The U.S. nuclear power sector is facing its biggest crisis in years, with an increasing number of nuclear units being retired for economic reasons and the four new units now under construction in the Southeast facing possible cancellation. Bad news for the nuclear sector is good news for owners and developers of natural gas-fired power plants — and, of course, for natural gas producers — because gas plants are a primary alternative to nuclear in providing reliable, around-the-clock power. Gas plants also are a go-to choice for supporting intermittently available renewable sources like wind and solar. Today we review the woes facing the nuclear sector, efforts by some states to prop it up with subsidies, and the strong economic/environmental case for ramping up gas-fired generation.
Natural gas consumption for U.S. power generation has increased by nearly 150% over the past 20 years — from 11.1 Bcf/d, on average, in 1997 to 27.3 Bcf/d in 2016, according to the Energy Information Administration (EIA) — and despite President Trump’s June 1 (2017) announcement that the U.S. will be exiting the Paris climate accord, many U.S. utilities and independent power producers (IPPs) have indicated they won’t waver from their plans to shut down more coal units, build new gas-fired plants and ramp up their use of wind and solar power. The power sector’s strategy is based primarily on economics and regulatory expectations. The sheer abundance of U.S. natural gas supply suggests that gas prices will remain relatively low and competitive with coal, even as exports of liquefied natural gas (LNG) pick up. And while the Trump administration has promised to dismantle the Clean Power Plan (the Obama administration effort to reduce the power sector’s carbon dioxide (CO2) emissions 32% from 2005 levels by 2030, mostly by switching to gas and renewables) — see More, More, More (U.S. Gas Demand) — many states, utilities and IPPs are (as we said) pushing ahead with their plans to shift away from coal, which produces roughly twice the CO2 per megawatt-hour (MWh) that gas does.
Nuclear power plays an important role too, of course. The 99 operating nuclear units in the U.S. produced just under 20% of the electricity generated in the U.S. last year; gas-fired plants produced 34%, coal plants produced 30% and renewables (including hydroelectric plants) produced 15%. Nuclear also has figured prominently in utility strategies for reducing CO2 emissions (nuclear units don’t produce any) — enough so to spur talk just a few years ago of a nuclear renaissance during which a significant number of new, safer, more reliable nuclear units would be built to help the U.S. reduce its greenhouse gas production and its reliance on fossil fuels for power generation.