Nuclear industry withers in U.S. as wind pummels prices

A glut of government-subsidized wind power may help accomplish a goal some environmentalists have sought for decades: kill off U.S. nuclear power plants while reducing reliance on electricity from burning coal.

That’s the assessment of executives and utility experts after the U.S. wind-energy industry went on a $25 billion growth binge in 2012, racing to qualify for a federal tax credit that was set to expire at year’s end.

The surge added a record 13,124 megawatts of wind turbines to the nation’s power grid, up 28% from 2011. The new wind farms increased financial pressure on traditional generators such as Dominion Resources Inc. and Exelon Corp. in their operating regions. That’s because wind energy undercut power prices already driven to 10-year-lows by an abundance of natural gas.

“Right now, natural gas and wind power are more economic than nuclear power in the Midwestern electricity market,” Howard Learner, executive director of the Environmental Law and Policy Center, a Chicago-based advocate of cleaner energy, said in a phone interview. “It’s a matter of economic competitiveness.”

Wind-generated electricity supplied about 3.4% of U.S. demand in 2012 and the share is projected to jump to 4.2% in 2014, according to the U.S. Energy Information Administration.

The wind power boom has benefited consumers in regions where wind development is fastest, contributing to a 40% wholesale power-price plunge since 2008 in the Midwest, for example. Yet the surplus is creating havoc for nuclear power and coal generators that sell their output into short-term markets.

‘Perfect Storm’

The impact is greatest in the capacity-glutted Midwest. There, Richmond, Virginia-based Dominion is closing a money-losing reactor and selling coal plants, Exelon warns of shrinking nuclear margins and an Edison International merchant coal-plant unit has gone into bankruptcy.

“It’s a perfect storm,” said Charley Parnell, a Chicago- based spokesman for Edison’s Midwest Generation unit, in a phone interview. Pricing, already under pressure from cheap natural gas and the lingering effects of recession, now has a wind factor. “Wind absolutely plays a part in that,” he said, “especially in the off-peak hours.”

Atomic-power providers complain that the upheaval is an example of government subsidies distorting the market -- to the particular detriment of nuclear which provides 19% of the nation’s electricity, is clean and has proved safe despite perennial concern by activists that it poses a danger to public safety.

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