What happens when a nuclear power plant is shut down

Mark Perry

Most climate debates have focused on cutting the use of coal in electricity production. But besides a few high profile scuffles over the transition to cleaner energy, political leaders have ignored nuclear power as a necessary component of an effective climate strategy.

Within the past two years, nuclear plants have been shut down in six states, and there are a number of other states — including Michigan — which have nuclear plants that are at high risk of premature retirement.

A recent study indicates that closing a nuclear plant has substantial energy-replacement costs and significant, if usually unacknowledged, environmental consequences. The twin-unit San Onofre nuclear plant in Southern California was shut down in 2012. According to a study by two economists, Lucas Davis of the University of California-Berkeley and Catherine Hausman of the University of Michigan, electricity generating costs rose by $350 million during the year following San Onofre’s closing.

What’s more, during that year, based on a rate of $35 per ton of carbon, the study determined that the increased cost of carbon releases due largely to the need for natural gas totaled $316 million. Carbon emissions rose by 9 million metric tons, which is equivalent to putting 2 million additional cars on the road.

When a nuclear plant is closed, hundreds of people who work at the plant lose their jobs. According to the Nuclear Energy Institute, each reactor employs between 400 and 700 highly skilled workers, has a payroll of about $40 million and contributes $470 million to the local economy. In Michigan alone, four nuclear plants — Cook 1 and 2, Palisades, and Fermi 2 — employ nearly 3,000 people.

It would be shortsighted for the United States to turn away from nuclear-generated electricity. Among sources of emission-free power production, nuclear power has no equal. Renewable sources like solar and wind power are only available when the sun is shining and the wind is blowing. When the weather isn’t cooperating, both solar and wind require backup power from natural gas plants. Natural gas has many virtues as a fuel compared to coal, but it too puts huge amounts of carbon into the atmosphere and releases nitrogen oxides that cause smog.

Unlike solar and wind, nuclear power receives no federal tax credits nor does it benefit from state mandates that require that a certain percentage of a state’s electricity must come from renewables. These factors have distorted the economics of nuclear power development and jeopardize the continued operation of many nuclear plants.

If we don’t keep our current fleet of nuclear plants in operation, we will need to burn a lot more natural gas, reducing a large source of carbon-free electricity and eroding the reliability of the electric grid.

Several states — most notably Illinois and New York — have taken steps to address the disadvantages that nuclear power labors under in electricity markets. Although nuclear power accounts for nearly 60 percent of the nation’s carbon-free electricity, the fact that its clean-air benefits receive no value creates a bias toward natural gas.

Reaching the goals of EPA’s carbon reduction program will be impossible unless more states with nuclear plants correct abnormalities in wholesale electricity markets by recognizing the need for a balanced mix of clean, reliable energy sources that includes nuclear power. These are the practical market considerations that will determine whether nuclear power remains a part of America’s energy future.

Mark Perry is a professor of economics at the University of Michigan and a scholar at the American Enterprise Institute.