Zero Emissions Certificates
In May 2018, the New Jersey Legislature and Gov. Phil Murphy enacted legislation intended to boost the state’s clean energy economy. These measures included a Zero Emissions Certificate program, which recognizes that nuclear power is a critical component of New Jersey’s clean energy portfolio and an important element of a diverse energy generation portfolio.
In 2018, New Jersey sought to preserve nuclear plants facing financial peril. These plants produce almost 40 percent of the state’s electricity and over 90 percent of its carbon-free power.
To qualify, plants must provide the New Jersey Board of Public Utilities with evidence demonstrating both financial need and significant environmental benefits.
PSEG applied for ZECs for New Jersey’s three nuclear units in December 2018. The documents submitted satisfied all requirements of the ZEC legislation. The company demonstrated that, absent a change in energy market conditions, the plants’ continued operation would not be economically viable without ZEC payments. It also provided assessments that greenhouse gas emissions from generation would increase by 75 percent if the plants were to close.
New Jersey’s law includes consumer protections that are stronger than similar programs in other states. For example, in New Jersey, the BPU may reduce the ZEC payments after the first two years, compared with reviews every 12 years in New York and 10 in Illinois.
The New Jersey program also is less expensive than other states. The value of New Jersey’s ZECs is 40 percent lower than that of Illinois and New York.
Impact on N.J. Clean Energy
New Jersey has set an ambitious goal to achieve 100 percent clean energy by 2050. That includes renewable energy standards that require 50 percent renewable energy by 2030.
Today, 45 percent of the state’s electric generation is carbon-free. The loss of nuclear power today would largely negate the benefits of achieving the 2030 renewables goal.
And while new renewables are developed and deployed, New Jersey would actually see a steep increase in greenhouse gas emissions as fossil fuel plants step in to replace the power previously produced by nuclear plants.
To keep PSEG’s nuclear plants operating requires an investment of $100 million to $200 million every year. The evidence submitted by PSEG proves the nuclear plants’ projected revenues do not support continued investment. It would be irresponsible for PSEG to invest on that scale in a business that is not expected to earn a profit.
This is why we have made the decision to close the plants unless each plant is awarded ZECs.
The nuclear plants produce more than 90 percent of the state’s emissions-free electricity. Closing them would lead to a 75 percent increase in greenhouse emissions from generation.
Replacing the energy output of New Jersey’s nuclear plants with solar energy would mean installing about 70 million solar panels, which would require about 150,000 acres, an area greater than Essex and Union counties combined.
The state is seeking to develop 1,100 MWs of offshore wind, which won’t be operational until the middle of the next decade. It would take 7,000 MWs of offshore wind plus significant storage to replace the energy output of the nuclear plants.
Because solar and wind are intermittent resources, they would also require significant investment in battery storage to deliver the same steady supply.
Many assertions made by intervenors are inaccurate and require correction.
Faulty Price Projections
Intervenors based their analysis on price projections that bear no resemblance to actual prices realized by the plants.
Some intervenors use “peak prices” as the baseline, which artificially inflates revenue. Peak prices are the market’s most expensive prices during peak energy usage times of the day. PSEG’s analysis is based on the more appropriate “around-the-clock” prices, as nuclear plants run 24/7.
Risk Has a Cost
Some claim the plants would break even if we exclude all risks. The risks associated with investing in and operating nuclear plants cannot be ignored; it is not like putting money in a federally insured certificate of deposit.
There are operational and market risks. If a mechanical problem occurs, not only are revenues lost, but there also are costs of making repairs while purchasing the power the plant is contractually obligated to deliver.
There are regulatory risks. After 9/11 and Fukushima, new regulations were put in place that cost the plants more than $100 million. There is legislation intended to protect American uranium providers that could further increase costs. In other words, the uncertainty of regulations breeds risk, which comes with a cost.
Without the nuclear plants, the unfortunate consequences for all New Jerseyans would be higher electricity prices, reduced air quality and reduced fuel diversity.