In Nuclear Now? Part 2 Bryce reports,
“It’s important to note that one of the biggest challenges facing new nuclear in the US are the subsidies for alt-energy, which dwarf those given to hydrocarbons and nuclear power.
As I reported last September, the solar and wind sectors are gorging on federal tax credits. As seen above, in 2022, solar energy producers got about 300 times more in federal tax incentives per unit of energy produced than nuclear producers. Wind energy producers got 70 times more. Those massive subsidies are driving the spending on the grid.”
The problem Bryce identifies goes beyond holding back development of nuclear power generation of electricity. Subsidies in the US – from the IRA to roof-top solar -- are mis-applied in that they are directed at _investment in_ zero CO2 emitting output rather than the _value of output_ itself. These subsides are not a good “second best,” do not mimic well, the “first best” policy which is to tax the net emission of CO2[1] (and methane).
Among the ways that current policy in mistaken is that it cannot account for the changing value of electricity generated as these constantly vary with changing marginal costs such as solar and wind intensity as well as value to users. The marginal cost of generating a Kilowatt-second of electricity depends on the solar intensity or none or wind velocity or none at a specific place at a specific time of day and season. A tax on net emissions provides the incentive for producers and users to contract for (and regulators to allow) the more efficient pricing structures.
There IS a case for differentially subsidizing the output of net zero CO2 emitting technologies as a way of subsidizing R&D; the costs of not all new technologies will fall equally. Making that differentiation, however, is tricky as we cannot know how technologies in the future will develop. In light of this fundamental ignorance highly deafferented subsides should be suspect. And one of the advantages of linking subsidies to value of output instead of investment is to make the differentiation transparent.
[Standard bleg: Although my style is know-it-all-ism, I do sometime entertain the thought that, here and there, I might be mistaken on some minor detail. I would welcome comments on these views.]
Image Prompt: three donkey carts labeled “Nuclear” “Solar” and “Wind” pulled by donkeys with a carrot dangling in front of each.
[1] It is worth saying again what “taxing net emissions of CO2” means in practice. It is an excise tax on the first sale of a carbon-containing fuel in proportion to the carbon it contains. Activities that permanently remove CO2 from the atmosphere would receive the same payment per carbon atom sequestered as the tax levied on the fuel.
A country that imposes such a tax to reduce the net emissions from its territory would logically impose a fee on the import of goods (in proportion to their CO2 content) produced in jurisdictions that do not have a similar tax. The fee not only makes the tax more effective in guiding use decisions, but also creates an incentive for other countries also to adopt this lowest-cost means of achieving climate goals.
Having an "objective measure" that includes other things than just money - i.e., an open mind to other viewpoints of what value is -- like having a perception / "feeling" towards another person.
I've done some math on subsidies, though it is simplistic. Using data from EIA's "Federal Financial Interventions and Subsidies in Energy in Fiscal Years 2016–2022" nuclear subsidies were worth $0.0549 per terawatt-hour of energy produced. On the other hand, wind and solar were $2.3947 and $6.8382 per terawatt-hour. Those numbers are the total subsidy reported by the EIA, divided by the energy each source produced.
What that tells me is that the government spent about a nickel for every TWH produced by nuclear, but over $2 and $6 dollars, respectively, for wind and solar. During that same period, 2022, capacity factors for each of those sources were 92.8%, 34.4% and 24.4%.
Are you familiar with J. Conca's paper, "How to compare energy sources—Apples to apples," published Jun 15, 2023 in Nuclear News? It compares sources in an unsubsidized fashion, and is actually surprising (I thought) in its results. Of course, Conca's assumptions are subject to change, which would of course impact outcomes. But overall, his numbers are reasonable. If you'd like a copy, please contact me at butternuts@cox.net.