OREANDA-NEWS. US nuclear power plants are joining coal plants in losing out to lower-cost natural gas and renewables for electric generation.

Low gas prices have already put the brakes on a revival of US nuclear construction and are blamed for the premature retirement of reactors in four states. Owners of nuclear plants in Florida and California also decided to retire, rather than repair, damaged reactors based on future low-priced gas expectations.

Nuclear plants require a large workforce, costly security measures and are subject to strict regulatory oversight, factors that put them at a disadvantage in a low gas-price environment, when overall power demand is stagnant and wind and solar generation are booming.

Reactors operating in competitive wholesale markets are the most challenged, said Jim Hempstead, associate managing director of Moody's Investors Service at the IHS CeraWeek conference last month. Reactors in regulated utility markets make about $70/MWh, or "plenty to run on," Hempstead said. Revenue for plants in competitive wholesale markets is about $35/MWh. "They are barely keeping their heads above water," he said.

Exelon, the largest operator of nuclear plants in the country, feels the brunt of the pressure from cheap gas and is weighing whether to close some Illinois reactors. A final decision may come later this year.

In 2013, Exelon canceled a plan to upgrade existing nuclear facilities to boost output after having added less than 25pc of the total capacity planned. At that time, Exelon chief executive Chris Crane said conditions were not dire enough to require the early shutdown of any Exelon reactor.

In an earnings call last month, Crane said Exelon's Illinois nuclear plants have been "suffering significant losses." If the company is unable to convince Illinois lawmakers to support the nuclear fleet financially through a low-carbon portfolio standard, several plants may shut.

Barclays' analysts said Exelon's 1,078MW Clinton unit and the two-unit, 1,918MW Quad Cities plant are most at-risk for closure given market economics, followed by the two-unit, 2,346MW Byron plant.

Clinton and Quad Cities sell power into markets with "suppressed energy pricing which impairs the revenue generation from these plants," bank Barclays said in a recent report. "Capacity pricing helps but, generally is not enough to overcome the weak energy pricing."

Exelon has begun the unusual step of dispatching two Illinois reactors based on wholesale prices and grid constraints. During shoulder months when power demand is low, output at the Byron and Quad Cities units can be reduced to between 70pc and 80pc for days at a time.

"We have periodically reduced power on the Byron and Quad Cities units in coordination with PJM and in response to price signals and expected transmission-line constraints," said Exelon spokesman Krista Lopykinski.

Despite low gas prices, the Tennessee Valley Authority (TVA) has completed the long-delayed 1,150MW Watts Bar 2 reactor in Tennessee and plans to start producing power in June. Construction on the unit stopped in 1988 because of low electric demand, but was restarted in 2007. TVA dropped plans to complete another unfinished nuclear plant in Alabama.

Cost control has become critical as US nuclear plants struggle to remain competitive, said Brent Ridge, chief financial and risk officer for utility Energy Northwest.

"We need to be as cost-effective and efficient as we possibly can to try to get our costs down to somewhere near the market," Ridge said at CeraWeek.

Energy Northwest's single reactor, the 1,166MW Columbia station in Washington, is one of the few US reactors that commonly reduces its output when the Bonneville Power Administration has excess hydropower supply.

Late last year, three nuclear industry groups launched a multi-year effort to help nuclear operators reduce expenses.

Electricity generating costs at US nuclear plants have risen by 28pc over the past 12 years to an average of $36.27/MWh, said the Nuclear Energy Institute's chief operating officer Maria Korsnick.

Low natural gas prices "make this mission more urgent for some at-risk facilities, but this initiative is more encompassing than that," Korsnick said.

The industry's "Nuclear Promise" programs will also work to gain better price recognition for nuclear plant reliability and their lack of carbon emissions.

"In the next couple of years, decisions will have to be made by many companies: do we take these units off line and lose the carbon-abatement they provide to the environment?" Crane said at CeraWeek.