The US Nuclear Regulatory Commission (NRC) is considering an application to extend the life of California’s only remaining nuclear power station, PG&E’s 2250 MW Diablo Canyon. For several years the two reactor plant’s fate seemed likely to be very different; in 2016 an agreement had been made to close the plant this year or next, before its current operating licence expired. For PG&E the closure was because the plant would be pushed out of the merit order by new renewables; others saw it as a victory for protest, amid public concern over the proximity of the plant to a seismic fault.
Diablo Canyon is just one example of the uncertainty that exists in some countries over the fate of individual nuclear stations and indeed entire nuclear programmes in the US, Europe and beyond. This is a hugely important issue for countries and nuclear operators: as well as making it hard to get new plants or programmes into operation, uncertainty raises costs for all parties. This uncertainty has been investigated by researchers in recent years. They suggest that rather than being determined by economic arguments, the outcome is hugely influenced by external factors, especially the political mood and governance structures that ensure an open political debate that results in an enduring outcome – whether for the industry’s good or ill.
Contrasts in European nuclear policy
A 2020 paper by Phil Johnstone and Andy Stirling (Comparing nuclear trajectories in Germany and the United Kingdom: From regimes to democracies in sociotechnical transitions and discontinuities, published in Energy Research and Social Science), investigated the “starkly differing” nuclear policies of Germany and the UK.
Germany committed to phasing out nuclear by 2022 – and did so – while the UK has an ambitious nuclear construction programme. The paper asked why they had such divergent strategies and the authors found that considering ‘internal’ aspects – industrial base, need due to demand growth and the like – tended to predict that the UK would be more likely to phase out nuclear; only what they called ‘external’ aspects – politics and consensus building – reflected the actual final outcome.
Germany confirmed plans for a complex shift towards a decentralised low-carbon energy system with no nuclear power in 2011. They found that ‘internal’ issues (economic conditions, strength of respective nuclear industries and resource potentials for rival technologies) would suggest that the UK would be more likely to phase out nuclear than Germany, but “this is the opposite of the actual picture”.
Germany’s nuclear programme was bigger than that of the UK. It had 17 large reactors producing a quarter of domestic electricity, and although the UK also had 17 reactors, they provided only 18% of electricity (and to a smaller national system). Germany was also more successful at maintaining high load factors across its fleet.
As well as providing lower output, the UK nuclear industry had a smaller onshore supply chain, had received less government investment and had not been able to build an export industry (except for two early units). At the same time, the UK had an enormous renewable energy resource, especially wind, and in previous decades it invested in a wind supply chain.
The authors concluded that it is in fact ‘external’ issues like political culture, non-energy policy-related interests and the general qualities of ‘democracy’ that made nuclear phaseout more likely in Germany.
The authors describe Germany as “a paradigmatic example of a ‘coordinated economy’ with relatively strong state intervention in policy“ and close alignment and planning between publicly-owned financial institutions and industry (which again might favour retaining a nuclear industry). The UK, by contrast, is a ‘liberal-market economy’ displaying generally less state intervention and coordination, which privatised its energy industry early.
The authors do suggest that Germany’s position at the centre of Europe with many interconnections may make it more confident about a nuclear phaseout than the
UK, which has fears over security of supply (although UK interconnections are increasing).
Nor was there initially overwhelming public support in Germany for a phaseout. The authors say that for a long time patterns of public opinion “give little basis for considering Germany to be markedly more anti-nuclear than the UK”. But “although public attitudes in the two countries… were not very different, a significantly larger and more active grassroots opposition movement formed in Germany than in the UK.”
The authors say that “Germany displays a generally more deliberative style of politics than the UK,” with ‘negotiation’ to produce a shared vision. The 2002 German Nuclear Exit Law was based around four years of negotiations between diverse interest groups. In contrast, the UK has an ‘adversarial’ political system.
The UK’s centralised political system “contrasts strongly with the decentralised German system”, where there is substantial political power at the regional level.
