home Production Costs, U For nuclear plants operating on thin margins, growing climate risks prompt tough choices

For nuclear plants operating on thin margins, growing climate risks prompt tough choices

As the single-largest carbon-free source of electricity, nuclear power often plays a big part in plans to decarbonize energy. Many policymakers insist that nuclear must be part of any solution to avoid the worst consequences of climate change over the coming decades.

But as the debate over preserving existing nuclear plants and supporting advanced nuclear technologies continues, it is becoming clear that the relationship between nuclear power and climate change is a two-way street: While nuclear’s role in the energy mix can decrease CO2 emissions and thus help governments meet climate goals, consequences of climate change are influencing nuclear power itself.

Academics expect rising air and water temperatures to cut into the operational efficiency of nuclear power plants, and an increase in severe weather patterns may necessitate more elaborate — and costly — disaster mitigation measures by plant operators. While low power prices and competition from cheap renewable energy and natural gas continue to be the most important economic headwinds against nuclear power, these climate effects could become another source of financial stress.

Financial, climate risks

An Aug. 18 report from Moody’s Investors service found that credit risks for nuclear plant operators will grow over the next two decades due to climate hazards. That timeline is too long for climate change to be financially material for nuclear plant owners today, Glenrock Associates equity analyst Paul Patterson said. “I don’t think it’s at the front burner of people’s minds,” he said.

At the same time, some nuclear plants are operating on thin margins, so a single catastrophic disruption can lead to early retirement. “If it comes to the point where they will have to make substantial capital investments … maybe it is the straw that breaks the camel’s back,” Patterson said.

For example, in 2018, Exelon closed the Oyster Creek nuclear plant in New Jersey, one of the longest-running plants in the U.S., rather than spend $800 million developing a new water cooling system in order to reduce the amount of heated water the plant discharged into the local bay, which environmental groups argued was harming the aquatic ecosystem.

That plant’s cooling issue cannot be linked specifically to climate change, but scientists expect that over time rising water temperatures will degrade the efficiency of thermal power plants’ water cooling systems. As a result, those plants may need to draw greater and greater volumes of water in order to make up for the efficiency losses, or consider switching to more expensive air cooling systems.

Other potential effects of climate change on nuclear plants include higher flood levels that surpass what plants were originally designed to handle. These and other impacts will require nuclear regulators and plant operators around the world to cooperate to properly assess risk and determine solutions, according to an article in the journal Global Environmental Politics, “The Climate Vulnerabilities of Global Nuclear Power,” published last year.