New revenue streams are needed for nuclear power to continue to drive decarbonization
Aggressive decarbonization goals are now the norm. More than 100 countries have either set or are considering targets to achieve net zero emissions. In the United States, 12 states have goals to achieve 100% renewable or net zero emission electricity generation, and around 300 large corporations have made a pledge to power 100% of their business operations with renewable energy.
To reach these ambitious targets, one of the globe’s largest existing sources of carbon-free energy, nuclear power, can play a role, along with renewable resources like solar and wind.
According to the U.S. Department of Energy (DOE), nuclear energy provided over 50% of the nation’s carbon-free electricity in 2020. It’s a similar story around the world, with 440 reactors delivering about 10% of the world’s electricity and around 30% of all low-carbon power.
Yet changes in marketplace dynamics and the economics of existing nuclear power plants make uncertain the extent to which it will be financially viable for these facilities to contribute to future decarbonization. Designed to operate continuously to generate baseload electricity delivered directly to the grid, many nuclear power plants have had to change how they operate in recent years in ways that reduce their revenues and increase the uncertainty that they will be able to continue to provide carbon-free electricity.
In particular, big increases in intermittent generation produced by wind and solar, low natural gas prices, and flat electrical load growth have all contributed to revenue declines that threaten the long-term economic viability of many nuclear power plants. For example, the utility Exelon recently announced that two nuclear power plants in Illinois would close in the fall of 2021 without state subsidies, while two others may be retired by 2023 “due to unfavorable market rules.” Ultimately, a new energy bill signed in September paved the way for the plants to continue operating.
Exploring New Revenue Sources
In response to these challenges, EPRI launched the Nuclear Beyond Electricity initiative last year to identify new opportunities for existing nuclear power plants to generate revenue and continue producing carbon-free electricity. An initial report was released in March and outlines seven possibilities beyond the traditional generation of baseload electricity.
The report includes insights derived from an examination of existing EPRI projects, a literature review, and interviews with subject matter experts. For each of the potential opportunities, the report includes assessments of their readiness level, ease of implementation, and potential value. The report also identifies research and development priorities and collaborative projects with the most potential.
“This report is our initial step,” said Chad Boyer, an EPRI program manager who is leading the Nuclear Beyond Electricity initiative. “We’ve identified 27 different opportunities in total, but we want to use this evaluation and additional outreach we are doing to really see where it makes sense to devote our research effort. From that, we are going to do a roadmap and get a list of priorities and focus on 5 or 10, some of which can be grouped together. In the past, one of the challenges to pursuing new opportunities for nuclear is a lack of coordination and different utilities and researchers could duplicate their work.”
Some of the more promising opportunities identified in the report include:
Hydrogen production: News about hydrogen’s role in a decarbonized world is ubiquitous these days. In May, for example, the Los Angeles Department of Water and Power (LADWP) committed to running its 4300 megawatts of fossil fuel power plants with green hydrogen by 2030. Multiple analyses estimate that green hydrogen will grow briskly in the future and be a key tool to decarbonize sectors that are hard to electrify, like shipping, manufacturing, and long-haul trucking. A report by Frost & Sullivan recently projected a 57% compound annual growth rate for the production of green hydrogen between 2019 and 2030. In addition, the DOE recently announced a “Hydrogen Shot” program, which has the goal of slashing the cost of producing clean hydrogen from $5 per kilogram today to $1 per kilogram by 2030.
Nuclear power has the potential to provide the large amount of energy needed to power the electrolysis process that splits water into hydrogen and oxygen. Currently, about three-quarters of hydrogen is made using natural gas. While there is potential for nuclear power plants to produce hydrogen at times when electricity prices are low, there are still many questions about the viability of this approach. Perhaps the most consequential unknown factor is the future size of the market for hydrogen. Even though green hydrogen is attracting large investments and research attention, its place in a clean energy economy remains uncertain—a question mark that is relevant to the prospects of nuclear-powered green hydrogen production.
Flexible power operations: One of the reasons existing nuclear power plants are under such financial pressure is that they historically have not adjusted their power output based on market conditions. Because they were built to operate continuously to provide baseload power, their operations and maintenance strategies were not designed to ramp generation down when large amounts of renewable generation forced prices down or ramp it up when demand spiked and renewable generation lapsed. Enhancing the capacity to operate flexibly in response to market price signals is a strategy identified in EPRI’s initial research and one that member utilities have identified as a priority. In contrast to the other strategies, flexible operations would not provide a new source of revenue. However, limiting the negative effect of falling power prices can enhance the overall financial viability of a plant.
There are several different ways a nuclear plant can improve its operational flexibility, including operating at low power levels or shutting down entirely during seasons with low demand, high levels of renewable generation, or both. “The industry in the U.S. is really focusing on increasing flexibility because it can provide economic benefits relatively quickly,” said Boyer. “It’s not enough on its own to sustain a plant economically, but it’s an approach that could be paired with other strategies to make a financial impact.”
This is readily achievable. France launched an aggressive nuclear development effort after the oil crisis in the 1970s. Today, 56 reactors generate around 70% of France’s electricity. For decades, French nuclear reactors have successfully provided load following and ancillary services to the grid.
