Dive Brief:
- A new analysis by Resources for the Future finds the U.S. Department of Energy's proposed cost recovery rule to support coal and nuclear facilities would cost more than $250 billion over a quarter century and result in 27,000 premature deaths.
- The proposal, which would delay the retirement of approximately 25 GW of coal-fueled capacity and 20 GW of nuclear, only generates net-positive results for the American consumer when the coal plants are left out of the rule.
- Late last month, FERC Acting Chairman Neil Chatterjee sketched an “interim plan” demonstrating a potential path forward, granting temporary cost recovery to at-risk plants through a mechanism similar to existing Reliability-Must-Run tariffs.
Dive Insight:
As Chatterjee lays out a plan to support struggling coal and nuclear plants, the industry continues to debate whether to support the aging generating plants, and at what costs.
While supporters of the plan say struggling coal and nuclear plants are needed for system resilience, opponents say grid stability is not at risk and aiding the unprofitable resources will cost consumers on multiple fronts.
Total subsidies required to guarantee profits for coal and nuclear generators in 2025 would come to $7.6 billion, according to a white paper released by Resources for the Future.
But if the policy is in effect from 2020 through 2045, researchers say it will result in 27,000 premature deaths in the United States, with an estimated total net cost of $263 billion. Of that amount, about $217 billion is attributed to environmental damages and about $45 billion to non-environmental net costs.
The research concludes the policy’s net non-environmental cost for electricity end-users over 25 years is $72 billion and its net benefit for generation owners is $28 billion. A scenario preventing the retirement of just nuclear capacity, leaving aside coal resources, "is the only simulated variation that produces positive net benefits," according to the paper's abstract.
"Those nuclear-only versions are also consequently the only ones that produce positive net benefits," the paper concludes. "In contrast, a version that applies only to coal-fueled generators produces higher emissions and a greater reduction in net benefits than does a policy that applies to both coal- and nuclear-fueled generators."
The rule, if implemented, would be in response to a Notice of Proposed Rulemaking issued by DOE in September that called for full cost recovery for merchant power plants with 90 days of fuel supply onsite. A Sierra Club analysis previously concluded the rule would cost up to $14 billion in 2016.
