Going nuclear for climate mitigation: An analysis of the cost effectiveness of preserving existing U.S. nuclear power plants as a carbon avoidance strategy

Abstract

Nuclear power plants generate over 60% of the carbon-free electricity in the U.S. Due to a decrease in electricity prices as a result of the availability of cheaper natural gas and increased low-cost renewables, many of these plants are at risk of premature retirement. If nuclear power plants retire, CO2 emissions in many U.S. states could increase, even while the states comply with EPA legislation aimed at mitigating emissions of greenhouse gases that contribute to climate change. In this paper, we perform a Monte Carlo-based analysis to determine the breakeven price of electricity these plants must secure in order to avoid financial loses between 2015 and 2040, and find median breakeven electricity prices to range between $35 and $73 per MWh. Based on our estimates of future electricity prices under a low natural gas price scenario from the Energy Information Administration, our analysis suggests that U.S. nuclear plants would require between $8 and $44 per MWh (median results) on top of electric sales revenue in order to breakeven. Assuming natural gas plants would replace retired nuclear power plants, we estimate an equivalent cost of avoided CO2 emissions to be $18-$30 per metric ton of avoided CO2 (median results) for multi-reactor nuclear plants, and $47-$97 per metric ton of avoided CO2 (median results) for single-reactor plants. Preserving the existing nuclear power plant fleet, especially multi-reactor plants, is thus a cost effective carbon-avoidance strategy compared to the social cost of carbon.