Energy storage: Another reason nuclear power plants are under financial pressure is that many sell electricity at times when prices are low. The ability to store electricity produced by nuclear generators could improve their economics by allowing plant operators the flexibility to sell when it’s most profitable. Integrating energy storage can also open up the possibility for nuclear plants to provide revenue-generating grid services, such as frequency regulation, voltage support, and spinning, non-spinning, and supplemental reserves.
While the potential benefits of integrating storage are significant, a lack of operational experience and storage technology costs are challenges. For example, while battery storage is experiencing cost reductions, the systems are still relatively high cost, and potential safety issues related to their integration at nuclear power plants still need to be vetted.
Water desalination: According to the United Nations, 2.2 billion people worldwide do not have access to safe drinking water, and 4.2 billion (over half the world’s population) don’t have adequate clean water supplies for sanitation. Although water covers over 70% of the earth’s surface, only about 0.5% of the water supply is fresh and suitable for drinking, sanitation, and the growing of crops. Climate change exacerbates the challenge of fresh water access through more prevalent and intense droughts and increased risk of contamination due to elevated water temperatures.
Areas around the globe that struggle with access to fresh water, like the Middle East and the Caribbean, already use desalination technologies that remove salt from abundant supplies of ocean water to make it drinkable and suitable for other uses. But desalination requires a lot of electricity and is expensive. EPRI’s analysis highlights the potential for using nuclear power plants to power desalination at times and places when the price of electricity is low, and a market exists for treated water. “Desalination is a use that has the potential to generate revenue for nuclear power plants and also has the advantage of being able to store treated water for sale later. That provides more flexibility compared to electricity markets that are more immediately time-sensitive,” said Boyer. “But there is a geographic limitation to this because some places are just in more need of water than others.”
Industrial uses: People and businesses around the globe rely more and more on the Internet and other digital services for commerce and entertainment. These services are supplied by energy-intensive data centers, which consume about 1% of the world’s electricity. The supply of reliable, emissions-free electricity to data centers is just one of the industrial uses nuclear power plants could meet. Others include the delivery of heat necessary for the manufacture of plastics and chemicals. In Eastern Europe, Asia, and Canada, nuclear power plants already provide steam for industrial processes, and developments in Ohio and Pennsylvania are expected to use nuclear energy to power data centers and cryptocurrency operations.
There are several potential challenges to pursuing different industrial applications. Industrial customers wanting to utilize heat produced by a nuclear power plant would need to be willing to locate near a nuclear facility and provide the infrastructure to transport the heat to their operation. Plant retrofits may also be necessary, and regulatory issues would need to be addressed. Another future possibility identified in EPRI’s analysis is to use nuclear power to run direct air capture technology able to reduce carbon emissions.
Xcel Investigates Nuclear Beyond Electricity
Xcel Energy owns and operates two nuclear power plants: the Monticello Nuclear Generating Plant near Monticello, Minnesota, and the Prairie Island Nuclear Generating Plant near Red Wing, Minnesota. Together, the plants produce about 30% of Xcel’s electricity to its customers in the upper Midwest.
When Patrick Burke talks about Xcel’s nuclear power plants, he emphasizes the important role they need to play in meeting the utility’s goal of reducing its carbon emissions 80% by 2030 and 100% by 2050. “We believe that nuclear power has to be a part of the solution to achieve those goals since it is such a large amount of our carbon-free generation currently,” said Burke, who is nuclear vice president for strategy at Xcel, which is actively involved with EPRI’s Nuclear Beyond Electricity initiative.
Burke said the utility’s nuclear power plants need to move beyond providing just baseload power to be economically competitive enough to contribute to meeting the company’s decarbonization goals. That evolution is already taking place because the plants have begun to operate more flexibly to support wind and solar generation integration. This has involved training plant personnel and adjusting processes to allow the generators to ramp up and down more quickly.
Xcel also recently began a two-year pilot project with the DOE aimed at producing hydrogen with nuclear power. Burke sees many different opportunities potentially flowing from green hydrogen production. “When you don’t need the nuclear electricity, you can divert it to hydrogen for various purposes,” he said. “Here in Minnesota, there is interest in using green hydrogen to make ammonia for the agriculture industry and reduce carbon emissions in that industry. There is also interest in injecting it into natural gas generation facilities to reduce their carbon or as storage, so we have firm capacity when renewables are not producing electricity. We feel it’s very important to investigate these possibilities and communicate about the importance of nuclear in decarbonization efforts.”
For its part, EPRI is continuing expansive research initiatives examining possible uses of nuclear power beyond the generation of baseload electricity. For example, one priority is to study the optimal ways to extract thermal or electrical energy from a nuclear plant for various uses, including hydrogen production, energy storage, and desalination. Another recently launched project will provide guidance about specific issues, including any safety issues hydrogen production at nuclear power plant sites may raise and the value of incorporating nuclear energy into energy parks.
EPRI research will also explore how small modular reactors can meet the needs of district energy users. “District energy is usually a university system, medical campus, or large corporate center where they basically produce their own steam heat for heating and sometimes cooling,” said Boyer. District energy systems typically rely on natural gas, which doesn’t support the zero carbon emissions targets that many schools have adopted.
“A reason why they produce their own energy and heat is they like the reliability. Solar and wind and batteries are just not going to cut it for them to provide that level of control and reliability,” said Boyer. “District energy with microreactors could be that solution.”
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Artwork by Josh McKible