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understand how advancements such
as modular reactors can be leveraged
to improve affordability, reliability,
and safety in Texas’ energy sector.
Results from their evaluation will be
announced in December 2024.
Texas may also prove fertile ground
for modular reactor deployment for
industrial uses. The modular reactors
may be particularly suited to serve on-
site at the large and growing footprint
of heavy manufacturing, petrochemi-
cal facilities, and data centers. The first
units—already ordered—are likely to
appear toward the end of the decade.
Balancing Costs and Reliability
While developments in advanced
nuclear technology hold promise for percent of Texas households with For the past two decades, Texas
an energy grid to achieve a desired annual income under $50,000 report- consumers have largely benefitted
balance of low emissions and reliabil- ed forgoing meals or medication to from cheaper electricity with the
ity, affordability may remain elusive. pay energy bills. increased presence of cheaper
Additionally, widespread deployment In times of severe weather, such renewables. However, consumers
of advanced nuclear is at least a households may also be at particular are no longer seeing benefits to
decade away. Balancing electricity risk of power loss. During the Feb- the same extent as concerns about
supply and demand with solar, wind, ruary 2021 statewide freeze, commu- reliability quickly escalate. Amid
batteries, and natural gas resources— nities with higher shares of racial volatile wholesale pricing, market
and the associated price volatility for minorities were more than four times signals and incentives to deploy more
consumers—will remain a significant more likely than predominately white baseload resources within ERCOT
challenge in the interim. areas to experience blackouts, driving are inadequate. An adjustment to the
ERCOT’s electricity load set records some to unsafe heating methods that market or incentive structure could
in summer 2023, primarily because led to carbon monoxide poisoning. bring more nuclear capacity into the
of consistently excessive heat. In the grid, but it’s likely to push electricity
winter, the grid continues to face Charting a Path Forward bills higher.
challenges, especially during sus- Nuclear energy offers several ad- Ultimately, Texas and the U.S. will
tained temperature drops, which spike vantages over other types of power: It need a diverse set of fuel sources while
demand across the state and impact is cleaner than fossil fuels, it is more grappling to balance sustainability,
the natural gas supply chain. predictable and reliable than renew- cost, and reliability. Nuclear, already
Even though wholesale electricity ables, and its generation capacity is part of the mix, may end up playing a
prices rise sharply during periods of far greater than all alternatives. Nu- larger role in the future through new
tight supply and demand, most house- clear reactors in Texas, either at the technology. Commercial small mod-
holds don’t experience surging power utility level or as co-generation assets ular reactors and advanced reactor
bills because they have fixed-rate power for heavy manufacturing facilities, designs are relatively new concepts.
contracts. However, volatile prices and offer the prospect of solving many It remains to be seen if new reactor
rising load forecasts have increased fundamental challenges for the grid. technology can deliver on the promise
forward electricity prices, which However, significant upfront of a scalable option. N
pushes retail prices higher over time. capital costs mean the returns for
While the residential cost per kilo- any plant developer are uncertain— As appeared in the Federal Reserve
watt-hour in Texas ranged between 14 particularly in ERCOT’s energy-only Bank of Dallas’ Southwest Economy.
and 17 cents from 2015 to 2019 in real market, which pays power providers Authored by Garrett Golding who is
(inflation-adjusted) terms, it jumped only for the electricity they deliver. In a senior business economist in the
to more than 30 cents in 2022 and has other regions, capacity markets, in Research Department of the Federal
remained volatile since (Chart 4). which power providers are compen- Reserve Bank of Dallas, Emily Ryder
For low-income households strug- sated for holding capacity in reserve, Perlmeter is a senior advisor in
gling to get by, rising utility bills could help ensure cost recovery for Community Development, and Prithvi
represent a significant share of living nuclear plants and likely accelerate Kalkunte is an economic programmer
expenses. For example, in 2023, 57 their development. in the Research Department.

18 NBIZ ■ JUNE 2024