In case you’re wondering what’s been happening with nuclear power, I thought I’d summarize the latest developments. The U.S. Nuclear Regulatory Commission hasn’t issued a license for a nuclear plant in 30 years, but there are some powerful forces for change on the horizon. There are many challenging steps, however, in getting from here to there.
The constraints on nuclear power are still very real. They include siting approval, construction cost, operating safety, and waste fuel storage, in addition to replacing the lost generation of nuclear engineers and constructors needed to move forward. These hurdles are not going to be easy or quick to overcome. So, although you may be hearing a lot about resurgence of nuclear power from the presidential candidates, don’t hold your breath.
According to a report from Tyson Slocum in the Multinational Monitor’sSeptember/October 2008 issue, there’s the sticky question about who’s going to pay for the nuclear power plants. With the cost of building a nuclear generator so much higher than a conventional coal or gas plant, customers will probably not be expected to pay for the full cost of construction. The projected cost of the currently proposed nuclear plants “is causing some sticker shock: $5 billion to $12 billion a plant, double to quadruple earlier rough estimates,” the Wall Street Journal reported in May 2008. New estimates from nuclear operators, such as NRG Energy, Progress Energy, Exelon, Southern Co., and FPL Group, “have blown by our highest estimate” of costs computed just 8 months ago. Moody’s Corporate Finance estimated in a May 2008 analysis that nuclear’s capital cost per kilowatt was 275-percent higher than wind and 150-percent higher than solar. The ratings and risk analysis firm projects capital costs for nuclear plants are only rising.
The report noted that, given the availability of cheap coal, transitioning away from fossil fuels will surely require government intervention – subsidies, mandates, and new regulatory rules. But, nuclear power has unmatched costs that will never diminish. “There very clearly will be few to zero new reactors without federal taxpayer support of one type or another,” says Michael Mariotte, of the Washington, D.C.-based Nuclear Information and Resource Service. “There’s no private investment capital interested in nuclear power on its own terms. Private capital is all going to renewables right now, and that’s where it will continue to go unless the government distorts the market.” John Keeley, manager of media relations for Nuclear Energy Institute, says, “Given that electricity companies and utilities have relatively modest market valuations, there’s an important role for the federal government to play as an insurer or an underwriter of loans to help facilitate the construction of new nuclear plants.” In fact, the Energy Policy Act of 2005 authorized the U.S. Department of Energy (DOE) to institute a loan-guarantee program for “innovative technologies,” of which nuclear power was to receive the lion’s share. The 2005 Act instructed the DOE to develop rules for handing out loan guarantees. That process proved to be complicated and controversial, with disputes raging about whether Congress would have to okay the guarantee program as developed by the DOE, and what amount of guarantees could be provided. Wall Street investment banks joined the nuclear industry in pushing for a large-scale federal loan-guarantee program. Investment banks would like to broker financing deals for nuclear plants, but they know no deals will be likely without government guarantees. With the banking industry so crippled now, it falls to the taxpayers to come up with the needed funds to move forward. Does this sound familiar?
The DOE issued solicitations on June 30 for up to $30.5 billion for energy efficiency, renewable energy, and advanced transmission and distribution technologies; nuclear power facilities; and advanced nuclear facilities for the front end of the nuclear fuel cycle. On Oct. 3, the DOE announced that it had received 19 Part-I applications from 17 electric-power companies for federal loan guarantees to support the construction of 14 nuclear power plants in response to its June solicitation. The applications reflect the intentions of those companies to build 21 new reactors, with some applications covering two reactors at the same site. The nuclear industry is asking the DOE to provide loan guarantees in the amount of $122 billion, which significantly exceeds the $18.5 billion in loan guarantees available under the June 30, 2008, Nuclear Power Facilities solicitation. The aggregate estimated construction cost of these 14 projects is $188 billion.
Once a loan guarantee is approved, the company receives a certificate that it can use as collateral with investment bankers, demonstrating that 100 percent of any loan – up to 80 percent of the total cost of the project – will be guaranteed by U.S. taxpayers. If all projects are constructed, they would add 28,800 megawatts of “clean, emissions-free, base-load electric-generating capacity”; that’s a very big if, given the ballooning federal budget deficit due to the banking crisis.
The next challenge will be re-staffing the nuclear industry to replace retirees and those displaced by the virtual shutdown of new construction for the past 30 years. Except for exporting our nuclear technology to foreign countries, like India, there has been little need for new staffing in this country.