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Is Nuclear Power a Doomed Industry in the United States?
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March 13, 2013

Is Nuclear Power a Doomed Industry in the United States?

By Steve Anderson
Contributing TMCnet Writer

Nuclear power has long been a part of the United States' power grid. But new reports from utility experts and executives say that an increased amount of wind power—coupled with an increase in natural gas power plants—may well one day mean an end to nuclear power as well as a steep drop in coal burning plants.

The reports point to a massive amount of wind turbine replacements that were erected in 2012, with $25 billion worth of plants going into place as the industry pursued a tax credit that was set to expire at the end of 2012. That in turn brought in a colossal amount of power to the overall power grid, with an extra 13,124 megawatts' worth of turbines cranking out juice and raising the overall contribution from wind power 28 percent over 2011's reported totals. This came as bad news to some providers like Exelon Corp., who were already facing power prices that hadn't been so low in a decade thanks to the growing abundance of natural gas on the market.

The U.S. Energy Information Administration expects a rise in the total amount of power wind generators supply to the grid, as the amount increases from 3.4 percent supplied in 2012 to 4.2 percent in 2014. This in turn is offering terrific prices to Midwest consumers—the executive director of the Environmental Law and Policy Center called natural gas and wind power "more economic" than nuclear power in the region but at the same time it is causing significant problems for nuclear and coal-based power generators.

Coal and nuclear power are seeing incredible price constraints, especially in the Midwest. Already stricken by a glut of natural gas, now the growing wind power component is doing extreme damage to pricing and profitability to the point where Dominion Resources is closing a nuclear reactor and selling several coal-fired plants. Wind according to Edison International's Midwest Generation unit Spokesman Charley Parnell is playing a significant role in price hits "especially in the off-peak hours" when power consumption needs are at their lowest.

Nuclear plant operators are saying that this is the result of government price manipulation. Many states have green energy laws requiring utilities to buy wind power as part of a push to produce cleaner energy, whether those utilities need the power or not. And the fact that wind farms also get tax credits, reportedly $22 for every megawatt-hour—gives them an added advantage. This in turn guarantees profit for wind power generators, so the turbines are kept cranking as long as there's a wind blowing. The constant power generation results in a glut of power to the market, which must be priced accordingly. For example in Illinois, off-peak hour wholesale electricity has sold for $23.29 a megawatt-hour since January 1. The record low price for that same megawatt-hour was hit October 11, where that megawatt-hour was sold at -$41.08. That's not a typo, either; the record low was reportedly a negative price. Relief for the coal and nuclear set doesn't seem forthcoming, either, as the production tax credit has been extended through December 31.

Naturally, this is having significant effects on the overall economy. While there's no doubt that the power consumers are welcoming a power glut, there's a downside. Much of the wind power glut is coming as a result of government subsidies, and those—just ask anyone who's writing a check ahead of April 15—can't last forever. Something will have to change, and soon, before a large part of power generation is gone under the force of an altered market.

Edited by Jamie Epstein

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