How We Gauge the Potential Credit Profile of Nuclear Energy Projects
Nuclear energy is a proven clean energy technology with a long history of producing carbon-free energy reliably 24/7 year-round. But it only represents about 20% of power generation in the U.S. and 15% in Canada, according to the World Nuclear Association. With rising energy costs and greater emphasis on environmental, social, and governance factors, nuclear power can play a vital role in the transition to cleaner energy. For example, approximately 1.07 kilowatt hours (26%) of U.S. electricity comes from coal and petroleum, heavy carbon-producing energy sources, that can be displaced with a clean energy source such as nuclear power. A single 1,000-megawatt (MW) nuclear power plant with a 60-year life can help offset approximately 335 million metric tons of carbon dioxide that would be otherwise generated from fossil fuels. However, there are some challenges to widespread adoption of nuclear energy.The purpose of this commentary is to explore some key strengths and challenges of nuclear energy and how DBRS Morningstar views the credit quality of nuclear power projects, including those with potential merchant power risk.
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