Limiting carbon through nuclear and renewables

By Drs. Robert & Sonia Vogl

President and Vice President, Illinois Renewable Energy Association

The U.S. Environmental Protection Agency’s proposed carbon reduction plan and the state’s efforts to comply with it have been the subject of recent meetings before the Illinois Commerce Commission.

Exelon officials want the plan to put nuclear power on an equal footing with other non-carbon energy sources, such as wind and solar energy.

The firm may close down the Quad Cities and Byron plants in mid-2015 if it fails to see a pathway to sustained profitability. Exelon’s profits are dropping from reduced levels of electrical consumption, low-priced natural gas generation and wind energy supplies. When wind farms provide excess power, the Quad Cities and Byron plants are obliged to pay for it. Firm officials indicate it happens around 8 percent of the time.

At the electric capacity market auction in May, the Quad Cities and Byron plants filed losing bids to provide the generating capacity that PJM says it will need for 12 months beginning June 1, 2017. Chosen generators receive payments in exchange for a commitment to maintain their units and ensure an adequate supply of power during the contract period.

Although the two nuclear plants were not selected, David Cay Johnston, author of three books about financial inequalities, explains that Exelon will collect twice the revenues on the 83 percent of its plants that filed winning bids as they would have received if the Quad Cities and Byron bids had been competitive.

Without capacity contracts, the Quad Cities and Byron plant incomes are likely to fall, as they will have to sell their electricity to the less profitable spot markets. If the plants are closed, both jobs and taxes would be lost, cutting funds for local roads, parks, libraries and schools.

According to an article by Steve Daniels in Crain’s Chicago Weekly, it appears Exelon will ask for state legislation next year to provide millions of additional dollars for its fleet of Illinois nuclear plants. Daniels suggests the Illinois nuclear plants as a group remain profitable, even as overall profits have fallen. Since Exelon indicates it will seek a market solution that benefits its entire Illinois nuclear fleet, Crain’s questions whether the state will compel ratepayers to subsidize a profitable enterprise. Profits should rebound from a revenue boost of $380 million from capacity prices being paid to their power plants since June 1, 2014.

An additional concern is how energy efficiency and renewable energy programs will fit into Illinois’ carbon reduction plans. Investments in energy efficiency can return as much as $3 for each dollar invested. A recent report from the Deutsche Bank indicates that by 2016 in all 50 U.S. states, the cost of obtaining electricity from rooftop solar systems will be equal to or less than the cost of obtaining electricity from utilities.

If legislators decide to temporarily assist Exelon’s nuclear facilities, it should be done in a way to minimize adverse impacts on consumers while continuing to support renewable energy and efficiency programs.

With the recent changes in the political landscape, national and state efforts to reduce carbon emissions could be altered.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail sonia@essex1.com.

Posted Nov. 12, 2014 Issue.

One thought on “Limiting carbon through nuclear and renewables

  • November 12, 2014 at 5:52 pm
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    Nuclear energy is a mature technology which as received multiple times as much in taxpayer subsidies than have wind and solar. Even new nuclear builds such as the Vogtle reactors now under construction will receive production tax credit similar to the subsidies (PTCs) that wind and solar receive.

    Additionally, nuclear plants obtain much lower cost financing thanks to taxpayers assuming the risk and don’t have to pay for more than a very small fraction of their liability insurance costs, again, thanks to taxpayers. Wind and solar do not receive those subsidies.

    For nuclear power was put on an equal footing with other non-carbon energy sources, such as wind and solar, nuclear would have to give up massive taxpayer subsidies.

    What Exelon is saying is that even their paid off reactors can’t compete in the market. They are asking for special treatment so that they can avoid market forces.

    What makes more sense, rather than to create a taxpayer gift to Exelon, is to put a price on carbon. Use the revenue to lower the cost of electricity to consumers. (Make the carbon tax revenue neutral in a way that won’t change the cost of electricity.)

    Then, as the wholesale cost of electricity from coal and natural gas rises let nuclear duke it out with wind, solar and storage. That would keep the energy field competitive and likely result in cheaper electricity. Artificially keeping nuclear alive only increases our cost of electricity.

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