Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

MEMORANDUM

SUBJECT: Summary of AEO2017 Nuclear Workshop Meeting held on March 7, 2017

DATE: June 15, 2017

TO: Ian Mead Assistant Administrator for Energy Analysis

Jim Diefenderfer 

Director, 

Office of Electricity, Coal, Nuclear, and Renewables Analysis 

Angelina LaRose

Director, 

Office of Integrated and International Energy Analysis 

FROM: Coal and Uranium Analysis Team & Electricity Analysis Team

PRESENTERS: Howard Gruenspecht, Michael Scott, Thad Huetteman, Laura Martin, Cara 

Marcy, Nick Domenico, Mark Holt, and Phillip Brown

ATTENDEES: 20 external, 17 EIA (see attached list)

Workshop Overview

On March 7, 2017, EIA’s Coal and Uranium Analysis Team hosted an Annual Energy Outlook 2017

(AEO2017) Nuclear Workshop to re-initiate efforts to conduct regular outreach with external nuclear 

industry stakeholders to help better inform EIA’s nuclear projections. The one-day workshop was 

organized into two sessions, which followed an opening address by the Acting EIA Administrator, Dr. 

Howard Gruenspecht.

During the morning session, EIA staff discussed the National Energy Modeling System (NEMS), including 

the assumptions and modeling parameters used to produce the AEO2017 outlook. This discussion 

centered around four separate presentations:

 AEO2017 Nuclear Projections: Dr. Michael Scott, Coal and Uranium Analysis Team, EIA

 AEO2017 Electricity Projections: Thad Huetteman, Team Lead, Electricity Analysis, EIA

 Electricity Market Module Overview: Laura Martin, Electricity Analysis Team, EIA

 AEO2017 Renewable Energy Projections: Cara Marcy, Renewable Energy Analysis Team, EIA

During the afternoon session, invited stake holders discussed issues affecting the nuclear sector,

including subsequent license renewal (SLR) and a review of recent activity concerning price subsidies 

and nuclear generating plant closures. This discussion centered around two separate presentations:

 Issues for Subsequent License Renewal Decision Makers – Licensing, Investments, and Market 

Risk: Nick Domenico, Z Inc. (contractor to EIA)
Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

 Review of Recent Market Activity - Price Subsidies and Recent Closings: Mark Holt and Phillip 

Brown, Congressional Research Service

Opening Address by the Acting EIA Administrator, Dr. Howard Gruenspecht

The Acting Administrator summarized some of the current uncertainties related to the future of the 

domestic nuclear power market, including the increase in shale gas production and the growth of

renewables. He explained EIA’s task of modeling the complex interactions between these markets and 

their impact on EIA projections under Reference case and various side cases, where various economic, 

policy, and technology assumptions are modified to examine alternative scenarios.

The Acting Administrator highlighted the importance of the workshop for EIA. Workshops like these help 

EIA better model projected developments in the overall energy market, especially when the market 

conditions depart from historical conditions.

He noted that the current U.S. nuclear fleet is achieving high capacity factors and availability at a 

relatively low cost, and that nearly all reactors have received license renewals to operate for up to 60 

years. However, all but the newest reactors will require a subsequent license renewal (SLR) within the 

2030-50 timeframe to operate for up to 80 years. In previous AEO releases, EIA assumed all reactors 

would apply for and receive a SLR. But as EIA extends its projections to 2050 (from 2040), this 

assumption needs to be better characterized to properly reflect the fuel mix and capital investments

requirements for long term operations. To that end, AEO2017 assumed generic retirements of 

approximately 25% of the existing fleet as reactors reach 60 years of commercial operations. EIA is 

continuing to evaluate the uncertainty associated with this modeling assumption, and is interested in 

stakeholder feedback on the issue. Near-term uncertainty also exists with respect to the impact of lowcost shale gas, low load growth, and growth in renewable electricity generation that contribute to a 

difficult revenue and investment environment for nuclear, both in the near and long term. 

He also commented on the CO2 pricing assumptions in the AEO2017. Whereas BP, Exxon, and other 

forecasters do assume some price for CO2, EIA assumes existing laws and regulations. He pointed out 

that the AEO2017 Reference Case incorporated the Clean Power Plan (CPP) and that AEO2017 also 

included a No CPP side case.

