Addition of New Nuclear Generation May Mitigate Need to Add Renewable Resources
Congress is currently considering the Waxman-Markey bill, which is intended to reduce greenhouse gas emissions and to promote renewable electricity generation.
The bill, as amended by the U.S. Senate Energy and Natural Resources Committee, excludes electricity generated by new nuclear units or that is the byproduct of improvements in existing nuclear units from the baseline of generation
on which the Renewable Energy Standard ("RES") is calculated. However, new nuclear generation also will not count as renewable generation for purposes of the RES. This system may have the effect of lowering the renewable
mandate for fleets that add new nuclear generation or improve existing units and who therefore reduce reliance on fossil fuel fired generation through displacement.
In the bill, the term “base quantity of electricity” means the total quantity of electricity sold by an electric utility to electric consumers in a calendar year. 16 U.S.C. § 2601, Sec. 610(a)(2)(A). However, several forms of generation are explicitly excluded from the “base quantity of electricity.”
The Senate version of the bill provides an exclusion from the base quantity of electricity for:
electricity generated by a nuclear generating unit placed in service after the date of enactment of this section; or
additional energy generated by an existing nuclear facility as a result of efficiency improvements or capacity additions made on or after the date of enactment of this section.
To be added as 16 U.S.C. § 2601, Sec. 610(a)(2)(B)(iv)(I)-(II).
The base quantity of electricity serves as the denominator against which the quantity of required renewable generation is determined in the RES.
Subject to subparagraph (B), each electric utility that sells electricity to electric consumers for a purpose other than resale shall obtain a percentage of the base quantity of electricity the electric utility sells to electric consumers in any calendar year from renewable energy or energy efficiency.
To be added as 16 U.S.C. § 2601, Sec. 610(b)(1)(A).
Displacing fossil fuel fired generation with new nuclear generation would reduce the base quantity of electricity on which the RES would apply. For example, assume that an uprate at a nuclear unit provides an additional 250,000 MWh annually that can replace baseload fossil fuel generation.
Before the addition of new nuclear generation
250,000 MWh of fossil fuel fired generation * assume 10% RES mandate = 25,000 Renewable Energy Credit ("REC") requirement related to this generation
After the addition of the new nuclear generation
250,000 MWh of new nuclear generation (replacing the fossil fuel generation) * 0 mandate = 0 REC requirement related to this generation
This analysis is based on the bill including amendments through June 10, 2009.