Report: 80% of Existing Coal Plants Could House Nuclear Power at 35% the Cost of New Installations

Environmental and consumer groups favor less risky renewable energy over nuclear.
September 22, 2022

Most existing and newly retired coal-fired power plants could be repurposed to house future advanced nuclear energy projects cheaply and provide an economic boost to disadvantaged communities, according to a new Department of Energy report.

About 80% of the nation’s coal-fired power plants could host advanced nuclear reactors, such as small modular reactors, at 35% the cost of placing them on undeveloped land. The installations could provide 265 gigawatts of electricity, or nearly a quarter of the utility-scale electricity produced in the U.S. in a year, onto existing grids cheaply.

Transitioning to fossil fuel-free nuclear energy instead of adopting methane-laden natural gas for electricity production could provide financial benefits to utilities and nearby disadvantaged communities, according to the report.

But environmental and consumer advocates said utilities should decarbonize using less risky and more cost-effective renewable energy alternatives.

ADVANCED NUCLEAR ENERGY

Advanced nuclear reactors are the latest generation of nuclear reactor technology derived from designs originally developed for use in naval ships. Advanced nuclear reactors include the small modular reactor and the non-light water reactor, which are designed to be smaller, safer and much less expensive than the nuclear reactors currently in operation in the U.S.

Small modular reactors are a fraction of the size of large nuclear reactors and can produce about one-third the electricity produced by conventional nuclear reactors. SMRs are manufactured off-site and are assembled where the reactor will be housed.

The U.S. Nuclear Regulatory Commission finalized the certification of the first SMR design for use in the U.S. in July — the NuScale VOYGR power plant that can hold four, six or 12 modules that each produce 50 megawatts of electricity.

There are currently no SMRs in operation in the U.S., but one project is in progress in Idaho. The Carbon Free Power Project at the Department of Energy’s Idaho National Laboratory has been in development since 2015 and is scheduled to begin generating power with NuScale VOYGR modules in 2029.

Non-light water nuclear reactors rely on materials other than water for cooling, including liquid sodium, helium and molten salt.

Bill Gates’ TerraPower will build a $4 billion demonstration non-light water nuclear power plant in Kemmerer, Wyoming. The sodium-cooled 345-megawatt reactor, branded as Natrium by the company, is scheduled to begin construction in 2024 and is expected to be complete by 2028.

THE REPORT

The energy department analyzed 157 retired coal powered plant sites and 237 operating sites, including nine unidentified sites in Indiana.

The study found that 80% of the sites were conducive for siting advanced reactors and 22% were amenable to siting large light water and non-light-water reactors. Building an advanced nuclear reactor at one of these sites could save utilities between 15% and 35% compared to building the site on undeveloped land.

The replacement of coal-fired power plants with advanced nuclear reactors was also found to reduce greenhouse gas emissions in the Midwest by as much as 86% and increase regional economic activity by as much as $275 million near every plant within the first decade of operation.

Composite map detailing SMR siting challenges. Oak Ridge National Laboratory

Construction of a nuclear plant at one of these sites would also add about 650 new permanent jobs, distributed across the nuclear plant, the supply chains supporting it, and the surrounding community.

“This is an important opportunity to help communities around the country preserve jobs, increase tax revenue and improve air quality,” said assistant secretary for nuclear energy Kathryn Huff. “As we move to a clean energy future, we need to deliver place-based solutions and ensure an equitable energy transition that does not leave communities behind.”

Utility companies’ profits mainly come from the investment in the infrastructure used to provide its services, which makes up most of a ratepayer’s monthly bill. According to the Indiana Office of Utility Consumer Counselor, base rates comprise between 66% to 99% of an average residential customer’s bill before taxes.

New tax credits in the recently passed Inflation Reduction Act could help convince utilities to make the switch to nuclear energy.

Utilities that build advanced nuclear reactors in 2025 or later can now receive an investment tax credit worth 30% of the amount they paid to build the facility. That, along with state-level cost recoupment measures, could provide enough financial incentives to convince utilities to add nuclear energy to their future energy production plans.

NUCLEAR REACTORS IN INDIANA

Earlier this year, the Indiana General Assembly passed a law, Senate Bill 271, that allowed utilities to construct small modular nuclear reactors in the state as long as they planned to apply for federal nuclear permits.

The law also added small modular reactors to the list of clean energy projects that are eligible for financial incentives, including recovery of costs through rate increases for utility customers.