The proportional representation system made it easier for Germany’s Green Party to win seats in parliament and a coalition government with the Social Democratic Party (SDP) in 1998 was pivotal in implementing the German Nuclear Exit Law of 2002.
That was not necessarily the outcome of the national conversation. The authors note that Finland is another European country with prominent participation by the Green Party in political life – including service in government.
But this has not affected the status of Finland as one of the few countries in Europe that is still constructing new nuclear power. In any case, the prominence of a counter-incumbency party like the Greens cannot easily in any setting be entirely divorced from the wider issues discussed here concerning ‘qualities of democracy’.
The authors considers particular events, such as German regional elections where Chancellor Angela Merkel was vulnerable to losing votes if she did not reaffirm a nuclear phase-out previously agreed. But that decision was taken within a broader long-run picture of trends and pressures across a range of economic, political and technical issues, among them the countries’ low-carbon pathways.
They say that the criteria that are relevant are a range of issues that might broadly be characterised as the ‘qualities of democracy’ – general governance institutions, political discourse and representational processes and practices.
Diverging fates in the Northeastern US
Two other authors compared the fates of two plants in the USA: Vermont Yankee and New York State’s James A. FitzPatrick (Geographical political economy of nuclear power plant closures, by Angelica Greco and Daisaku Yamamotu, published in Geoforum in 2019).
The two plants are separated by just 250 miles are in the northeastern USA. But Vermont Yankee’s owner Entergy carried through closure plans announced in 2013 that saw the plant stop operating the following year, although at the time the plant could cover 35 per cent of the state’s electricity needs.
The plant had won a 20-year licence extension from the NRC but it also needed approval from the State of Vermont to operate beyond 2012. The company sought the necessary Certificate of Public Good but instead came to an agreement with the state that allowed operation only into 2014. The company blamed economic factors, notably the lower cost of electricity provided by competing natural gas-fired power plants – these might correspond to the ‘internal’ technical factors discussed in the paper on Germany.
The James A. FitzPatrick plant also won an extended licence from NRC, which allowed it to operate until 2034. After several changes of ownership, Exelon acquired the plant from Entergy when the latter announced it would not operate the plant after 2016.
The paper’s authors note that causal factors in closure decisions include factors such as structural shift in demand, recession, import penetration, technical change, loss of market share, takeover or merger and locational difficulties. But the authors also looked outside these arguments.
They take account of the geographical political economy and consider the role of key state actors and how they use global and local themes, such as the nuclear disaster in Fukushima, climate change, corporate accountability and regional economic conditions. They look to socio-spatial ‘moments of closure’ processes rather than enumerating underlying factors, and how the owners used those ‘moments of closure’.
Now James A Fitzpatrick is part of Constellation Energy and the company has placed it firmly in the context of climate effects and its role in both helping consumers ‘ride through’ climate events and helping the fight against climate change.
In a recent press release it said, “As the country endured yet another brutal summer of extended heatwaves and extreme weather brought upon by climate change, Constellation’s carbon-free clean energy centers ran at nearly full power. The company’s 21 nuclear reactors at 12 sites from the Midwest to the Mid-Atlantic and Northeast operated at a 98.1% capacity factor during the months of June, July and August to keep the lights on and air conditioners humming 24/7 for nearly 15 million homes and businesses.” It added that “Constellation’s clean energy centers remain indispensable assets providing reliable and affordable carbon-free energy to American homes and businesses”.
Diablo Canyon
In 2023 Sara Nelson and M V Ramana examined the changing fate of Diablo Canyon in Managing decline: Devaluation and just transition at Diablo Canyon nuclear power plant (published in Environment and Planning).
The authors list political and economic factors contributed to PG&E’s motivation to pursue a negotiated transition: the cost of installing cooling towers, the difficulties of integrating Diablo’s baseload power into a renewables-dominated grid and a declining ratepayer base due to the proliferation of Community Choice Aggregators (CCAs). They say, “These factors shaped both the economic pressures on the plant and the power dynamics that demanded a negotiated solution”.
