September Illinois legislators agreed to use up to $694 Million of taxpayer funds over five years in order to maintain several nuclear power plants that are losing money.

The nuclear energy does not emit greenhouse gases, so it is able to contribute to decreasing carbon emissions. But today’s nuclear plants often can’t compete on price against cheaper existing sources of energy, particularly natural gas and government-subsidized renewables.

Illinois negotiations represent a small part of larger discussion about nuclear power plant role in clean energy future.

The operator is responsible for the operation of two of the three nuclear plants in question. ExelonThey had previously filed documents with federal regulators seeking to have them shut down due to financial reasons. Exelon and lawmakers both agreed that the two nuclear plants would be kept open to ensure Illinois’s clean energy goals. Exelon was also willing to maintain the operation of two additional marginal plants within the state.

According to Illinois, the deal was the culmination of many years of hard work and practicality in midwestern America. Deputy Governor Christian Mitchell.

However, not everyone agrees. Illinois gets a much larger percentage of power from nuclear than other statesTo meet state clean energy goals, it would have taken massive investments in renewables. Exelon was in a way the master of the state’s clean energy goals.

Steve Cicala is a nonresident scholar at The Energy Policy Institute at University of Chicago. He referred to an earlier round of subsidies. energy jobs bill in 2016.

They’ll continue to do the same dance if the money runs out.

Exelon Generation, which announced in August 2020 that it was going to close two nuclear power stations in Illinois in the fall of 2021, started the latest fight. Byron was to be closed in September 2021 while Dresden would be shut down in November 2021. Exelon stated that the plants are in good condition. losing hundreds of millions of dollarsAlthough it refused to give exact numbers to CNBC,

Cicala stated that decommissioning papers are like parents securing their keys, saying “I’m leaving …'” when the child doesn’t want the controller or the car.

Offering government subsidies for a company profitable with a market capitalization in excess of $52billion can seem difficult. Total earnings of Exelon $1.2 billion in GAAP profitsExelon Generation was worth $607 million in 2021’s third quarter. However, as is often the case with utilities, its results can vary widely — for the first nine months of the year total, Exelon earned $1.32 billion and Exelon Generation showed a loss of $247 million, both worse than the equivalent period last year.

Exelon argues that it’s unfair to expect it to compete on an open energy market in which carbon-emitting power sources can freely emit their waste into air, while nuclear power stations must follow very specific and expensive waste management guidelines.

However, the legislators were determined to get a bill passed. comprehensive energy billThis will move the state towards 100% clean energy in 2050. These two plants produced nearly 4200 megawatts, and two other nuclear power plants, Braidwood & LeSalle, gave out another 4,700. Here’s a comparison: 1,000 megawatts of energy will power a mid-size cityAccording to Bill Gates’ book, “How to Avoid Climate Disasters,”

This amount of power would need to be replaced with renewables. It required massive amounts of wind and solar construction.

Jason Ryan, spokesperson, stated that the average solar farm size is currently 105 megawatts. For wind, it is 188 megawatts. American Clean PowerCNBC was informed by, an organization that represents the renewable industry.

The state would then have to build about 85 solar farm or more wind farms.

Jack Darin of the Sierra Club Illinois Chapter stated that if the reactors were to be retired immediately, then “renewables would not be available in time for their replacement.” CNBC has learned that the environmental lobby group doesn’t support long-term nuclear power because of its nuclear waste. Darin suggested, however that the construction of new natural gas plants could be more harmful in the long-term.

He stated, “Once a natural gas plant has been built, it is very probable that pipelines will be brought in. These are extremely likely to operate for decades and even decades and emit carbon pollution.”

Exelon Illinois nuclear power plant (except Clinton) are all connected to the Internet. PJMThe U.S.’s largest electricity grid is run by and PJM operates the largest wholesale electricity market in the world. PJM allows power generators to bid in the wholesale market. This ensures that rates are kept as low as possible.

Jeff Shields, spokesperson for PJM said that everyone bids and we then accept offers from the lowest to the highest to achieve the desired capacity.

In the 15 years since PJM was founded, the mix of energy resources has varied. Natural gas is now at 40% and renewables are slightly lower at 6%. The coal consumption has decreased steadily over the years to 19%.

The nuclear rate has been relatively stable at 35%.

While the composition mix of wholesale and retail electricity has been subject to change, it has largely remained the same over the 15-year period, PJM reported.

