Expanding Nuclear Energy s Value Proposition

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1 Expanding Nuclear Energy s Value Proposition Daniel Lipman Vice President, Supplier and International Programs Nuclear Energy Institute August 21, 2015 NuScale Exposition August 20-21, 2015 Corvallis, OR

2 Overview Nuclear energy s value proposition Maintaining 20% share of U.S. electricity production Nuclear. Clean Air Energy Regulatory and policy priorities

3 Maintaining Nuclear Energy s Market Share Extending production at existing reactors with license renewals through 80 years New reactors at Watts Bar 2, Summer and Vogtle Small reactor design approval and deployment Advanced reactor design innovation

4 Impacts of Losing Electricity Diversity $93 billion increase in cost of electricity per year 25% increase in retail power prices, along with increased price volatility $200 billion reduction in GDP each year due to higher electricity prices 1 million fewer jobs resulting from lower GDP $2,100 increase in electricity costs per year for the typical household

5 Nuclear Energy s Economic Impact 100,000 workers $40 billion-$50 billion in annual electricity sales $14 billion annually injected into U.S. economy $8 billion in tax revenues generated at local, state and federal levels

6 Nuclear Energy Replacement Scenarios If all U.S. nuclear capacity retires at 60 years New Nuclear Capacity Needed to Maintain 20% Existing Nuclear Capacity 100 GW (16.4% of U.S. electric supply) 72.4 GW (11.4% of U.S. electric supply)

7 Nuclear Energy Replacement Scenarios If all U.S. nuclear capacity retires at 80 years New Nuclear Capacity Needed to Maintain 20% Existing Nuclear Capacity 104 GW (17% of U.S. electric supply) 104 GW (16.4% of U.S. electric supply)

8 Industry Policy, Regulatory Priorities Reducing cumulative impact of regulation across the industry, reducing NRC staff/budget Efficient licensing for new reactors Improving market conditions for at-risk reactors Aggressive nuclear trade policy - Export-Import Bank reauthorization - Bilateral trade agreements with China, South Korea, etc. Comprehensive nuclear fuel management policy

9 Nuclear Energy s Solid Value Proposition Safe, Reliable Electricity 24/7 Plus Supports Grid Stability Provides Price Stability Runs When Needed (Fuel on Site) Provides Clean Air Compliance Value Contributes to Fuel and Technology Diversity (Portfolio Value) Avoids Carbon Emissions Anchors the Local Community: Jobs, Tax Base

10 Nuclear s Economic Challenges Lack of a coherent federal energy policy and market rules Policies that subsidize and incentivize certain clean sources over others Increase in low-cost natural gas production Transmission challenges Cumulative impact of regulation

11 $28.22 Lowest-Cost Nuclear Plants (Lowest 25%) $42.53 Average All Existing Nuclear Plants The Cost of Replacing Nuclear Generating Capacity ($ per MWh) $49.81 $50.10 Single-Unit Nuclear Plant New CC ($4.00 gas) $53.70 New CC ($4.50 gas) $57.30 New CC ($5.00 gas) Sources: Nuclear plant costs are averages from Electric Utility Cost Group. Cost for single-unit nuclear plant is average for seven small (approx. 600 MW) nuclear plants like Kewaunee, Vermont Yankee. Gas-fired combined cycle plant costs from NEI financial model: Debt at 5.0%, 15% return on equity, debt/equity structure of 50/50. Capital, O&M and fuel cost assumptions for natural gas are from the Energy Information Administration s Annual Energy Outlook CC = combined cycle. The Kewaunee power plant needed much less than the cost of a new [gas-fired combined-cycle plant] to cover the costs of continued operation. - The Value of US Power Supply Diversity, IHS Energy, July 2014

12 Treatment of Nuclear Energy In EPA s Clean Power Plan Without nuclear energy, the Clean Power Plan s carbon reduction goals will be difficult, if not impossible, to achieve and sustain EPA provides compliance value to new reactors and uprates completed since 2012 License renewals not included in compliance plan EPA s best system of emission reduction does not include nuclear power plants, but larger CO2 reductions and mass-based system will provide value

13 Preventing Electric Sector Carbon Emissions U.S. Electric Power Industry CO 2 Avoided Million Metric Tons 2013 Nuclear Hydro Wind Geothermal Solar Wind 13.4% Nuclear 63.3% Hydro 21.2% Source: Emissions avoided are calculated using regional and national fossil fuel emissions rates from the Environmental Protection Agency and generation data from the Energy Information Administration. U.S. Carbon-Free Electricity Sources 2013 Solar 0.7% Geothermal 1.3%

14 SMRs, Other Emerging Reactor Designs NEI develops small reactor roadmap to guide industry development and deployment Efficient, disciplined regulatory process imperative to success SMR developers partner with potential customers Generation IV development underway

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