I expect that Thanksgiving tables across the state were full of interesting conversations this year, with a presidential election just three weeks before and lots of change looming on the horizon.
Some conversations likely expressed optimism about America’s future, while others expressed something more like “Bah humbug.” However, one topic that is always highlighted and wished for this time of year is world peace. Given recent global conflicts that have been raging and the turmoil in our own country, there is a real need for everyone to add this to their Christmas wish list.
It has happened before. There was a Christmas truce in 1914 during World War I, where for a brief time on Christmas Eve and Christmas Day, soldiers stopped fighting in the trenches with reports of impromptu soccer games, a day of ceasefire and fellowship between enemies who were shooting at each other the previous day.
After world peace, the next item on my Christmas wish list is a common-sense national energy policy, one that balances affordability and reliability with environmental responsibility. For too long, our energy policy has been unbalanced, and we have seen the erosion of affordability and reliability in our nation’s electric grid.
National policy has continued to apply disincentives to traditional and reliable baseload power generation resources while applying incentives to renewable resources. This disturbs the reliability equation and tilts electricity markets to increased overall cost and power shortages. Most Americans don’t know that they actually get two power bills these days — one the cooperative sends you monthly and one the IRS sends you every April 15.
What am I talking about? Renewable energy subsidies that are funded by your taxes. The U.S. spent $7.4 billion in 2016 on intermittent energy subsidies, and that increased to $15.6 billion in 2022, with a total of $84 billion over that period. The U.S. fiscal year 2024 budget, created before the Inflation Reduction Act (IRA), included another $145 billion in intermittent energy subsidies over the next 10 years. The fiscal year 2025 budget (post IRA) showed that number increasing to $1.1 trillion.
To show the imbalance, nuclear energy received $415 million in subsidies in 2016 and $390 million in 2022, for a total of $2.8 billion over the entire period. While both renewable and nuclear sources produce low-carbon energy, they are fundamentally different. Nuclear is highly reliable while renewable resources are by design, intermittent. See recent headlines about Germany’s “dunkelflaute,” a high-pressure weather system that caused the wind to stop blowing, for a prime example.
The dunkelflaute effect was a sudden reduction in renewable energy and a heavy reliance on fossil generation — about 95% — to keep the lights on. This resulted in wholesale electricity prices spiking to about $800 megawatt hours (MWh). Compare that with average U.S. prices between $30 MWh and $40 MWh. Germany’s unbalanced energy policy, caused by closing coal and nuclear plants and replacing these resources almost entirely with renewable energy sources, has caused them long-term economic harm. The availability and cost of energy drives a national economy. Germany’s new “normal” industrial energy prices are double that of the U.S. and China, Germany’s competitors.
As we look to the future, I do believe that the new administration’s focus on energy will bring balance to American energy policy. I think there will be increased focus on reducing regulations and restrictions on reliable and controllable baseload power sources like nuclear and natural gas, and possibly slowing down retirements of reliable coal plants that still have remaining useful life. This effort is needed if we are going to address the national need for more electricity.
Let’s face it, a lot of things on America’s Christmas list require electrical power. Every new app on your iPhone, hotel and flight reservations made online, pictures stored in the cloud, series streamed on Netflix, video games played on Xbox, selfies or videos posted to social media all require data centers.
Data centers require a lot of power. The advent and growth of Artificial Intelligence (AI) has only accelerated this need for power, and so has the desire to bring jobs and manufacturing back to America. There is a clear and present need for more always-available power generation in our country.
Clearly big tech companies have figured this out. Google is signing deals with Kairos Power for new small modular reactors (SMRs). Microsoft has made a deal to restart Unit 1 at Three Mile Island. Amazon is investing in SMR technology with X-energy. Meta (Facebook) was close to a nuclear deal when the project was canceled due to discovery of a rare bee species on land it intended to use for the project.
Why are all these tech companies suddenly abandoning their all-renewables-all-the-time approach from the past? The answer is simple: The amount and reliability of power needed is unachievable any other way, and nuclear still addresses their carbon goals.
So, what is on your Christmas wish list? Whatever it is, I hope that you get what you wish for. We wish you a very merry Christmas and a happy holiday season this year.