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Paying Nuclear Losers for ‘Clean’ Power Upends U.S. Markets via Bloomberg

Some U.S. states are trying to save money-losing nuclear plants — and disrupting America’s electricity markets in the process.

New York and Illinois have cleared the way for nuclear power to be subsidized with higher fees on buyers — aid normally reserved for renewable energy like solar and wind. One reason policy makers gave was to protect jobs at aging plants teetering on closure. Another was nuclear’s emission-free electricity, because states are trying to address climate change by relying less on fossil fuels like coal and natural gas. Connecticut and Ohio are considering similar moves, and pressure is mounting in New Jersey.

But federal regulators and gas-fueled generators including Dynegy Inc. and Calpine Corp. say the states are fundamentally altering the way wholesale power markets work. Armed with billions of dollars in new clean-energy benefits, higher-cost nuclear generators can now compete with companies that get no aid. The first test comes next month when PJM Interconnection LLC, the biggest grid, takes bids to supply power from Chicago to Washington.

[…]

While nuclear power has kept its share of U.S. electricity at around 20 percent over the past decade, it’s become a high-cost supplier with the emergence of gas-fired turbines burning cheap shale fuel, as well as more-efficient wind farms and solar panels. The country now gets more electricity from gas than from coal, which has seen its market share plunge.

[…]

The federal agency that regulates power markets is so concerned that the acting chairman called for both sides to meet and figure out a compromise.

“The markets weren’t designed to” compensate nuclear resources for carbon-free power, “and that’s something those state programs are seeking to do,” said Cheryl LaFleur, acting chairman of the Federal Energy Regulatory Commission. “That’s something that we have to work out.”

 

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