Joe Romm recently wrote a piece for Climate Progress titled Nuclear Power Is Losing Money At An Astonishing Rate.

In that post Romm exaggerates the amount of support that the New York Zero Emissions Credit (ZEC) will provide, absolves the massive build out of industrial scale wind and solar from any responsibility for contributing to the situation, offers an incomplete analysis of the real causes and effects of unsustainably low wholesale market prices and provides a slanted suggestion for implementing a solution.

How big is New York’s Zero Emission Credit?

Like many observers that do not like the idea of helping existing nuclear plants survive temporary market conditions, Romm accepts the very high end of the estimated range of costs for the New York ZEC. With a link to a Huff Post piece By an infamously antinuclear author named Karl Grossman, Romm describes the plan as a “$7.6 billion bailout of nuclear.”

That description overlooks the fact that the equation for the administratively-determined price of the ZECs includes a term that will automatically reduce the amount paid when the predicted wholesale market price of electricity rises above $39 per MWh. Unsurprisingly, given Grossman’s known antinuclear attitude, his article did not mention How wholesale electricity prices above $56 per MWh would result in zero cost ZECs.

Romm should have known better than to trust a single source, especially one with a long-standing agenda of eliminating nuclear energy.

Should we blame renewables?

Romm also takes issue with the notion that unreliable energy system growth is causing market price problems for nuclear energy. He admits that wind, solar, biomass, geothermal and waste-to-energy are still receiving substantial direct payments and market mandates from governments at the local, state and federal level, but he claims that those subsidies are appropriate for emerging technologies that ar still progressing down the cost curve. Besides, he says, those generous subsidies are scheduled to be phased out.

Romm is apparently banking on the fact that many readers don’t know that wind and solar subsidies have been in place since the early 1990s and have been “scheduled” to be phased out at least 5 times already.

Instead of blaming his favorite power systems, Romm says that we should blame “cheap natural gas.” He avoids acknowledging that the massive buildout of wind and solar enabled by the $25 billion that the Recovery Act has dolled out to renewable energy programs has successfully increased the quantity of wind and solar electricity generated by an amount that has finally begun to be visible in EIA statistical reports.

Since weather-dependent sources displace mostly natural gas fired electricity if they are available, the increase in renewable generation has contributed to the current gas market oversupply and low price situation. If the electricity produced by new wind turbines in Texas, Illinois and Iowa had come from burning natural gas, there would not be a gas glut threatening to overflow available storage reservoirs.

The glut is the reason prices are low; fracking makes gas abundant, but it does not lower the cost of extraction compared to conventional drilling.

Blame market design

Romm turns to Peter Fox-Penner for an explanation of the market challenges facing nuclear power plants. His published quote from that conversation is intriguing and offers an opportunity to find common ground.

While I agree that premature closure of safely operating existing nuclear is a terrible idea from the climate policy standpoint, he overlooks the fact that this consequence is neither “unintended” nor the “fault” of solar and wind. This is the very-much-intended result of the way electric markets were designed, and you can be sure this design was not formulated by wind and solar producers and is in so sense their fault.

I concur. The current market structure was purposely invented by market-manipulating entities like Enron to give an advantage to natural gas traders, build an alliance between natural gas and renewable energy and crowd nuclear energy out of the market in order to enable increasing sales for both gas and renewable power systems.

Price on carbon

Romm once again blames the nuclear industry and independent nuclear advocates for not sufficiently supporting the fatally flawed 2009 climate and energy bill. He says the bill would have put a price on carbon, but it did so through the same “cap and trade” mechanism that has proven incapable of actually addressing carbon emissions in example markets like Europe and California.

The politically determined amount of available credits for incumbent producers has invariably been set so high that those credits usually trade for a value that is too low to influence system purchase decisions. They are often so low that they don’t even influence operational choices between burning high emission fuels like brown coal instead of somewhat lower emission fuels like natural gas.

Romm is right that a price on carbon would help nuclear energy from both established plants and new projects compete, but that price needs to be predictable and sufficiently high before it will influence decision making. The rising fee and dividend approach advocated by the Citizens Climate Lobby and James Hansen has a much better chance of successfully reducing CO2 emissions.

Effective solutions

Nuclear energy is not inherently uncompetitive. Fuel costs are low and predictable, equipment is durable and often needs little maintenance or repair, life cycle emissions levels are extremely low, waste is compact and easily managed and paying people fair salaries for productive work is an economic benefit, not a disadvantage.

The established nuclear industry, however, has done a lousy job of controlling its costs and marketing the benefits of its product.

It needs to work more effectively to ensure that regulators do not ratchet requirements, especially when they are imposed for the purpose of producing the right political “optics” with no measurable improvement in public safety. Achieving that condition will require the industry to take a more adversarial approach to regulators. Under the American system of jurisprudence regulators and the regulated are not supposed to be friends and partners.

There is also a need to recognize that innovative, advanced reactor systems that incorporate lessons learned during the past 60 years of commercial nuclear power generation offer the opportunity for long lasting cost reductions. Many of the smaller designs offer the same kind of volume-based learning curves that have so effectively reduced the cost of weather-dependent collector systems like wind turbines and solar panels.

I agree with Romm on the subject of nuclear energy subsidies. They are unaffordable because nuclear is far too productive to remain a small and emerging technology whose subsidies can be lost in the weeds. At this point, that same statement can be made about wind and solar energy. Subsidies for those systems need to actually phase out this time or they will become ever more unaffordable.

They will also become an increasingly important obstacle to the real goal of cleaning up our electricity generating system and enabling it to grow rapidly to provide an ever larger share of our total energy needs.