New Projects, Nuclear

Examining the Evidence

Issue 2 and Volume 114.

By Nancy Spring, Senior Editor

“I guess I’d be more concerned if there was complete agreement on whether we are in the midst of a nuclear renaissance in the U.S.,” said Chris Gadomski, managing editor, nuclear, New Energy Finance. “One minute I’m optimistic, the next minute I’m less so, but at least the discussion is still ongoing.”

Gadomski took part in a panel discussion on the economics of nuclear power at the NUCLEAR-POWER International conference in December and we talked after the session about the “evidence” pointing toward or against new nuclear projects in the U.S.

He was one of five nuclear power experts on the panel, each of whom had a different take on trends affecting the U.S. nuclear renaissance.

Energy generation has followed a decarbonization trend for 150 years and energy density has been one of the primary drivers of the change from one fuel to the next, said Robert Preston, portfolio manager, Merrill Lynch. With 200 years of history behind this trend, Preston is confident that “the decarbonization vector will not deviate significantly from its path.” Nuclear power’s fuels, uranium and thorium, have 2 million times the spatial energy of wood and no carbon, making the move to nuclear power the natural next step.

Nuclear power has a positive effect on local economies, said Mark Fecteau, managing director, global growth and innovation, Westinghouse, and chairman of the Carolinas Nuclear Cluster. The goal of the “cluster” companies is to make the “New” Carolinas the center of nuclear activity in the U.S., “like the wine industry in California.”

In the Carolinas, 51 percent of the electricity is generated by nuclear power and the nuclear industry there employs 37,000 people, in good, well-paid positions. Fecteau hopes that number will double in 20 years and said currently interest is strong. “There was standing-room-only at the four supplier information sessions we have held since 2007.”

We have knowledge and experience building and operating nuclear plants and now we must show we can do it, said Bryan Erler, Erler Engineering, and ASME vice president of Nuclear Codes and Standards. What ended nuclear power in the ’70s was the (un)economics of the projects and this time around “we’ll have to rebuild our credibility.”

Erler is optimistic but said we still have to be careful. The U.S. must have standards that are consistent and quality in every aspect of construction is critical. “We must lock in the design before construction and fabrication” or cost and scheduling problems will plague us again.

Ed Kee, vice president, NERA Economic Consulting, said nuclear energy today is a very valuable commodity because its fuel costs are low—the marginal cost is zero—and nuclear plants have such a long operating life. “The new plants being built today could even last forever,” he said.

On the other hand, constructing a nuclear power plant has a long lead time, said Kee, with about 10 years of delay before the operator sees any financial benefit, and “something that far out is not desireable.”

Two of the four plants being considered for the U.S. Department of Energy loan guarantee, UniStar’s Calvert Cliffs and NRG’s STP 3&4, are merchant plants and “never in the whole world has there been commercial nuclear power,” Kee said.

The move toward a carbon-free society is usually a big plus for nuclear power but if carbon prices aren’t high enough, they may not give nuclear the push it needs.

The supply of experienced workers is limited and the cost and availability of commodities is troublesome. “We can’t even fabricate a reactor in the U.S.,” said Erler.

In other parts of the world, the government’s role is key to making new nuclear projects work. As Kee said, it’s not about anything but building something big and if the government said it would do it, it could be done. That kind of radical departure from the norm in this country is unlikely to happen.

Perhaps most worrisome is recent talk about tying the decision to build nuclear power plants to the price of natural gas.

“This shale-gas bubble thing is happening,” said Kee. “It’s amazing that a short-term gas price is driving people away from nuclear.”

When I add up most of the pros and cons mentioned here and include other factors, such as early site approval, standardized nuclear power plant designs and construction experience in other parts of the world, I am optimistic that we will be building new nuclear plants soon. By some estimates, we need to build 70 reactors by 2053 in the U.S. just to replace our current fleet of 104, so the sooner the better.

But when I consider short-term thinking like tying nuclear power to natural gas, I’m less encouraged. “Letting the markets work” based on short-term price signals is not likely to result in multi-billion dollar investments in projects with 10-year-plus timelines. Until our system changes, my bet’s on natural gas.

 

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