During Dr. Gruenspecht’s introduction, one participant inquired about regions in the Electricity Market 

Module (EMM); a map of the EMM regions is available on the EIA website.

SESSION A

EIA Perspective on Nuclear Power and the AEO2017 Electricity Sector Outlook

Dr. Michael Scott provided an overview of EIA’s perspective of the nuclear power market, including the 

major issues that are driving plant operations. These issues include rising operation and maintenance 

(O&M) costs, flat demand, historically low prices in deregulated markets, increasing electricity 

production from renewables, and developing state price support for nuclear power. The challenge for 

EIA relates to modeling how these factors impact major capital investment decisions, including those to 

seek subsequent license renewals or build new reactors. The importance of the workshop was 

emphasized since EIA has limited access to nuclear industry data and future investment decisions cannot 
Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

be properly represented without an understanding of the strategies being developed to deal with these 

market challenges. Thad Huetteman provided a description of the NEMS Electricity Market Module

(EMM) and how the market variables are represented.

Several attendees asked questions about how state renewable portfolio standards (RPS) are modeled. 

EIA staff indicated that only actual mandates, not state goals, are assumed, with accommodations for 

special carve outs and alternative compliance mechanisms. Attendees were also interested in how 

different power markets were represented and to what level of fidelity. The effect of the CPP on the 

production profiles was discussed and illustrated the strong impact natural gas and renewables had on 

coal use and to a lesser effect on nuclear use. 

One participant inquired about assumptions regarding electric vehicles. EIA clarified that a 10-year 

turnover rate for vehicles is assumed and that vehicle choices are otherwise economically driven in the 

model. One participant inquired about capital cost comparisons and EIA staff indicated that the latest 

capital cost study would be available shortly. Another participant inquired about how advanced reactor

costs come down over time. EIA staff explained how learning curves are implemented in the EMM and 

mentioned the original research and development conducted on the issue, which are available upon 

request from EIA.

Electricity Market Module (EMM) Overview

Laura Martin provided an overview of how the NEMS EMM works. In particular, participants were 

interested in how the EMM treats competition with respect to regulated and deregulated nuclear power

markets, the granularity of the market model, and renewable portfolio standards (RPS) and other carveouts or forms of support for renewables. There was also interest in the cost profiles used in NEMS to 

represent the nuclear fleet, including the profile going forward out to 2050. EIA staff stated that nuclear 

fuel costs are projected in AEO2017 to go up in real dollars. The nuclear fuel cost projections for each 

AEO are developed from an Energy Research Institute report on projected uranium prices. The current

EMM fuel costs are comparable to high-level Electric Utility Cost Group fuel cost estimates. 

Overview of renewable technologies in the National Energy Modeling System (NEMS)

Cara Marcy discussed how renewable energy resources are represented in the Electricity Market 

Module (EMM). The renewable energy presentation spurred discussion from the participants concerning 

cost estimates for renewable power and how these may differ from the Nuclear Energy Institute’s

estimates. EIA noted that the input capital costs assumptions for AEO2017 were updated using an 

independent report based on as-installed system costs. EIA also references external reports published 

by independent research laboratories such as DOE’s Lawrence Berkeley National Laboratory to keep 

abreast of market changes. Ms. Marcy also noted that future costs in the model are projected to decline 

based on a learning algorithm and are dependent on the deployment of the technology. 

Tax credits for renewables were also discussed, in reference to their inclusion in the EIA model. 

Participants inquired as to the cost of the credits, by technology or dollar amount or by year. EIA stated
Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

that details of the renewable tax credit assumptions were described in the Legislation and Regulations 

section of AEO2016.

Renewable Portfolio Standards (RPS) were discussed, with respect to the degree by which the standards

set the decision-making within the model. EIA staff responded that RPS are modeled as constraints in 

the EMM, and that while the standards do appear to have some influence, overall they tend to set the 

minimum bound to which renewable technologies are deployed and that generally the economics are 

favorable enough that renewable generation well exceeds RPS requirements. 

One participant inquired about whether EIA “backcasts” against reality. EIA responded that the 

projections have a “current” policy focus and are not subject to backcasting, but retrospective analyses 

are published on an annual basis. In addition, last year EIA published a report that focused on specifically 

on historical renewable projections and the impacts of policy on the model results.

