top of page
  • Writer's pictureMATRIX PMO

The US sees lower energy prices, but at what cost?

In 2020, PJM Interconnection, the largest electricity market in the US, saw its lowest history prices at $21.77/MWh, down 20.3% from 2019. While factors like Covid-19 and a mild winter played a role, the main contributor to the decrease was fuel prices.

For clean energy, this is difficult news, especially nuclear, the largest contributor to clean energy in the U.S. Reports show nuclear energy output remained flat from 2019 -2020, and lower fuel costs are threatening shutdowns. “As energy prices have fallen to their lowest levels in decades in 2020, we find it unlikely that any of the nuclear resources in PJM are covering their costs,” a study by Potomac Economics says.

It’s important to look at nuclear as economically viable beyond fuel costs. The US is a leader in innovation and technology. Recently, a group of researchers at MIT published a series of seven papers purporting to prove the viability of a compact nuclear fusion reactor. The development of Small Modular Reactors promises to be cheaper, faster to build, and safer than their older counterparts. To Support Next-Generation Nuclear Power better regulation is needed. A recent letter from Sen. Joe Manchin (D., W.Va.) to the current administration urged them to support the continued operation of the United States’ civil nuclear fleet and prevent further plant closures.

Indian Point Nuclear Power Plant
Indian Point nuclear power plant closes after 59 years of operation.

Many factors contribute to how the US looks at energy production and consumption. Of those, perhaps the most important are cost, reliability, diversity, and environmental sustainability. The push for cleaner energy has caused growth in almost all renewables (wind, solar and hydro). Severe weather has challenged the reliability of certain forms of energy production. While closures have fueled the conversation surrounding diversity in production. But for the most part, the economic viability of energy production still controls how we treat it.

2020 did show that renewable energy is making significant progress. Renewables accounted for almost 20% of US electricity production outperforming coal-fired production, which fell to 19.3%, helping CO2 emissions fall by 2.8% in 2020. But with Nuclear output remaining the same, the majority of US energy production came from Fossil Fuels at 60.3%, with Natural Gas producing 40.3% of all energy production.

A wind turbine sits froozen due to severe weather in Texas . Many forms of energy production were brought to a halt due to Wind, ice/snow and record low temperatures.

This winter severe weather hit Texas, halting almost all energy production including gas-fired power plants. This cost Texas $90 billion, according to Enki Research. However, the majority of Texas’ nuclear power plants remained operational. In this case, reliability played a significant cost factor.

This past month Entergy shut down Indian Point’s remaining reactor (IP3) after nearly 60 years of nuclear power generation. IP3 has been online continuously since April 9, 2019, and maintained the highest levels of reliability, safety, and security. Despite all this, low current and projected wholesale energy prices are reducing revenue and forcing closure. This closure now means that the majority of New York City’s energy is produced from Natural Gas.

Industry leaders expect to see US renewables continue to grow and CO2 emissions fall. But will lower fuel costs continue to hurt the largest contributor to clean energy? It depends on priorities both now and future. We believe that includes Nuclear, as well as other diverse means of production. We fear the closure of nuclear power plants to counter a current issue may lead to problematic issues. If we’ve learned anything from past experiences, the focus should be on keeping Nuclear a part of our energy production in the future.


bottom of page