The Need
The federal government has an important role to play in reducing the impact of rising electricity prices. Electricity prices will rise in the future as the U.S. builds the carbon-free and low-carbon technologies necessary to meet energy needs and environmental imperatives. Simply maintaining nuclear energy at 20% of U.S. electricity supply will require construction of 20 to 25 new nuclear power plants by 2030. Under all credible climate change policy scenarios, modeling shows failure to deploy sufficient nuclear power generation capacity will result in an over-reliance on natural gas. Increased demand for natural gas due to fuel switching in the power generation industry will drive up costs and reduce the competitiveness of U.S. manufacturing dependent on this important energy source.
By providing targeted financing support and working cooperatively with state governments, the federal government can lessen the impact of rising prices on electricity consumers (residential, commercial and industrial). Many of the states where new nuclear plants are planned — including Florida, Virginia, Texas, Louisiana, Mississippi, North Carolina and South Carolina — have passed legislation or implemented new regulations to encourage construction of new nuclear power plants by providing financing support and assurance of investment recovery. By itself, this state support is not sufficient. The federal government must also provide financing support for deployment of clean energy technologies to address growing U.S. electricity needs and reduce carbon emissions.
The nuclear energy industry manages its used nuclear fuel safely at plant sites but the public, state government officials and others must have confidence that the federal government has a credible long-term program for used fuel management and disposal. The federal government’s program to manage used fuel must be restructured and placed on a path to long-term success.
Solutions
- Federal and state governments must ensure stable policies relating to nuclear energy. Like other advanced energy technologies, new nuclear power projects will not enter service until the 2016-2017 timeframe and need assurances of sustained policy and political support to be commercially successful.
- The federal government must provide financing capability commensurate with the scale of the baseload power projects being developed. The loan guarantee program authorized by the 2005 Energy Policy Act allows for $18.5 billion in loan volume for nuclear projects, which is inadequate given the $6 to $8 billion estimated cost of a new nuclear power facility.
- The federal government program to manage used fuel must be restructured and placed on a path to long-term success. The federal program must include the development of interim storage facilities to meet its obligation under the Nuclear Waste Policy Act; an R&D program to demonstrate advanced fuel cycle technologies; a commercial deployment of advanced fuel cycle technologies; and the construction and operation of a permanent disposal facility.
- The federal government should continue efforts to develop the Next Generation Nuclear Power Plant.
