Subsidies for baseload generators should favor nuclear over coal
After years of plowing subsidies into solar and wind power, federal and state governments are preparing to provide support for nuclear and coal electricity generating plants. The concern is that the capacity to always satisfy the demand for power by people and businesses is coming to rely too much on natural gas.
Solar and wind continue to grow and drop in cost (although they are still subsidized), but their output is dependent on weather conditions. They won’t provide guaranteed power unless someday an inexpensive way is found to store their surplus energy on the grid.
Generating stations that carry the burden of handling power demands at all hours and in all weather and seasons are called baseload plants. Until a couple of decades ago, they were predominantly nuclear and coal plants. But natural gas from shale has made that the baseload fuel of choice, burning much cleaner than coal and producing the cheapest electricity.
Now there is concern among regulators and in the power industry that disruptions in natural gas supplies could jeopardize the ability to meet baseload demand. Diminished baseload competition from nuclear and coal plants also could leave customers vulnerable to wide swings in prices for natural gas.
Six U.S. nuclear reactors have shut down in recent years before their operating licenses expired, and several more closings are expected. Nuclear and coal plants both are subject to much more costly regulation than those fueled with natural gas. Even with the closings, however, coal and nuclear plants still provided half of U.S. electricity last year, according to the federal Energy Information Agency.
To help prevent more closings, the Trump administration has proposed changes to wholesale energy markets to pay baseload plants more appropriately for the power they produce. Plants would be considered resilient and eligible for the higher prices if they have a 90-day supply of fuel on site — a standard only nuclear and coal plants can meet.
