Should California keep its last nuclear plant open? The battle is back

Is the Diablo Canyon nuclear plant vital to a clean and reliable grid, or a costly threat to environmental and energy goals? State lawmakers have less than three weeks to decide.

An aerial view of a nuclear power plant near the ocean
The Diablo Canyon Power Plant near Avila Beach, California (George Rose/Getty Images)
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Is Diablo Canyon, California’s last nuclear power plant, so crucial to a reliable power grid that the state should prop it up with $1.4 billion and waive environmental regulations to help it stay open an extra decade? 

Or would extending Diablo Canyon’s lifespan cost too much, cause ongoing environmental harms, increase the risk of radioactive disaster, and betray commitments to replace its power with cheaper renewables and batteries? 

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On Friday, California Governor Gavin Newsom (D) unveiled a legislative proposal that would keep the Diablo Canyon nuclear power plant running until 2035

The plant, which came into operation in the mid-1980s, is scheduled to shut down in 2025, as decided under a hard-fought 2016 settlement agreement. But in the face of heat waves, droughts and wildfires that are supercharged by climate change and putting massive strain on the state’s grid, Newsom has done an about-face on Diablo Canyon. In April, the governor told the Los Angeles Times editorial board that he started having second thoughts about closing the plant in the summer of 2020, when a heat wave forced the state into rolling power outages.

California lawmakers will have less than three weeks to consider Newsom’s proposal. The state’s legislative session ends on August 31. If lawmakers don’t act this year, utility Pacific Gas & Electric, which owns the plant, may miss its last chance to obtain federal aid to help keep it running. 

California regulators last year ordered the state’s utilities and community choice energy providers to procure a massive amount of new battery-backed solar power and other zero-carbon resources to make up for the impending loss of Diablo Canyon’s 2 gigawatts of generation capacity. The plant provides about 9 percent of the state’s electricity and 17 percent of its carbon-free power, according to the draft legislation. 

But the state’s clean-energy buildout has been slowed by widespread shortages of solar and battery equipment and delays in permitting new projects and connecting them to the grid. Recent forecasts by state agencies warn that the state could be 1.6 to 3.8 gigawatts short of its goal of adding more than 13 gigawatts of solar and batteries by 2025.

Earlier this year, lawmakers passed a plan backed by Newsom to direct $6.7 billion in state funds to emergency measures to shore up grid reliability — including $5.2 billion that will most likely end up supporting the use of fossil-fueled generation as a last resort during times of regionwide grid stress. 

Given that losing Diablo Canyon’s round-the-clock energy output could force the state to burn more fossil fuels to make up for it, some would say it’s the righteous and right climate decision” to keep the plant running, Newsom told the LA Times in April. 

The arguments for and against keeping Diablo Canyon running

Newsom’s view is backed by an increasing number of climate advocates who see the value of nuclear power — by far the world’s largest source of carbon-free electricity — outweighing its environmental and cost concerns. 

Steven Chu and Ernest Moniz, both of whom served as secretary of energy under President Obama, have thrown their support behind a study by MIT and Stanford University researchers that indicates keeping Diablo open through 2035 could save the state $2.6 billion in power grid costs and reduce power-sector carbon emissions by 10 percent below 2017 levels. 

Princeton professor and energy-modeling expert Jesse Jenkins, who advocates for keeping nuclear power plants running for their zero-carbon power, told Canary Media in a Friday email that retaining Diablo Canyon preserves a foundation for more rapid clean energy progress. Every megawatt-hour of new clean electricity used to replace polluting fossil-fueled power plants rather than carbon-free generation from Diablo Canyon is a step toward the 100% carbon-free electricity system that California has committed to build.” 

But opponents say these rosy projections, and Newsom’s legislative proposal, are flawed on multiple levels. Rather than saving money, extending Diablo Canyon’s operating life would cost PG&E customers or state taxpayers billions of dollars, they argue. Nuclear power is notoriously expensive and uncompetitive in energy markets, unlike solar, wind and batteries. 

They also warn that extending the plant’s operation would prolong the risk that an accident or earthquake could trigger a release of radioactive contamination. And they fear that relying on the plant for grid reliability will undermine the political will to invest in necessary long-term clean energy alternatives.

Keeping Diablo Canyon open will slow our installation of more flexible, more reliable, lower-cost resources,” said Ralph Cavanagh, co-director of the climate and clean energy program at the Natural Resources Defense Council (NRDC), one of the key parties to the 2016 agreement to shutter Diablo Canyon. It will block the good new stuff — and that’s a big part of the reason why the decision was made to phase it out.” 

Cavanagh challenged the cost-saving assumptions of the MIT-Stanford study and a subsequent study conducted by engineering firm The Brattle Group. A 2016 study by NRDC found the state could save at least $1 billion by closing the plant by 2025.