Battery storage was mentioned as an emerging consideration for the models, and EIA noted that it 

currently plans to add storage into NEMS for in AEO2018. In addition, advances in energy storage may 

show an offset in curtailments for wind and solar. 

Aging of renewable generation equipment is addressed via cost adders. Renewables have minimal 

maintenance costs and, as a young industry (particularly solar), there is not much historical data on 

retirements.

Attendees asked many questions about the growth of renewables and how their impacts on grid 

congestion were modeled. EIA discussed an ongoing project to develop an enhanced model structure to 

capture the intermittency aspect of renewable technologies through an 864-hourly model which 

accounts for minimum generation constraints for non-flexible technologies such as coal and nuclear and 

the resulting excess generation from non-dispatchable technologies such as wind and solar. Elements of 

this structure were in place for AEO2017, with older algorithms capturing many aspects of intermittency 

also in use.

SESSION B

Analysis of Subsequent License Renewal (SLR) for Nuclear Power Plants

Nick Domenico gave a presentation on work being performed by Z Inc. under contract with EIA to review 

some of the key issues affecting the modeling of SLR decisions. The project is intended to improve the 

quality of SLR modeling in NEMS by deriving a long-term qualitative vulnerability measure as an input 

into the model. 

One participant expressed interest in a methodology for including revenues in the decision-making, 

noting that revenues could be the single most significant driving factor influencing the decision to 

pursue SLR.

Another participant added that plant-by-plant evaluations should also be included in the model, but 

technology and regulatory decisions should be kept separate from economic risk calculations on the 

grounds of the potential to confound causality. EIA staff responded that although technology and 
Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

regulation are addressed along with cost in the current model, cost has been “set aside” due to lack of 

data in some cases – but it will ultimately be included in the model.

A participant noted that revenue is a key variable in plant decision-making and given the current 

presence of rating bodies already in the “market,” advised caution regarding how the ranking of reactors 

by the likelihood of pursuing a SLR may be perceived by others. The participant also further argued that 

regulating bodies in the nuclear sphere may have existing positions on plant rankings that could conflict 

with EIA rankings. 

EIA noted that it must review risk rating in some form, as risk can influence the operational cost. It was 

suggested that further discussions between NEI and EIA will take place on this subject.

A participant suggested that additional data sources should be explored. DOE’s opinion regarding SLR to 

80-years of plant operation is generally viable, whereas EIA assumes a 25% reduction in capacity as the

result of unpursued SLRs. He added that NEI has published figures for a non-SLR specific nuclear capacity 

decline of 15%. 

After the Workshop another participant followed up with email further discussing SLR – “First, when it 

comes to wholesale markets, EIA could do some sort of analysis like what Congressional Research 

Service or Idaho National Labs did looking into the future. For example, if EIA’s day-ahead power prices 

from 2030-2032 are say $40/MWh in a certain region and a three-year cost average over the same time 

frame for a nuclear plant is say $44/MWh (single-unit all-in cost), EIA could assume the plant will close 

no matter where they are with the license (could be year of operation 20 or 50). EIA could do this on a 

three-year average, a five-year average, base it off capacity market rules, etc. Just be clear on the 

assumptions. It’s obviously impossible to predict the value judgments of nuclear companies in the future 

beyond say the next few years. In the near term forecasts, it is recommended that EIA continue

analyzing public statements and strategies stated by nuclear operating companies in public settings. So 

if a company says they will be out of wholesale markets by day X and their plants don’t have policy 

support and/or a buyer, EIA probably has cover to go ahead and close those plants in NEMS. Although 

this is constantly evolving, this is the best source of information any of us have got.”

“Second, when it comes to regulated markets, it’s obviously very difficult to model value judgments by 

governmental entities. However, EIA could analyze the fact that the cost of new natural gas combinedcycle (NGCC) or new NGCC plus a certain set of renewables may be cost-effective compared to the cost 

of operating nuclear plants plus the periodic lifecycle costs (which EIA already has assumptions for). Or, 

if load growth is decreasing or distributed solar becomes really big, there may not be a need to continue 

operating the nuclear plant (or other generation for that matter). These are possibly all things that 

NEMS can be utilized for. Once the timeframes that IRPs will analyze start making assumptions for 

nukes, that’ll also help influence your assumptions for the model.”

