Cold War-Era Act Could Save Coal and Nuclear Power
Wind power generation is getting so ridiculously cheap that NextEra Energy (NYSE: NEE) plans to close its only operating nuclear power plant in Iowa.
It’s going to retire the 615-megawatt Duane Arnold nuclear plant near the end of 2020 – five years sooner than it had originally planned.
What’s prompting the early closure? Alliant Energy, the plant’s largest customer, has a better deal.
It plans to purchase cheaper wind energy from NextEra. This will allow Alliant’s customers to save an estimated $300 million over the next 21 years.
Alliant will still save customers money through this deal, even after it pays NextEra $110 million to shorten their power purchase agreement.
For its part, NextEra is spending $650 million on existing and new renewable energy in the Hawkeye State. The company plans to spend $250 million on generator upgrades at four of its existing wind farms in Iowa.
The low cost of renewables is creating challenges for nuclear plant operators. The reality is that nuclear power is now more expensive to generate than renewable energy like wind and solar.
Trump to the Rescue?
Trump has to be a little torn on nuclear versus wind. You see, he’s been an outspoken supporter of offshore wind.
And yet the Department of Energy is considering invoking the Cold War-era Defense Production Act.
The Defense Production Act authorizes a president to “influence domestic industry in the interest of national defense.” Trump could effectively use this act to keep struggling nuclear and coal plants open.
The DOE suggests these struggling plants are crucial to our nation’s grid reliability. I couldn’t disagree more.
Ten state attorneys general are also opposed to any intervention in our nation’s power markets.
If the government tried to set prices – and force utilities to buy uneconomical power – the customer would ultimately be the loser.
Additionally, pollution levels in the U.S. would rise.
A Toxic Situation
Coal plants emit twice as much carbon dioxide as natural gas-fired plants. And while nuclear plants are emissions free, they are terribly expensive to run and maintain.
Not to mention the highly radioactive waste from a nuclear plant has a half-life of around 25,000 years. And no one has come up with a storage solution that states and utilities can agree on. For the most part, this toxic waste remains on reactor sites in storage ponds to keep it cool.
Closing coal and nuclear plants is happening because of Economics 101. As many as 60% of the remaining 99 operating nuclear power stations can’t break even.
Subsidizing old, uneconomical and polluting coal and nuclear plants makes absolutely no sense. If we are moving forward to utilize next-generation energy solutions, we shouldn’t waste money subsidizing the old ones.
Renewables are far less expensive to construct. And they are far less expensive to operate.
But here’s the best part: They don’t generate any greenhouse gases. And they don’t generate radioactive waste.
What’s not to like?
What Analysts Get Wrong When Valuing Tesla
June 16, 2021
Nuclear Power: On the Way Up or Out?
May 5, 2021
How to Invest in Infrastructure’s Long-Needed Boost
April 7, 2021