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November 29, 2005
In the U.S., Nukes Are Going Nowhere Fast
My colleague Peter Coy contributes this item:
Joe Barton thinks America needs more nuclear power plants, and the Republican congressman from Texas is exasperated that utilities are dragging their heels on building them. Speaking at a conference put on by investment bank Harris Nesbitt in New York , Barton said (shield your eyes if you’re easily offended): “Why keep acting like we’re for it [i.e., nuclear energy] if nobody in this country has the balls to build it?”
What got him riled up was a lament by Thomas E. Capps, the chairman and CEO of Dominion Resources Inc. of Richmond, Va., which is one of the biggest electricity generators in the U.S. and owns seven nuclear reactors. Capps said nukes are expensive ($1.5 billion to $2 billion, experts estimate) and take a long time to build (probably five or six years from when a license is issued). Capps said, “I think if we announced that we were going to build a nuclear power plant, our stock would go down 25%.”
Barton, chairman of the House Energy and Commerce Committee, said the electric utilities should go ahead and build some nukes and stop hoping for more incentives from Washington. Congress years ago streamlined the permitting process, so that companies would now be given provisional operating licenses at the same time they get construction permits (so they wouldn’t have to worry that they’ll build it and then not be allowed to run it). In August, President Bush signed the Energy Policy Act, which among other things gives a production tax credit to the first companies that produce electricity from new nukes. There’s even standby insurance, holding the utilities harmless in case of a permitting delay that’s the fault of the Nuclear Regulatory Commission.
Nuclear energy doesn’t produce greenhouse gases. It has a good safety record. And its fuel supply—uranium—is in no danger of running low. But while Russia, India, China, and other countries go full-speed ahead with building nuclear power plants [here's a list of plants under construction globally), the U.S. hasn’t started construction on a nuclear plant since the 1970s.
I talked to the chief spokesman of Dominion, William C. Hall Jr., this afternoon. He said “Dominion’s very happy with the approach to new nuclear construction that Congress and its leaders like Joe Barton have made.” He hinted that the company might be more likely to build a nuke if it could get favorable financing terms from one of the companies that sells nukes, such as General Electric or ABB. But he reiterated Capps’ bottom line: “We have no plans at this time to build any nuclear unit.”
Now, here’s one last twist: Dominion is actually counted by the Nuclear Energy Institute as one of the 10 or 12 U.S. utilities that’s considering building nukes. Why? Because the company kept its options open by applying for an “early site permit” to add a couple of reactors at an existing installation.
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I agree that there is a very real need to ramp up nuclear energy production in this country. Of the 400+ nuclear power stations in the world, France and Japan together have just under 50% (France has 77 stations, Japan a few less)
The US has far fewer.
As for the economics of the matter: The costs of building a nuclear plant (as highlighted in the post) are high. These are the high sunk costs associated with power plants in general. What turns things in favor of nuclear power is that the operational and maintenance costs are low. Nuclear fuel (which, although technically not a renewable resource) reserves extend into the next several centuries (by comparison coal reserves go about 200 at current usage and technology levels). Nuclear fuels are also much cheaper (both absolutely and in terms of energy produced) than fossil fuel counterparts. So...high sunk costs+low O&M costs. Well, perhaps efforts should be made (and some are) to improve efficiency of our current plants--I've heard estimates that they're running at about 60% efficiency rates) before we start investing the billions of dollars needed to put new plants in place. There haven't been any radical breakthroughs in nuclear energy technology in the past couple of decades, but there have been a number of incremental advances in the process.
Of course, there are very real concerns with the disposal of nuclear waste; Technology Review's (the MIT magazine) suggestion in December of last year, that we simply store it until better technologies for disposal come along may be a viable option.
Posted by: Christopher at November 29, 2005 04:34 PM
Though I generally support new nuclear power plant construction in the U.S., I must say that I am sympathetic with Dominion's position. The price of failure in nuclear power is so catastrophic, it fundamentally alters the risk premium of the the energy company that embarks on such a project.
Most of the new nuclear power plants listed in the exhibit are in countries whose governments assume a significant portion of that risk. If we really want to unburden ourselves from foreign oil imports, the Feds must assume a far greater portion of the risk associated with new plant construction. - pjw
Posted by: Patrick J. Walker at December 1, 2005 04:41 AM
Readers of Business Week who would like an easy way to learn more about nuclear power should check out "Rad Decision", a techno-thriller novel about the American nuclear power industry, written by a longtime nuclear engineer (me).
Rad Decision provides an entertaining and accurate portrait of the nuclear industry today and how a nuclear accident would be handled. It is at RadDecision.blogspot.com. There is no cost to readers. The book is divided into 15 minute episodes for on-line reading, or there is a PDF file available for download.
"I'd like to see Rad Decision widely read." - Stewart Brand, co-founder, Global Business Network.
I hope you'll take a few moments and check out Rad Decision.
Posted by: James Aach at December 3, 2005 05:43 PM
Great article. Bravo! Thank you very much.
Posted by: Patricia at December 8, 2005 07:25 AM
Readers of BRW might like to consult the following URL. The President of the Australian Conservation Foundation demonstrates why nuclear energy is not and cannot be a sustainable energy source. The misrepresentations that are presented in your article and comments are astounding.
Posted by: richard at December 15, 2005 08:24 AM