Financial Challenges of Operating U.S. Nuclear Power Plants

Mark Holt and Phillip Brown with the Congressional Research Service (CRS) presented evidence from 

their paper, “Review of Recent Market Activity - Price Subsidies and Recent Closings”, highlighting the 

financial challenges of operating nuclear plants in the current market. Key takeaways showed that 

shutdown decisions were not only financial, but in most cases a combination of things, including political 
Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

factors. This is evident when observing the sample - units operating in negative cost areas are not 

congruent with those “at risk” for shutting down. Plants sampled were in deregulated areas only and did 

not include capital costs due to significant data limitations. O&M costs were estimated as an industry 

average. 

One participant added that value judgements by plants are also relevant, but very difficult to model. 

Another participant concurred, and noted they also attempt to capture political, economic, 

environmental, and employment factors. A discussion occurred related to whether federal policies 

would be necessary to support existing nuclear in regulated markets. Participants noted that although 

not necessarily needed, fairness could be an issue, but prudency issues could be an issue and SLR would 

be hard to consider for regulated concerns. Participants noted that economics were the main driver 

behind Fort Calhoun’s closure. For Indian Point, the retirement decision was driven by political and 

safety concerns rather than economics. In comparison, employment, grid reliability, and emissions

considerations were major factors supporting the continued operation of reactors in upstate New York.

Participants agreed that fixed O&M costs were not representative, and integral for a meaningful 

analysis. EIA also uses a single value, though EIA staff recognized that this is in reality a range of costs. 

Next steps for EIA staff would be to reach out to partners and cooperatively discuss how to accurately 

capture this range in the model.

EIA added that current policies are modeled as much as possible. While CRS may be at liberty to suggest 

policy recommendations, EIA, as a policy neutral statistical and analytical agency is not. DOE indicated 

that a nuclear cost gap study has been commissioned, and DOE will coordinate with CRS once an 

additional round of results are available. 

Industry/Industry Representatives/Consultants

In Person

Ahn Alan Global America Business Institute

Brown Phil Congressional Research Service

Davis Ed The Pegasus Group

Gadomski Christopher Bloomberg New Energy Finance

Grecheck Eugene Grecheck Consulting LLC

Holt Mark Congressional Research Service

Nakano Jane CSIS Energy & National Security Program

Purdie Michael Nuclear Energy Institute

Roth Michael Carnegie Mellon

WebEx

Dittmer Kent Energy Northwest

Harding Margaret NECG Affiliate

Kaydak Andrew NECG Affiliate / Kadak Associates, Inc.

Kee Ed Nuclear Economic Consulting Group (NECG)

Venkatesh Boddu ICF International
Workshop presentations and notes are for discussion purposes only. Do not quote or 

cite as AEO2018 modeling assumptions and inputs are subject to change.

Young Garry G. Entergy Nuclear

EIA Staff

Adams Greg U.S. Energy Information Administration

Angel Stacy U.S. Energy Information Administration

Bowers Richard U.S. Energy Information Administration

Bowman Michelle U.S. Energy Information Administration

Diefenderfer Jim U.S. Energy Information Administration

Domenico (Contractor) Nick U.S. Energy Information Administration

Dubin Kenneth U.S. Energy Information Administration

Gospodarczyk Marta U.S. Energy Information Administration

Huetteman Thaddeus U.S. Energy Information Administration

Jell Scott U.S. Energy Information Administration

Jones Jeff U.S. Energy Information Administration

LaRose Angelina U.S. Energy Information Administration

Manzogol Nilay U.S. Energy Information Administration

Marcy Cara U.S. Energy Information Administration

Martin Laura U.S. Energy Information Administration

Mead Ian U.S. Energy Information Administration

Namovicz Christopher U.S. Energy Information Administration

Scott Mike U.S. Energy Information Administration

Sukunta Manussawee U.S. Energy Information Administration

Other Government

Bergman Aaron US DOE: Office of Policy and International Affairs

Hagen Ron U.S. Department of Energy

Kelly John U.S. Department of Energy

Schoeberlein David US DOE: Office of Policy and International Affairs

Williams Bradley U.S. Department of Energy