According to industry experts who testified during the bill’s advancement through the Indiana Legislature, the federal permit process to construct a nuclear facility takes about three years and reactor construction takes another three to four years.

NuScale conceptual site layout for a small modular nuclear reactor site. The reactor building, marked RXB, is at the center of the layout.

That means utilities could charge their ratepayers for the better part of a decade before receiving any electricity produced by the SMR project.

Duke Energy Indiana and Purdue University are exploring the feasibility of using a small modular reactor to power the university’s West Lafayette campus.

AES Indiana and CenterPoint Energy, Inc. are considering adding small modular reactors to their resource plans. Northern Indiana Public Service Co. said it has not evaluated SMRs as a realistic resource option, but will monitor the technology’s progress.

Environmental and consumer advocacy groups in Indiana said utilities have better options than nuclear energy.

"The Beyond Coal Campaign is working for a transition from fossil fuels to clean energy — and by clean energy, we mean a portfolio including wind, solar, battery storage, energy efficiency and demand side management. We shouldn’t be chasing risky and costly nuclear energy, including SMRs, when we have safe, cheaper and reliable clean solutions readily available," said Wendy Bredhold, senior representative for the Sierra Club's Beyond Coal campaign in Indiana and Kentucky.

‘RELIABLE,’ BUT AT WHAT COST?

Nuclear energy is considered the “most reliable energy source” by the Department of Energy, as nuclear plants are able to produce maximum power more than 92% of the year. That is twice as much as natural gas and coal-fired units and three times as much as wind and solar plants, according to the department.

But electricity from nuclear plants is about five times more expensive than electricity from utility-scale renewable energy systems like wind and solar, without subsidies.

Utility-scale wind and solar are also much less expensive to install. Each utility-scale 2-megawatt wind turbine costs between $3 million and $4 million, and solar systems cost about $890,000 per megawatt.

Both of the currently planned advanced nuclear energy projects depend heavily on federal subsidies. The Carbon Free Power Project has received more than $1 billion from the Department of Energy to keep the project afloat, and about half of the $4 billion TerraPower project will be subsidized by the federal government.

The Citizens Action Coalition argues that utility investment in small modular reactors would result in years of additional sunk costs for ratepayers without any return.

The Carbon Free Power Project was approved for construction in August 2020, but within months, the project was delayed by three years and the cost climbed from $4.2 billion to $6.1 billion.

Similar expensive overruns have happened at recently constructed nuclear plants around the nation, saddling customers with billions of dollars of extra costs.

A pair of nuclear reactors in Georgia known as Vogtle 3 and Vogtle 4 were authorized by Georgia’s regulatory agency in 2009 at the cost of $14.1 billion. The project faced delays and cost overruns that pushed back the completion dates of the project four years and caused the price to more than double to $32 billion. Ratepayers for Georgia Power, the company building the reactors, paid $3.5 billion more in their electric bills between January 2011 and December 2020 to cover the cost of the reactor financing and will pay about $500 million more by the end of construction.

In South Carolina, lawmakers approved a $9.8 billion project to build two nuclear reactors at the Virgil C. Summer Nuclear Station. The project was scrapped after a series of construction setbacks and cost overruns, and ratepayers were left paying off $2.3 billion for nothing in return.

The state of Indiana had its own failed nuclear project in the early 1980s, when the Public Service Company of Indiana, now part of Duke Energy Corp., abandoned the Marble Hill Nuclear Generating Station project in Jefferson County halfway through construction. Customers were left paying $2.5 billion, or about $6.7 billion in today’s dollars, in extra utility rate increases over 20 years.

Not only will ratepayers most likely be responsible for the cost of building a nuclear plant, they will also most likely be responsible for the cost of decommissioning a nuclear plant if a utility decides to retire it. The years-long process of decommissioning a nuclear reactor in the U.S. is estimated to cost between $544 million to $821 million dollars.

The state-authorized power to recoup costs essentially forces customers to give utilities interest-free loan, the CAC argued.

The CAC and environmental groups are also concerned about the storage of radioactive waste from potential Indiana reactors.

Indiana’s SMR law allows utilities to store the waste at the nuclear plant site as long as federal requirements are met.

According to the NRC, spent nuclear fuel is stored either in 20-foot-deep pools of water or in gas-lined dry casks. The commission said the two storage methods provide adequate protection of public health, safety and the environment, but some studies have found some links between living near nuclear plants and an increased risk of developing cancer in the thyroid, bladder and the brain.

Report: 80% of Existing Coal Plants Could House Nuclear Power at 35% the Cost of New Installations

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