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Fuel Diversity Supports a Stable Grid, NEI’s Fertel Says

Jan. 15, 2014—Extreme weather events like the polar vortex that recently froze much of the nation are a reminder that a reliable electricity supply is critical.

While the importance of reliability may be obvious to anyone who has shivered through a cold spell, the role fuel diversity plays in reliability is often overlooked, says Marvin Fertel, the Nuclear Energy Institute’s president and chief executive officer.

Fertel speaks Jan. 16 at the U.S. Energy Association’s 10th annual State of the Energy Industry Forum, along with representatives from the oil, natural gas and solar energy sectors, the Edison Electric Institute and others.

Technology and fuel diversity are vital attributes of a reliable and affordable supply of electricity, Fertel says. He believes the tough economics facing some power generators in merchant markets—including some nuclear energy facilities—threatens these important attributes of America’s electricity supply.

The recent cold snap should be an eye-opener for energy policymakers, Fertel says. As temperatures dropped, electricity demand soared, setting winter records for electricity use in some regions. Gas-fired generators vied with home heating for supplies of natural gas, coal piles froze and some power plant equipment failed because of the cold. 

While nuclear energy facilities are not immune to cold-weather problems and have provisions to deal with them, the facilities nationwide operated at 95 percent of maximum production around the clock.

On the whole, the nation’s electricity system experienced no serious problems—but without the nuclear power plants, it would have been a different story. 

Fertel says the way competitive electricity markets are operating threatens nuclear energy facilities and could put both reliability and energy diversity at risk.

The Kewaunee nuclear plant in Wisconsin—an efficient and cost-effective reactor—could not compete against low-priced natural gas and coal and renewable energy sources that receive subsidies. It shut down last May because of economics.

Entergy announced in August that it will close Vermont Yankee by the end of 2014 for the same reason. 

Both plants have operated well, Fertel says, but conditions in their markets do not support continued operation. Absent changes in market structure or the resurgence of electricity demand, more 24/7 power sources, including nuclear energy facilities, could be at risk of shutting down.

Fertel said the fundamental problem—not a simple one to address—is the fact that competitive electricity markets have no mechanisms to value important qualitative attributes of nuclear energy facilities, including their ability to supply large amounts of electricity on demand; electric grid stability; nuclear energy's role in providing fuel and technology diversity to minimize the impact of problems with any one electricity source; or their clean-air value.

Firms that monitor grid operators have raised concerns about the effectiveness of price signals in these markets to attract investment in new electric generation, even in regions that are close to the minimum-planning electric reserve targets—in particular Texas and the Midwest.

Fertel says the nuclear energy industry is intensifying efforts to apprise energy policymakers of potential risks to efficient nuclear energy facilities and the ramifications if more reactors are shut down prematurely.

This year’s USEA forum begins at noon on Thursday, Dec. 16.