End of Nuclear in U.S. Seen by Carlyle Group Without Subsidies

  • Carlyle’s outlook comes as nuclear plants are retiring
  • Cost of building a reactor may be five times that of gas unit

Nuclear power will come to an end in the U.S. if the industry doesn’t get more government support, according to Carlyle Group LP, one of the world’s largest investment firms.

The nation’s nuclear reactors need more subsidies to keep running, such as a federal carbon tax that’ll reward them for their zero-emissions power, Bob Mancini, co-head of Carlyle Group’s power unit, said at a conference in New York. Carlyle, which has $176 billion in assets under management across funds, invests in natural gas- and coal-fired power plants and renewable energy projects.

Its outlook comes as nuclear power generators including Exelon Corp. and Entergy Corp. make plans to shut reactors across the country. Low power prices, fueled by an abundance of natural gas from shale drilling and weakening demand, have squeezed their profits just as their operating costs rise amid mounting regulation.

“We will see the end of the nuclear industry in the next coming decades” without legislation, incentives or other support to keep reactors open or encourage new builds, Mancini said at S&P Global Platts’s Financing U.S. Power Conference on Tuesday.

The cost of building a nuclear plant may be more than five times that of a gas-fired one based on U.S. government data, Bloomberg Intelligence analyst Stacy Nemeroff said in a report earlier this month.

China, India and Russia are among the few places where new nuclear plants are being built, Mancini said. The U.S. is building four new nuclear units in Georgia and South Carolina.

New York Plan

Mancini pointed to measures approved by New York as an example of the kind of help nuclear power plant owners are going to need to survive. In August, state regulators there cleared subsidies worth about $500 million a year as part of a clean energy plan to reduce greenhouse gas emissions. They’re being fought by competing power producers who say the measures are unlawful.

If the upstate reactors shut down, “emissions reductions will be eviscerated and volatility of prices will increase,” Mancini said. “More importantly, from a political perspective, hundreds of millions of dollars of tax revenue will be affected and thousands of jobs lost in parts of the state that are already economically depressed.”

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