Nuclear power has accounted for 20% of electricity generated in the U.S. each year since 1990. But even with climate concerns and a worldwide movement to reduce CO2 emissions, the market is not rewarding nuclear power’s zero-carbon generation nor its unrivaled reliability. More than a quarter of U.S. nuclear power plants don’t make enough money to cover their operating costs, raising the threat of more early retirements.
These retirements have two important consequences concerning the used, or spent, nuclear fuel that exists onsite:
– their spent nuclear fuel is now orphaned
– the power plants are no longer providing power and obtaining the revenue that would continue to pay for the storage and monitoring of their spent nuclear fuel, and will no longer pay into the Nuclear Waste Fund that is designed to take care of their ultimate disposal.
The 1982 NWPA established a fee of 1 mill (1/10-cent) per kWh of electricity generated by commercial nuclear power plants. These must be paid by nuclear utilities with standard contracts and deposited in the Nuclear Waste Fund, which is a separate account in the U.S. Treasury. But in 2014, the federal government stopped collecting the Nuclear Waste Fund fee after a successful legal battle waged by several states and the commercial nuclear industry in light of the cessation of the Yucca Mountain Project.
The NWFund is still accruing interest at about $2 billion/year. The last Department of Energy Nuclear Waste Fund Fee Adequacy Assessment Report, which outlines the best estimates of how well the NWFund can handle the entire nuclear waste disposal program for the next 100 years or so. Projected future revenues were based on assumed nuclear energy production, no new license extensions for existing reactors, no new builds after 2012, and the fee of 1 mill/kWh-produced.
These assumptions may not be correct. Most of the existing fleet has already obtained one 20-year extension, and half will most likely get another 20-year extension. The advent of SMRs in the 2020s will also change nuclear generation.
Counter to this, is the present wave of premature reactor closings caused by economic and political pressures in deregulated energy markets.
Since 2012, twelve commercial reactors have shut down in the United States totaling about 10,348 MW of capacity (Table 1), losing over a trillion kWhs from their expected life assuming one license extension for half of them and two license extensions for the other half.
An additional twenty-seven reactors have announced closures by 2025 totaling about 27,203 MW of capacity (Table 2), or about 4 trillion kWhs from their previously expected life. Although all are expected to close before 2026, closure dates have not been set for some reactors.
These closings represent over $8 billion in NWFund initial revenue from fees lost. Using the DOE estimated final total principle of $55 billion in the NWFund when the nuclear fleet is shuttered completely, this lost fee from premature closings represents about 15% of the NWFund.
In addition to lost fees, these prematurely-closed reactors will not produce as much spent fuel. Given the high-degree of maintenance being seen at almost all reactors, it is reasonable to assume for calculation purposes that all would have received another license extension, bringing their useful life to 80 years. If most close after only 40 years or so, then the amount of waste produced by them in aggregate will be about 50% of what would have been produced. If you assume a 60-year life, as in most DOE projections, then the amount of waste produced by them in aggregate will be about 75% of what would have been produced.
These are large changes and affect the final cost and schedule of any final repository. But those effects are not linear, as there are many costs that do not track directly with amount of waste such as repository preparation and initial construction, waste storage at reactor sites or at consolidated interim storage facilities, modelling and monitoring, surface structures, general administrative and management costs, licensing costs, decommissioning and closure costs, and essential personnel.
EIA predicts that, from 2018 through 2050, 9.1 GW of nuclear capacity will be added, as well as another 4.7 GW of added nuclear capacity resulting from uprates. However, more than offsetting this additional 9.1 GW of nuclear capacity, are projected retirements of 35 GW of nuclear capacity from 2018 through 2050, especially those expected to close by 2026 listed in Table 2.
It should be noted that the defense high level waste (HLW) generated by weapons production will comprise about a third of the waste disposed in any final repository in this century. In past life-cycle cost estimates, DOE has assumed that Congress would allocate funding through defense nuclear waste appropriations (thus from taxpayers, not ratepayers) to cover about 20 percent of the costs. This discussion will only cover the funding from the fees paid by rate-payers and collected by the commercial nuclear industry as there are no rules or legislation controlling DOE’s defense waste disposal support.
The results of the Fee Adequacy Assessment, which attempted to include inflation and economic forecasting, showed no compelling evidence that either insufficient or excess revenues were being collected to ensure the recovery of these costs by the federal government. The variation in estimates were tremendous, ranging from a negative ending balance of $2 trillion to a positive ending balance of $4.9 trillion.
Folding in the premature reactor closings that could delete 15% from the NWFund, or the probable additional license extensions that could add 20% to the Nuclear Waste Fund, does not change the conclusion that we cannot assign a meaningful probability to any of these economic forecasts. And there is no indication that these effects should bring about a change to the current fee amount.
Predicting the economic trends that control the NWFund and the cost of the Yucca Mountain Project over a hundred years has little chance of providing useful information on which to base policy. Relative to the Fee Adequacy calculations by DOE, the effect of premature closings may be offset by the incorrect initial assumptions of nuclear plant lifespans. DOE assumed that the fleet of 104 reactors operating in 2012 would receive one, but only one, 20-year license extension, giving a fleet total of about 6,000 reactor-years of operation and waste generation.
With about 30 reactors to be retired early, after about 40 years, and the remaining 79 or so reactors getting a second 20-year license extension to 80 years, there will be a fleet total of about 7,500 reactor-years of operation and waste generation, significantly larger. A second 20-year license extension would increase it even more.
The next time DOE, or a new managing entity, prepares an updated total system life-cycle cost estimate, it might be better to look at direct revenues and costs without trying to predict inflation rates or attempts to economic forecast as these direct values could be equally affected by whatever occurs. Unfortunately, the NWFund revenue is highly front-loaded over about 60 years beginning in 1983, while the construction and operation of the Yucca Mountain Project, or whatever replaces it, will be highly end-loaded for 60 years after 2043.
If that is the case, the NWFund could accrue significant interest before any operations begin, making its financial effectiveness relatively greater. However, forecasting construction, labor and material costs, like massive amounts of titanium, beyond mid-century gets back to being too difficult to believe, certainly for purposes of assuring congressional appropriations in the years when expenditures need to occur.
Projecting or estimating nuclear generation, and any fee collection, many years into the future is difficult. It is uncertain whether any fees would be collected retroactively after the NWFund is restarted, although that seems unlikely.
In the end, these premature closings will have a large, though unknown, effect on the ultimate state of our nuclear waste disposal program.
Of course, Congress needs to stop stealing money from the NWFund, or everything may be for naught.
Have a wonderful New Years’ Let’s hope 2021 is better than 2020!