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Should States Subsidize Nuclear? The Economics And Implications On Our Grid
Carbon emissions are down 30 percent thanks in large part to an increased use of natural gas and a near doubling of renewable generation. But amid these positive developments has emerged an unexpected casualty: America’s fleet of nuclear power plants. Plant owners are threatening to shut down unless they receive subsidies. And last week, New York agreed to provide these subsidies. Was it the right decision? And if not, what’s the path forward?
The U.S. power grid is in a period of massive change. The good news is that carbon emissions in the power sector are down an incredible 30 percent over the first four months of 2016. There are many reasons for this, including weak demand growth, the large-scale substitution of natural gas for coal and the sustained low gas prices. But a near doubling of renewable generation has played a critical role as well. Meanwhile, wholesale electricity prices are plunging. Amid these changes an unexpected casualty has emerged: America’s fleet of nuclear power plants. These plants currently account for 60 percent of U.S. carbon-free electricity generation. Industry has threatened to close multiple plants. The debate is now raging. The industry says it needs subsidies to survive. States like California are letting plants expire, opting not to pay the subsidies. But last week New York put out an ambitious plan to get half its power from carbon-free sources by 2050, a goal it says it cannot accomplish without the nuclear subsidies. Was that the right choice? And if not, what’s the path forward? EPIC’s Sam Ori talks with Steve Cicala, assistant professor at the Harris School of Public Policy.