AMERICA’S GENERATION GAP | NEW BUILD
Left: Completing Vogtle took 17 years and in that timeframe could have been under up to five different administrations Source: Axios
take the risk of the bubble bursting… They have done the analysis and the energy side is a second derivative”. Even investments of billions of dollars represent a relatively small amount, where the big risk is being left behind in the data centre arms race.
Fast action expected on renewables The Biden administration’s Inflation Reduction Act (IRA) incentivised the build-out of wind and solar power, seen as the most economical choice to rapidly expand generating capacity, as well as the least carbon-intensive. The administration (and the IRA) also supported expansion of the US nuclear power station fleet and life extensions for plants already in operation. The Trump administration has replaced the IRA with the One Big Beautiful Act (OBBA), which cuts back radically on supporting renewables, instead stressing the need for “firm, dispatchable” sources of generation. The administration has also cited April’s EO that limits states’ power over energy matters to halt investment in new transmission networks if they are to be used to export renewable energy. The focus on firm power should be good news for the
nuclear industry, and pronouncements from the Trump administration have continued the support already given to the nuclear sector by the Biden administration. However, in an analysis of the likely build-out of all forms
of new generation in the coming decades, Baringa found that while the change from IRA to OBBA had a dramatic effect on some forms of generation, for nuclear it failed to shift the dial at all. The Baringa analysis found that despite the Trump administration’s EOs and the OBBA, which all included measures intended to quash wind and solar generation, the initial effect of the OBBA would be to speed up deployment of these types of generation. That is because the production tax credits that were
mandated to support them by the IRA do not end immediately. After OBBA, the deadline by which wind and solar farms have to be in operation to qualify for credits has been brought forward and the window now closes in around two years, so wind and solar developers are rushing to install projects that were previously due to start up beyond that date ahead of schedule, before the deadline passes.
The result is a short-term boom in deployment, as Baringa’s analysis shows in Figure 1, overleaf. As expected, the OBBA also favoured new gas-fired and
even coal-fired stations. However, that still leaves a gap in the 2030s. Baringa’s analysis found that “despite improved incentives, gas and firm power expansion is insufficient to meet growing energy demand”. It said growing demand, along with retirements in the existing fleet, would leave a gap of at least 100 GW and “Wind and solar therefore have a clear role in meeting demand growth”. The analysis found that the impacts of OBBA included higher annual carbon emissions, even when demand was decreasing, because through the 2030s the change in the rate of retirement results in higher levels of coal and natural gas-based generation on the system. As regards the contrasting legislation, Coleman
characterises the IRA as “decarbonise at all costs” and the OBBA as seeking “firm dispatchable power”. He adds, “The latter pushes back at wind and solar, but leaves alone measures for nuclear.” He believes the evidence is that nuclear “has bipartisan support”. But overall, Baringa found that more wind and solar would be installed in the near term under the OBBA than under IRA and the amount of new nuclear would be unchanged.
Meeting the need for ‘firm’ power Given the bipartisan support for nuclear, and its status as a ‘firm’ source, why is it not top of the list to fill the looming generation gap? Coleman says “Nuclear’s headwinds are not a lack of policy support”. Instead, he lists some familiar issues: cost over-runs; supply chains, new and existing; employment and skills; permitting and licensing; and public perception. Coleman says “The OBBA shores up the economics of the
existing fleet and lays a groundwork for support for new units, but the headwinds are outside federal government support”.
Behind some of these issues are the extremely long lead
time required to build a nuclear unit. That raises questions over maintaining political support: “Look at Vogtle [which has recently started up]. It has taken 17 years and that could have been under up to five administrations. The best case
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