The US went through two major waves of nuclear power plant construction: first in the mid-1970s after the Oil Embargo and then in the late 1980s. Since those two boom periods total nuclear operating capacity has reached 105 GW, however only 7.4 GW of that total have been added since 1990. Those meager capacity additions wouldn’t be an issue if nuclear power played a minor role in the US’ generation mix, however in 2017 20% of the electricity generated in the US came from nuclear power plants. With an aging fleet still serving such a large load, what are the ramifications of nuclear plant retirements on the US fuel mix and natural gas power burn?
While changes in nuclear power can have impacts in the short-term (0 – 5 years), these issues are likely to play out over a longer time scale. That’s why BTU recently published our Long Term Gas Outlook. This semi-annual report provides forecasts for Henry Hub prices as well as supply and demand fundamentals over the next 30 years, and tackles the implications of longer-term trends, like nuclear retirements, wind and solar generation growth, and peak Marcellus and Utica production, just to name a few.
Looking back in time a bit, the United States Nuclear Research Commission (NRC) initially permitted reactors to run for 40 years. However, operators can apply for permit extensions, pushing their lifespan to 60, or even 80 years (as Florida Power and Light’s Turkey Point facility recently applied for). Right now, the average age of an operating nuclear reactor stands at about 37 years, close to that initial 40-year cutoff. The graphic below shows nuclear nameplate capacity by age, with 50 GW of the US’ capacity already 40 years or older.
With an aging fleet, the next question is when will those plants retire? Some argue that plants can run for an indefinite amount of time with the proper maintenance. However, all it takes is one safety incident to change public perception of nuclear power. Let’s book-end retirements between forced retirements at the age of 55 years and 80 years. These two bookends can essentially leave the US’ nuclear capacity unchanged through 2050 or bring capacity down to almost zero.
What are the impacts of these scenarios to generation? Forcing retirements at the age of 55 will eliminate generation equivalent to about 16 Bcfe/d of natural gas power burn, as shown in the graphic below.
So, if nuclear power plants last another 20 or 40 years, what’s the big deal? The biggest loser if nuclear plants extend their lifespan will be natural gas. Coal power plants will play an increasingly small role thanks to natural gas plants, but the trouble comes after the bulk of those plants are sidelined. How will natural gas grow its market share, especially with growing renewables generation nipping at its heels? Will electric vehicles be a savior or will natural gas go the way of wood, fuel oil, and coal? For the answers to these questions and more, see the inaugural edition of BTU’s Long Term Gas Outlook. And if you have a scenario of your own or want to test different assumptions, BTU can create customized outlooks.