Institute, the industry’s trade association. Illinois spends nearly $700million to maintain three of its reactors open, while new renewable resources are available.
This trend is primarily due to low electricity prices, but federal and state policies that boost solar and wind have also contributed, according to the NEI.
The United States has 55 commercially owned nuclear power plants, with 93 nuclear reactors located in the 28 states. Nuclear power already provides about 20% of electricity in the U.S., or about half the nation’s carbon-free energy.
Andrew Griffith, the acting assistant secretary for nuclear power at DOE, stated that if reactors close prior to their licenses expires, then fossil fuel plants would likely take over and increase emissions, which would represent a significant setback.
While natural gas may be cheaper, nuclear power hasn’t been given credit for its carbon-free contribution to the grid and that has caused nuclear plants to struggle financially, Griffith added.
This bailout is similar to the assistance that the airline and auto industries received following the 2008 financial collapse and coronavirus pandemics.
In less than a month, President George W. Bush approved $25 billion of loans for General Motors and Chrysler. These were made from the $700 billion bailout funds originally intended to rescue the biggest U.S. banks. Obama created a task force that would oversee GM/Chrysler after he took office in 2009. These companies received an additional $55 billion of aid, and had to shut down factories and reorganize operations in order to recover and add jobs. Most of the industry’s bailout loans have been repaid.
Recently, $54Billion in government money was given to airlines by the Pandemic to maintain employment. But, they still eliminated many thousands of jobs and offered incentives to their employees to leave or to retire earlier.
David Schlissel of the Ohio-based Institute for Energy Economics and Financial Analysis stated that the federal government should have analyzed the possibility of spending the $6 billion to increase renewables, battery storage, and other energy efficiency projects. This can be accomplished quickly and economically enough to replace fossil fuels.
Now that the money is already set aside for nuclear plants, the federal tax credits for renewables should be extended and more should be invested in energy efficiency, he said, because the faster that’s done, the faster the nation reduces its dependence on fossil fuels and its emissions. He also said that the retirement of nuclear power plants is imminent, and therefore, it’s important to have carbon-free energy sources in place.
The Sierra Club has a nuclear free campaign that says nuclear is not a solution to climate change, and “every dollar spent on nuclear is one less dollar spent on truly safe, affordable and renewable energy sources.”
California will close Diablo Canyon’s last nuclear power station in 2025. Officials there think they can replace it with new solar, wind and battery storage resources, though skeptics have questioned whether California’s all-in renewable plan can work in a state of nearly 40 million people.
Annual applications will be accepted by the Energy Department for the civil credit program until fiscal 2031 (or the $6 billion limit). For financial aid to continue operating, nuclear plant operators or owners can submit bids for credits. Operators or plant owners must demonstrate that their reactors would be retiring for economic reasons. With the help of U.S. Nuclear Regulatory Commission input, they would determine if they could operate safely.
Maria Korsnick, president and chief executive officer of NEI, said she thinks the federal program will level the playing field for nuclear energy and help clear a path to pass even more intensive policies, such as a nuclear production tax credit proposed in Biden’s now-stalled Build Back Better plan.
Democrats claim they want to revive parts of the Social and Environmental Package and win back voters tired of the 2-year-old Pandemic as well as the most severe inflation since decades.
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