Updated: Jan 10, 2022
This week the Illinois Senate passed a sweeping clean energy bill that should help prevent two Exelon nuclear plants in the state from closing prematurely. The bill also set target deadlines to close the state’s remaining coal plants.
For those who haven’t been following this news story, the Byron Nuclear Generating Station has been scheduled to close two units later this month while Dresden nuclear plant is scheduled to close two units this November.
Once offline, Illinois would permanently lose 4.1 GW of generating capacity, replaced mostly by natural gas. Combined, the two nuclear plants supply nearly 30% of Illinois’ electricity, and without them carbon emissions were expected to go up to 70% as fossil fuels made up the lost output.
Why were the plants scheduled to close?
Illinois’ electricity market rewards short-term lower prices from generators. This has the advantage of forcing down electricity prices for consumers today. But it also means the market does not reward investment in long-term reliability.
In recent years, the rapid increase in shale gas mining has led to a glut of natural gas on the market and extremely low prices. As a result, other types of generation (including nuclear) have struggled to compete with gas-fired plants.
In the case of the Illinois nuclear plants, Exelon had revealed in 2019 that the plants were experiencing revenue shortfalls to the tune of hundreds of millions of dollars. By 2020, they had been forced to announce plans for retirement.
Illinois is not alone in this experience. There is a concerning trend in some US states of shuttering nuclear plants in the face of extreme competition from natural gas, including the closure of Indian Point in New York State earlier this year, and the planned retirement of Diablo Canyon in California in 2025 (we covered some of this story in our May Intelligence Report).
The problem with these closures is that they are based on market conditions today which cannot persist much longer. In the coming years, states will need to move away from natural gas in order to meet aggressive carbon reduction targets.
Gas-fired generation will become uncompetitive—either because the price of natural gas will increase dramatically (via a carbon price or other market mechanism), or because gas is ruled out entirely as a matter of policy.
As natural gas is taken offline, state grids will need sources of reliable baseload power to keep their electricity system running—which is exactly what nuclear power provides. Allowing nuclear plants to retire today in response to short-term market conditions makes this future energy challenge even greater.
This trend is not unique to the US alone. A similar push to shut down nuclear plants in the EU is raising concerns about how the additional generating capacity will be supplemented. A recent article highlights the shifting sentiment in the EU as leaders are becoming increasingly aware of the climate costs of shutting down nuclear plants when instead we should be trying to extend their life for as long as safely possible.
Citizens take to the streets to save their nuclear plants
Citizens and industry in Illinois recognized this long-term need and launched a campaign to save the plants.
In a final attempt to save their nuclear plants, local citizens took to the streets on May 27 and protested outside of a congressional legislative session in the state’s capitol in Springfield.
Petitions were circulated throughout the entire industry (even I signed it) directed to Governor J. B. Pritzker and people were urged to write, email, or fax the Governor’s office to denounce the plans to close the plants.
This campaign was successful, resulting in a comprehensive clean energy bill that would help save the plants. The new bill’s objective is to reduce the state’s dependency on fossil fuels and is a game changer for the Illinois’ nuclear industry with the provision of $694 million of subsidies.
In addition to this, it endeavours to phase out coal by 2035 and natural gas by 2045. The plan also includes $4,000 rebates to EV consumers as part of a strategy aimed to get one million on the road by 2030.
Lessons learnt in Illinois
It’s unclear what prompted this sudden change of heart on nuclear.
Perhaps it was the protesting, or maybe lawmakers saw what happened to carbon emissions in New York State when Indian Point was forced offline early. President Biden’s focus on nuclear in his Clean Energy Plan also provides a clear indicator that nuclear is a good investment.
Whatever the reasons were, the final clean energy bill is exactly what Illinois needed to ensure that their nuclear fleet continues to power the state safely with clean electricity.
The bill still has hurdles to pass before becoming law, though. It still needs approval from the House and from Governor Pritzker, who has stated that he won’t approve a plan until there are firm closing dates for the state’s two largest coal plants.
Regardless, there’s still much that we can learn from the events that have transpired in Illinois. Here are my key takeaways:
Money talks. Economics will always be an underlying factor driving energy markets and conditions. To allow clean energy technologies to truly compete, policymakers must level the playing field with policies that tax fossil fuel or provide subsidies for low-carbon energy producers.
Advocacy works. Through the efforts of NGOs and individual people, public awareness was raised and momentum gained to cause decision makers to stop, pause and listen.
With Diablo Canyon in California scheduled for early shutdown in 2025 due to similar economic reasons, the concerned citizens of Illinois have set a precedence in showing us that individual people have the ability to influence change. Similarly, I’m hoping the folks in California are inspired to fight to keep their nuclear plant open.
Written by Susie Ho, former Senior Advisor at the Nuclear Innovation Institute.