Valuing Nuclear Assets in A National Energy Review

President Obama in January directed the heads of nearly two dozen federal agencies to create an integrated review of U.S. energy policy “in the context of economic, environmental, occupational, security, and health and safety priorities.”

The task force is charged with developing “integrated guidance to strengthen U.S. energy policy,” building on the administration’s Blueprint for a Secure Energy Future and Climate Action Plan. The first of the quadrennial energy reviews is due this coming January. It will be updated every four years thereafter, if future administrations continue with it.

Quadrennial might sound like a old European dance (that’s a quadrille), but it’s a kind of roadmap timed to occur near the mid-point of an administration’s term. Even if the review is based on administration priorities that the next president does not follow, it will encourage continuity and transparency in energy policy.

Public comments were due October 10. NEI submitted a few, focusing on several points, including the review’s focus.

[T]his first-ever review will focus on energy infrastructure and will identify the threats, risks, and opportunities for U.S. energy and climate security, enabling the federal government to translate policy goals into a set of integrated actions.

And NEI’s response:

Although DOE has indicated that the first edition of the QER focuses on infrastructure, NEI does not believe it is possible or prudent to separate delivery from supply and production, particularly in the electric sector. It is not possible to examine transmission of electricity or natural gas in isolation without also examining, for example, the number and locations of the power plants that might need natural gas.

Of course, NEI is most interested in the role of nuclear energy in the electricity market, but not considering energy generators impacts them all, denying them the value they bring to the marketplace. An energy review that ignores this risks being of limited use.

Sound competitive market design should follow basic economic principles and begin with a systematic inventory of the attributes of the various forms of electric generating capacity that have value to the grid. Then the competitive markets should develop mechanisms to provide compensation for those attributes. Unless and until these attributes are recognized and priced, markets run the risk that they will gradually disappear.

Some of those attributes are obvious for nuclear energy: carbon-emission free, non-stop baseload energy that can be very inexpensive to run. NEI’s response expands on several of these qualities, notably how nuclear energy fulfills the energy review’s specific concerns:

Affordable, clean, and secure energy and energy services are essential for improving U.S. economic productivity, enhancing our quality of life, protecting our environment, and ensuring our Nation's security.

With a tweak here and there, this could be the mission statement of the nuclear energy industry. We’ll see how the final report goes when it emerges in January.