Nuclear, Policy & Regulations

The Tortoise and the Hare

Issue 1 and Volume 119.

Brian Schimmoller   By Brian Schimmoller, Contributing Editor

One of Aesop’s most famous fables is the story of the tortoise and the hare. The tortoise challenges the hare to a race after the hare ridicules the tortoise’s slow-moving nature. When the race starts, the hare quickly takes off and builds a large lead. After a while, he decides to take a mid-race nap – confident that the tortoise is so far behind he’ll never catch up.

While the hare is sleeping, the tortoise plods along at a steady pace and ultimately passes the hare to win the race. The moral of the story: Slow and steady wins the race.

In observing the U.S. nuclear power industry the past 15 years, it’s clear to me the hares are too often out front. Expectations about a nuclear renaissance pop up every few years in response to one stimuli or another, only to be tamped down by the reality of economics or politics or public perception.

Remember the U.S. Department of Energy’s (DOE) loan guarantee program launched back in 2008? That was supposed to be the governmental “spark” that would initiate a fresh round of nuclear plant construction. Admittedly, it didn’t completely fail. DOE received 17 applications for loan guarantees, and Southern Company did secure a loan guarantee for the Vogtle project in Georgia.

No one could claim with a straight face, however, that it has worked well. Negotiations between Southern and the DOE took years, with final agreement only occurring in early 2014, and an earlier loan guarantee application from Constellation Energy Nuclear Group never got off the ground.

This past September, DOE announced plans for a new $12.6 billion loan guarantee program. This one would apply not only to new nuclear plant projects, but also to uranium enrichment facilities, capacity uprates, and small modular reactors. Probably a more realistic approach in light of current market conditions, but details are still being worked out.

As the four new units at the Vogtle and Summer plants in Georgia and South Carolina began to rise from the ground in the last two years, that was supposed to be the next signpost heralding the coming renaissance. While significant progress has been made – just take a look at one of the many impressive time-lapse videos of the basemat pour or the placement of one of the large modules for visible proof – it’s not been smooth sailing. Both projects face potential delays – and potential cost increases – because of challenges with the fabrication and delivery of modules and because of design modifications along the way to comply with regulatory requirements. South Carolina Electric & Gas is in the midst of negotiations with its main vendors, Westinghouse and Chicago Bridge and Iron, to revise the schedule and develop a new cost estimate. So again, let’s manage our expectations.

The most recent nuclear savior to come on the scene is the Clean Power Plan, which the Environmental Protection Agency (EPA) proposed in June 2014 as a “commonsense plan to cut carbon pollution from power plants.” It is more commonly referred to as 111(d) because it’s built around a section of the Clean Air Act that enables EPA to establish guidelines and the states to design programs that comply with these guidelines to achieve needed reductions. One of the building blocks established in the Clean Power Plan recognizes the role that zero-emitting sources like nuclear could play in reducing carbon emissions.

Depending on how these regulations evolve after EPA addresses the millions of comments it received by the Dec. 1, 2014 deadline, nuclear power could potentially benefit from favorable treatment – although the benefit may be modest. A major contention raised during the comment period revolved around the fact that the original language would not allow states where nuclear plants are being built to claim credit for nuclear plants already under construction.

Before getting overly excited about the 111(d) provisions, however, recall that we’ve been down similar carbon reduction paths. In the 2008-2009 time period, expectations were relatively high that carbon legislation of some sort was going to pass. Multiple bills were put forward, some getting close to passing, and each likely would have provided a boost to nuclear power. Some companies, such as Exelon, bet heavily that a nuclear-weighted generation portfolio would be profitable in a carbon-constrained environment. That didn’t come to pass, of course, and the growth of renewables and gas-fired generation is now putting even more pressure on some nuclear plants.

Notwithstanding the points above, I’m relatively optimistic about nuclear power in the United States. I think many people equate a “nuclear renaissance” with an intense level of new construction. That’s not the way to look at it. The real Renaissance – with a capital ‘R’ – evolved from the darkness of the Middle Ages, and didn’t suffuse European culture immediately. Neither will this.

There remains a place for clean, baseload power to satisfy the demand for round-the-clock electricity. I’m betting on the tortoise.

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