The difference, he said, is that these newer studies failed to account for the billions of dollars it would cost to rebuild the plant’s cooling system to stop discharging superheated seawater back into the ocean — a violation of state environmental laws that is having dramatic effects on sea life and the marine ecosystem. The violation was allowed to continue past 2018 with the understanding that it would end when the plant closed in 2025

Instead of rebuilding the cooling system, the MIT/​Stanford study calls for building desalination or hydrogen plants that could make use of the heated seawater, potentially lowering the costs of operating those new plants. But the costs and timelines for such projects are highly uncertain, and multiple regulatory approvals would be needed, he said.

Newsom’s proposed legislation deals with that by waiving all the environmental requirements,” Cavanagh said. Newsom’s draft bill would exempt some plant improvements from the California Environmental Quality Act, limiting the scope of environmental impact studies on Diablo Canyon. 

The legislative plan would also offer a $1.4 billion loan to PG&E in the hopes that it could be repaid after the utility accesses a $6 billion federal program to shore up nuclear power plants. The Newsom administration successfully lobbied the U.S. Department of Energy to alter the program’s rules, originally designed to bolster the economics of nuclear plants operating in competitive energy markets across the U.S. East, so that Diablo Canyon could be eligible for a portion of the funds. 

But there’s no guarantee that PG&E would get money from the federal program. In late June, the utility asked DOE for a 75-day extension to apply for the funds; DOE has yet to respond. Under Newsom’s plan, if the company doesn’t get DOE funding, the state would forgive the loan. 

Ken Cook, president of the Environmental Working Group, said in a Friday email to Canary Media, The idea the people of California would give PG&E more than $1.4 billion to help the company keep this decrepit and potentially dangerous facility operating is outrageous and shortsighted.” 

Cavanagh also pointed out that no state agency has yet conducted a study on the plant’s role in maintaining grid reliability. For a multibillion-dollar investment decision like this, you’re entitled to that.” 

While studies like those from The Brattle Group and the MIT and Stanford researchers show a net cost and reliability benefit from extending the plant, other studies, such as one conducted this year by GridLab, Telos Energy and Energy Innovation, showed that the state can achieve its carbon-reduction goals and maintain grid reliability without it. 

But Adam Stein, director of nuclear energy innovation at the Breakthrough Institute, a pro-nuclear environmental think tank, argues that the current utility rate structure doesn’t properly reward Diablo Canyon for the reliability of its round-the-clock power. 

Keeping Diablo Canyon online is one of the easiest and most beneficial things California can do to decrease greenhouse gases in the long term while maintaining reliability,” Stein said. The good work that is being done to deploy additional clean energy in California should be directly offsetting damaging sources of energy such as fossil fuels, not offsetting other clean energy sources like nuclear energy.” 

Cavanagh countered by pointing out that Diablo Canyon’s baseload power doesn’t meet California’s increasing need for peaker” resources that can cover the relatively small portion of hours during the year when extreme heat drives up demand for electricity to power air conditioners at the same time that the state’s solar resources are fading out at the end of the day. These kinds of grid needs are normally solved by contracting for flexible generation or flexible demand,” he said. That’s the kind of resource you need.” 

So many questions, so little time 

Leaving aside these uncertainties over long-term costs and reliability, there’s a more pressing question of whether the plant could earn approval from the Nuclear Regulatory Commission to stay open beyond 2025, when its current operating license expires. 

PG&E submitted a relicensing application to the federal nuclear regulator in 2009 but withdrew it in 2018 after its closure settlement plans were codified in state law. If it were to reopen that relicensing process, PG&E would need to make a number of major investments to keep the plant running past 2025 — and state policymakers would need to address even more concerns about safety, economic impacts and local land use. 

These concerns were summarized by state Senator John Laird (D), who represents the Central Coast legislative district that’s home to Diablo Canyon, during a Friday workshop held by Newsom’s office, the California Energy Commission and state grid operator CAISO

The bottom line is, we are now faced with a situation where everything that would have been done to renew Diablo Canyon’s operations beyond 2025 during these last 16 years” — since PG&E submitted a relicensing application — would have to be collapsed into a three-year window,” Laird said. 

Another major problem is that Diablo Canyon is running out of space to store its spent nuclear fuel. The plant’s spent fuel repository is only large enough to accommodate the waste generated by the plant until 2025,” Laird said. PG&E would need to figure out how to expand that repository — no small task — and how to pay for that expansion. 

Laird also highlighted the uncertain cost of maintenance at the plant that’s been deferred since the shutdown deal was reached in 2016, as well as the challenge of retaining a skilled workforce to operate it past 2025, given that a number of workers there have made their retirement or career decisions based on that date.” 

How will we know who pays and how much before we make a decision to go forward?” he asked. Will state taxpayers through the general fund pay? Will federal dollars be accessed to pay back the state general fund cost? Will utility ratepayers pick up the tab?” 

