NEW YORK (Reuters Breakingviews) - Nuclear energy is having an economic meltdown. Entergy, a $13 billion company, just agreed to close a plant 30 miles north of New York City, blaming the low cost of natural gas. More operators are bound to follow suit.
The Indian Point site has generated controversy for decades. A lightning strike at a nearby power substation triggered a Big Apple blackout in 1977. After the Sept. 11 attacks, fears grew that Indian Point could be a target. The partial meltdown of the Fukushima Daiichi plant in Japan ended any political support. New York Governor Andrew Cuomo insisted there was no way to evacuate 17 million people who live in the vicinity.
Entergy, which completed its acquisition of Indian Point just five days before 9/11, has been fighting to renew its license for years. The market ultimately forced a retreat, with the facility's two reactors closing by 2021. Abundant shale gas has driven wholesale power prices down by about 45 percent over the past decade, effectively slashing Indian Point's revenue by some $575 million a year. For Entergy, which is shuttering four other sites, wholesaling nuclear no longer make sense.
Other utilities are reaching a similar conclusion. Five nuclear plants have been shut down in the past five years and companies plan to retire five more by 2025. Toshiba, meanwhile, lost 42 percent of its market value last month after disclosing multibillion-dollar writedowns.
The Tennessee Valley Authority did open a 1.1 megawatt nuclear plant in October, and four other reactors are currently under construction in Georgia and South Carolina. President-elect Donald Trump has said he wants to expand the sector, but also seems more inclined to support fossil fuels. After all, he has tapped former Texas Governor Rick Perry and former Exxon Mobil Chief Executive Rex Tillerson to be in his cabinet.
Putting a price on carbon and allowing it to be traded would ascribe fresh value to the lack of greenhouse-gas emissions in nuclear. Any effort devoted to pushing such a plan at this point, though, probably would be a waste of energy.
(Editing by Jeffrey Goldfarb and Kate Duguid)