An agreement signed in 2016 would see the plant retire by 2025, and Nelson and Ramana say its development had “been widely upheld as a model of ‘just transition’ linking labour, community, and environmental concerns”. It involved compensation for affected workers and communities and a commitment to replacing the plant’s capacity with renewables and energy efficiency. Nevertheless, on 31 August 2022 California’s legislature voted to keep the Diablo Canyon Nuclear Plant online until 2030 and, what is more, offer a US$1.4bn loan to operator PG&E for the cost of permits. Uniquely, in March 2023, the US Nuclear Regulatory Commission allowed Diablo Canyon to remain in operation through its licence expiry date on current licences and during an application for licence renewal.
Nelson and Ramana are largely concerned with the 2016 Joint Proposal to retire Diablo Canyon as a novel solution to the problem of devaluation of expensive assets. They say, “As devaluation of energy assets becomes an increasingly- prevalent reality of transition trajectories in many jurisdictions, and as just transitions strategies are pursued by various stakeholders, such negotiated devaluations may offer an emerging strategy for asset owners to manage reputational and material risks through the devaluation process.”
But they also argue that the potential reversal of this proposal “demonstrates the political contingency of devaluation and of associated negotiated transitions”.
Diablo Canyon’s prospects started changing in 2021, when several high-level nuclear officials, including two former Secretaries of Energy, publicly supported keeping the plant running even after 2025. In 2022 two opponents – Governor Gavin Newsom and Senator Diane Feinstein – also reversed their positions and publicly supported continued operations. The Biden Administration’s offer of up to US$6bn in subsidies also pushed California’s lawmakers to abandon the Joint Proposal.
The authors said that “the plant’s economic viability is a continued site of struggle among diverse environmental and energy agendas. These changing political forces and economic incentives are changing PG&E’s calculations… demonstrating the political contingency of devaluation and associated negotiated transitions”.
Some of the plant’s technical challenges – for instance, relating to the position of nuclear energy in the state’s overall energy mix – were shaped by its political context. The state’s increasingly-ambitious renewables requirements led PG&E to conclude that a large baseload power plant would in the future be a liability rather than an asset. This is why PG&E decided to pursue a political solution. The strong ties of labour and environmental organisations to Democratic state leadership set the overall context in which the utility felt obliged to pursue a negotiated approach – but also, under California’s regulated market it could to recover the costs of the deal from ratepayers.
The authors argue that it was a change in political dynamics that gave PG&E the option of pivoting to use public funding to support continued operation.
Ultimately, Diablo’s future – and those of similarly-large, contested energy assets – will depend on how policymakers react to decarbonisation needs, grassroots pressure and actions by incumbent industries. The uncertainty is greatest with facilities that involve massive fixed-capital investments, of which nuclear power plants are just one example. Others large energy assets that may also face this uncertainty include pipelines or liquified natural gas terminals, for example.
The authors say that sustained grassroots pressure and powerful labour and environmental groups can narrow the exit path for an asset owner, with material benefits for stakeholders affected by transitions. However, they describe the example of Diablo Canyon as an “asset-owner-driven negotiation,” suggesting that too strong a presence from the incumbent can make the outcome more fragile with regard to other stakeholders. They say, “As asset owners seek to mobilise just transition tactics to proactively manage declining assets without shifting fundamental power relations, their control of the process may limit the dimensions of justice that can be affirmed and produce unstable coalitions that may undermine trust in the negotiated process”.
For the authors, “This raises strategic questions for grassroots actors demanding just transitions”. Similarly, it raises questions for the owners of large assets such as nuclear power plants. In a public conversation about the future of their asset, how much influence is enough to educate other stakeholders, without making them feel they have been pushed towards a particular outcome? How much should owners talk about economic and technical factors, and how much should they try to take advantage of ‘moments’ that could override some of those arguments? And what can they learn from other national policies about whether they have to convince a multitude of local stakeholders, or just one key political decisionmaker?
