The Obama administration gave the struggling U.S. nuclear industry a glimmer of hope this week by allowing new reactors to count more toward meeting federal emissions limits.
States can take more credit for carbon-free electricity to be generated by nuclear power plants under construction as they work to comply with emission-reduction targets set in the U.S. Environmental Protection Agency’s Clean Power Plan released Monday. Cuts from existing reactors won’t count, casting the fate of units at risk of premature retirement in doubt.
Under last year’s draft of the plan, the yet-to-be completed reactors were counted as existing units that wouldn’t be fully credited for carbon reductions generated in the future after they had started operating. The nuclear power industry complained that amounted to a penalty on the plants and made state targets harder to achieve.
“We tend to view new rules as potentially the first bit of good news for the struggling nuclear industry,” Julien Dumoulin-Smith, an analyst for UBS, wrote on Monday in a research note.
Nuclear operators are facing high maintenance and clean-up costs, as well as competition from cheap natural gas-fueled power plants and low-cost wind and solar generation. About 10 percent of the nation’s nuclear output may retire early because of low energy prices, according to Moody’s Investors Service.