Cicala believes that the problem lies not in the supply of power, but rather the capability to transport it from rural areas to areas such as Chicago. Today, there’s a surplus of inexpensive wind power in those rural areas — where Exelon’s nuclear plants are located — driving prices down.

If power was purchased for the downtown area, rather than downstate, it would put plants in better financial straits. Cicala suggested that investments in high-voltage transmission can solve this problem.

This is ultimately a problem with too many supply, which depresses prices. By encouraging more supply, the nuclear subsidies try to solve this problem. This is like thinking one more flush will fix an overflowing bathroom.

Exelon’s Barron was not in agreement.

Barron said that while transmission improvements could help with the growth of renewable energy as well as improve reliability on the grid, it would not significantly impact the underlying market or the policy failures that have disadvantageed nuclear operators.

Federal and state policies must recognize nuclear’s carbon-free advantages, as well as the positive environmental effects of solar and wind energy.

In order to allow for a fair debate, Illinois Environmental Protection Agency employed Synapse Energy EconomicsIn January, Exelon will conduct an independent audit on its financial statements.

“Everyone had a baseline of agreement — from the governor, to the legislature, to the environmental groups to our union allies — everyone agreed that we needed to keep the nuclear fleet online. There was only one question: “What support will be sufficient to permit them to continue their operations?” CNBC spoke with Mitchell, the Deputy Governor. CNBC’s Deputy Governor Mitchell said, “That was where the push was.”

A redacted version of the auditCNBC reviewed an edited version that was less redacted. However, none of these reports included a breakdown of each plant’s losses, as CNBC cited proprietary business information. Because energy is traded on a competitive market, there could be other competitors using that information just to barely undercut Exelon.

Max Chang, an associate principal at the firm’s auditing company, stated that Exelon has been experiencing this problem with merchant generators and utilities, making it not unusual. It would be great to have more transparency.

Exelon lost money at its plants, and the independent audit recommended that $350 million be paid to the state.

Exelon opposed the figure, noting that Exelon had left some costs out and that the report was too optimistic about the future direction of energy prices.

Synapse admitted that its energy price projections were incorrect later. Chang said to CNBC, “As it turns… our estimates on capacity prices are not high enough for 2022 or 2023 and that our energy price estimates are low enough for 2021 and perhaps 2022.”

The $694 million figure was within our calculations. This report was not about the highest values, but the 95th percentiles.

The final agreement was agreed upon by consumer protection advocates. David Kolata is the executive director at the Environmental Protection Society. He stated that the best way to combat climate change was to simply build upon what we have. Citizens Utility BoardA non-partisan, nonprofit organization working to defend the consumer’s interests.

Kolata stated to CNBC that it was obvious to people that 100% of clean energy cannot be achieved economically if the existing nuclear power plants are shut down prematurely. He said, “None this is an argument to a blank check Exelon and for nuclear.”

The deal also states that Exelon will apply for federal funds to subsidise existing nuclear fleets. Exelon is required to return all money to Illinois taxpayers.

Bill Cunningham was the Democratic point person for the negotiations and the assistant majority leader of the Illinois Senate.

That could come into play now that the Democratic-controlled Congress has passed President Biden’s infrastructure spending planIt could even be in line to surpass the bigger Build Back Better plan.

Cicala stated that Exelon prevailed by keeping the plants open at the end.

While a nuclear plant may lose money at times, it’s hard to turn on and off — think of it a like a 24-hour convenience store that makes more money at 8 a.m. than it does at 4 a.m.

Cicala stated that 24/7 stores would complain about the loss of money at 4 AM if they had the chance to be subsidized by government. “But there’s option value to holding onto the plant if the economics aren’t working for them right now — look how quickly gas prices can change!”

Chris Crane, CEO of Exelon, celebrated the agreement in the quarter-end financial report. calling the legislation a critical milestone.

Exelon’s Barron reports that the cost of the subsidy to customers is approximately 80 cents per month.

“Even if this bill doesn’t look like what we would write as kings or queens, we have to continue moving forward.” J.C. KibbyCNBC interviewed Jeremy, an Illinois clean energy advocate for National Resources Defense Council.

It was the result of many years of education and organizing. Kibby stated that that the effort culminated in elected officials who realized how serious climate change was. So, as my friend said to me, “You’ve got just got the work to do.”