The existing nuclear fleet, and the zero-carbon, baseload power it produces, will play an integral role in the transition to net-zero emissions. Support to continue operations of safe nuclear power stations has been reinforced by the increased backing for new federal and state initiatives surrounding state subsidies for zero-emissions credits.

What Are Zero-Emission Credits (ZEC)?

Zero-emission credits (ZECs) are payments that electricity generators receive to compensate them for the valuable attribute of not emitting greenhouse gases in the production of electricity. ZECs are modeled after credit programs in many states that support renewable energy production. Like renewable energy credits (RECs) that are generated by wind and solar generators and sold to utilities, ZECs are credits generated with each megawatt-hour (MWh) of electricity produced by the plants. Just as wind, solar and other non-emitting generators have been compensated through REC programs, ZECs have been established for nuclear energy production, specifically for those plants facing imminent closure.

How do Zero-Emission Credits Work?

Each utility is required to purchase a certain number of these credits from the plants that produce zero-emissions electricity. The utility rolls the cost of the credits into the electric customers’ bills.

From the point of view of a nuclear plant owner, ZECs provide a source of revenue for an attribute that had previously been provided for free. Before these programs were in place, the markets paid primarily for the electricity that the plants produced, plus a small supplement for the capacity certainty that they provided. (State air regulators and public health advocates did recognize the clean air benefits, but nobody paid for them directly.) With these credits, each megawatt-hour of generation will receive a ZEC in addition to the price of electricity at that moment.

Which states are currently accessing these subsidies?

In late July 2019, Ohio became the fifth state in the United States to enact policies that provide for compensation or other assistance for in-state nuclear generating plants. Connecticut, Illinois, New Jersey, and New York have implemented similar support programs for some of their nuclear power plants since 2017. All five states have unbundled, retail-choice electricity markets where generators do not receive cost recovery from state regulatory commissions. Nuclear power is a significant source of in-state electricity generation in each of these five states.

Collectively, the 14 reactors at the 10 plants receiving state support account for 9% of the utility-scale generating capacity in those five states and 13% of the nation’s nuclear generating capacity. Because nuclear power plants tend to operate at higher capacity factors than other generator types, these plants’ shares of their states’ or the national electricity generation is larger than their shares of capacity.