There’s also the No. 1” issue of safety, Laird said. Fears of Diablo Canyon’s susceptibility to earthquakes have dogged the plant since it was first proposed in the late 1960s. Anti-nuclear activists and Central California communities near the facility have long complained that PG&E’s studies of the plant’s durability in the face of earthquakes or tsunamis are flawed and have not been reviewed by a neutral third party. 

Ana Matosantos, Newsom’s cabinet secretary and energy czar” who is stepping down at the end of August, said during Friday’s workshop that the Diablo Canyon proposal, much like earlier decisions to provide billions of dollars to keep gas-fired power plants running, is a last resort when we look at every tool that’s available to ensure that we retain reliability in the course of our energy transition.” She said that any extension of the nuclear plant’s operating life needs to be as short as possible” and must be as affordable and low-cost as possible” to residents, and that safety is first” among the state’s considerations. 

A global nuclear debate — and a local nuclear conundrum

Nuclear power is an immensely polarizing subject for climate activists around the world. This polarization was evident in Friday’s workshop on Diablo Canyon, with public commenters speaking vehemently both for and against extending the nuclear plant’s life. State residents have also filed hundreds of public comments about the issue with the state energy commission. 

Many environmental groups have spent decades opposing nuclear power, but in recent years some have softened their stances as they’ve recognized how hard it will be to cut carbon emissions enough without retaining the world’s largest source of carbon-free electricity. Japan and Germany, which moved to shut down their nuclear fleets after the 2011 Fukushima nuclear disaster, have both begun to consider keeping plants open longer or restarting plants in the face of fossil fuel shortages and spiking energy prices. 

In the U.S., states including New York, New Jersey and Illinois have passed laws that offer economic aid to struggling nuclear power plants. The Biden administration’s clean energy policy has directed considerable help to the U.S. nuclear power industry, from $6 billion in assistance in last year’s infrastructure law to a production tax credit for nuclear power in the recently passed Inflation Reduction Act.

Nuclear has to be part of the array of clean energy technologies” to meet the Biden administration’s goal of zero-carbon electricity by 2035, Energy Secretary Jennifer Granholm said in a Sunday interview on CNN. That includes keeping the existing fleet online as well.” 

Recent polling indicates an increase in support from California residents for extending Diablo Canyon’s life, a shift from decades past. But skeptics contend that Diablo Canyon’s particular challenges and risks make it a poor candidate for government support despite the pros of nuclear power overall. 

What happens next?

It’s unclear how California lawmakers will respond to Newsom’s proposal. Rob Rains, an analyst with Washington Analysis, said that his conversations with state lawmakers lead him to believe that they will support the proposed legislation because reliability is an issue right now in California and because they don’t want to be perceived by voters and ratepayers as a contributing factor if things get worse.” 

State Senator Josh Becker (D), who as chair of the Senate Subcommittee on Clean Energy Future held a hearing last week on the state’s grid reliability, told Canary Media on Friday that Diablo is something we do need to look at” as one of all options on the table” to improve grid reliability. But he also cited cost, deferred maintenance and safety as complicating factors. 

We’re certainly not going to do it at any cost,” he said. We should only spend billions” if there’s a clear path for those costs to pay themselves back in improved reliability and carbon reduction in the next decade.

PG&E itself has not taken a side in the debate. PG&E spokesperson Lynsey Paulo said in a Friday email that the utility is committed to California’s clean energy future, and as a regulated utility, we are required to follow the energy policies of the state.”

PG&E is not in a position to push back against decisions from a state government that has played a central role in its continued existence. The utility was forced into bankruptcy in 2019 after its power lines sparked a wildfire that killed 86 people, the state’s deadliest blaze to date, and has relied on state lawmakers and Newsom’s office to backstop its exit from bankruptcy in 2020.

Cavanagh argued that state lawmakers should stick with the commitment made in a 2018 law to ensure that Diablo Canyon is replaced by a mix of carbon-free resources by the time it’s shuttered. Those resources include solar and wind power, batteries to shift that power into hours when the grid needs it, geothermal plants to provide round-the-clock electricity, energy efficiency and demand response to reduce or shift electricity use away from times when the grid is under the most stress, and new market constructs and transmission lines to expand the sharing of power across the U.S. West.

It’s not clear whether California can successfully build this mix of resources quickly enough to stabilize the grid. Recent projections from the California Energy Commission and CAISO indicate that, even with the recent grid-reliability measures enacted via executive order and legislation, the state could face significant gaps in meeting its forecasted grid-capacity needs. 

But Cavanagh asserted that one reason California is facing a potential reliability crisis is that state regulators haven’t moved aggressively enough in years past to meet the clean energy goals called for in state law. It can still meet them if it moves aggressively enough now, he argued. 

If the legislature does not pass this bill, then the Diablo Canyon [shutdown] agreement will go forward, and everyone can double down on replacement with clean resources,” he said. If the bill passes, there’s a massive distraction standing in the way of progress, and the false impression that a long-term reliability problem has been solved.”

Jeff St. John is director of news and special projects at Canary Media.