Should the U.S. Go Nuclear-Free?

For the second time since the Fukushima disaster and the third time in over 40 years, Japan is entirely nuclear-free. With proponents and opponents battling fiercely over the future of nuclear power in Japan, let's take a look at whether the United States should be nuclear-free.

Japan's nuclear notions
Japan's last operating nuclear plant went offline this week for an inspection, and public pressure has kept any restart date questionable. After embracing nuclear power more than four decades ago, Japanese are split over the future of this energy source.

Prime Minister Shinzo Abe and utilities are all for firing up the nation's 50 idle reactors to keep supply steady and avoid major blackouts. But the general public and environmental groups remain skeptical on nuclear notions, citing everything from general safety concerns to an unprecedented opportunity to embrace alternative energies.

No-nuclear nation
If the United States shuttered its 104 nuclear reactors, 20% of our nation's total electricity supply would immediately disappear. With 20% of that 20% to its name, Exelon's (NYSE: EXC  ) 19,000 MW of nuclear capacity alone would cut 4% of the United States' power.

With the recent rise of natural gas and renewables, a decline in nuclear might not seem so bad. Natural gas has already surpassed coal as our largest source of electricity, and wind power alone is expected to triple capacity in the next three years. Crude oil is a relic of the past for electricity, and we've managed fine with recent coal closures.

Source: EIA.gov 

Fuel sources have come and gone over the past 60 years, and we've still got plenty of power today.

Precedent for a predicament
But survival alone isn't the ultimate goal, and cutting out nuclear may hit closer to home than we think. Even before Edison International (NYSE: EIX  ) announced that it would shut down the remainder of a faulty Southern California nuclear plant, extended outages pushed wholesale power prices through the roof. For more than a year, South Cali prices clocked in 12% higher than North Cali as the area fired up expensive (and more polluting) alternatives to keep power pumping to Los Angeles and San Diego.

Over on the East Coast, Entergy's (NYSE: ETR  ) anticipated closure of its Vermont Yankee nuclear plant pushed up natural gas futures contracts. The day the utility announced the closure of its 604 MW plant, the forward basis swap for January 2015 (the month after Yankee goes offline) increased around $0.50 per MMBtu, an approximate 7% spike.

And that's just for now. New England natural gas generation has jumped from 30% of total electricity in 2011 to 52% in 2012, and nuclear's exit would undoubtedly imply increasing reliance on an increasingly expensive fuel.

Foolish bottom line
If the United States said no to nuclear, we'd be in a tight spot. Nuclear provides cheap baseload electricity with enviable consistency. But there are advantages to a nuclear-free nation. If supportive policy jumps in to save the day, the generation gap could put the U.S. on a fast track to ramping up alternative energies. Duke Energy's (NYSE: DUK  ) recent win for wind energy storage would need a massive influx of R&D to expand beyond a 36 MW battery, and new energy sources like Dominion's (NYSE: D  )  long-term lease for offshore wind would need a timelier timeline than ten years from now.

Our nation would also need to take a hard look at its power system, decentralizing generation via smart investments in smart grid technology. And of course, natural gas would head center stage, paving the way for any utility with capacity to expand generation and transmission operations.

Japan's nuclear-free for now – and it may stay that way. But the United States isn't about to follow suit. Market prices play a bigger role than public opinion, and our nation's energy portfolio will continue to flex to the fuels that provide a present and future balance of consistency and cost.

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Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 20, 2013, at 4:12 PM, HoosierRube wrote:

    I found this to be a 'pipe-dream' analysis. Anybody with a calculator can discover for themselves that depending on solar/wind is fool-hardy at best. The Duke and Dominion contracts are no different than the Solyndra or A123 contracts; foisted upon the American people from a fairly ignorant government. Both contracts were from the Dept. of Defense, yes, yours and mine taxes.

    Here is the only take-away anyone needs; the country with the cheapest energy sources will be the dominant economy. And that energy source will in fact be nuclear.

    China, Russia, India, Qutar and a host of other countries understand that very simple idea. And thats why they are investing in nuclear.

    What you dont want to do is quit pushing forward with a practical and proven technology because of some fairly baseless fears.

    The nuclear industry is by far and away the safest form of energy the world has. Move away from the 'what if this, or what if that' and look at the 40 year history. You'll find it looks very good compared with everything else.

    The question you must ask yourself, can you have technological break-throughs by thowing up your hands and say 'I quit'?

  • Report this Comment On September 21, 2013, at 2:23 PM, GuestPost wrote:

    Nuclear energy only provides 8% of U.S. energy, not 20%.

    Even on the chart you provide by the EIA, it says 8% for nuclear energy.

    Also, see Lawrence Livermore energy chart or just google "nuclear energy 8%."

    The fact is that the U.S. gets only 8% of its energy from Nuclear energy.

    8% of energy could easily be replaced by Conservation and energy efficiency and renewable energy.

    The U.S. actually already uses more Renewable Energy than nuclear energy.

    Please note that Germany produces the equivalent-energy of 40 nuclear power plants with Wind and Solar energy alone! And it's not even sunny in Germany.

  • Report this Comment On September 21, 2013, at 10:38 PM, TMFJLo wrote:

    @GuestPost

    Thanks for the read, nuclear provides ~8% of total energy and ~20% of total generated electricity.

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