Abundant natural gas resources and prevailing low prices are frequently credited with reducing coal-fired electricity generation and reducing carbon dioxide emissions from power plants. However, the same characteristics are putting similar stresses on future renewable and nuclear power generation, both low carbon sources of energy. The February 2013 Credit Suisse presentation cites low electricity prices as squeezing profit margins for nuclear plants. Credit Suisse concludes by suggesting that low prices could lead to a decrease in nuclear’s market share, which has traditionally stood at about 20% of US generation.
(c) Credit Suisse
Assuming that Credit Suisse is correct and nuclear begins to lose market share in the near term, the question is: “What fuel source will replace the lost nuclear capacity?” Three options exist, renewables, natural gas and coal. Two of those options, gas and coal, will cause a net increase in GHG emission from power plants when compared to existing nuclear reactors. Since nuclear is a base-load fuel, coal and gas are better suited than renewables to serve as direct replacements. Given EPA’s new and upcoming rules on coal plants, it is likely that much of the slack will be comprised of natural gas. However, increased demand and marginally higher gas prices may also cause old coal plants to stay online longer than they would otherwise.
In summation, natural gas has replaced some coal-fired generation and reduced emissions in the short-term; however, the indirect effects of low prices on nuclear and renewables could have a partially offsetting effect on emissions in future years. Given the Obama administration’s interest in reducing carbon pollution and moving away from coal, the nuclear industry should further investigate this effect to argue for license extensions, new plant approvals and increased R&D investment. — N. R.