Duke: new nuclear still best option

Oct 26 - McClatchy-Tribune Regional News - Bruce Henderson The Charlotte Observer, N.C.

New nuclear plants remain Duke Energy's best baseload power option for the Carolinas despite headwinds, a utility executive told an industry audience today.

Duke will have to replace its aging fleet of nuclear and coal-fired plants by 2050, Christopher Fallon, Duke's vice president for nuclear development, said at the Nuclear Construction Summit in Charlotte. Each technology produces about half of Duke's generation.

The utility plans to build a two-unit nuclear plant, its first since the mid-1980s, near Gaffney, S.C. The plant would start operating in about 2021. Duke is also mulling construction of a plant in Ohio.

The case for nuclear: The fading future of coal, which faces growing environmental regulations. Expected caps on carbon dioxide, which nuclear plants don't emit. And the inability of solar, wind and other renewable energy to provide the massive, steady output called baseload generation.

"We have to modernize and decarbonize our fleet, and new nuclear has to be part of that strategy," Fallon said.

The downside includes high costs -- perhaps $11 billion for Duke's new Lee plant, paid for by consumers -- jittery investors and the lack of a recently-completed U.S. nuclear plant to prove they can be built on time and within budget.

Fallon said Duke's long-range plan submitted this year depicted a perfect storm blowing gainst nuclear. Projections of future electricity demand fell. Congress failed to take up carbon legislation. And prices are falling for natural gas, a competing fuel.

"The landscape has changed because of these uncertainties," Fallon said.

Still, he added, Duke's plan showed a need for new nuclear generation. Gas prices might not stay low indefinitely, Fallon said. Running coal plants longer and harder to make up for retired nuclear plants isn't likely to be popular with the public, he added.

Duke is still looking for partners to build a new nuclear plant, a move investors heavily favor. After his talk, Fallon said it's possible Duke could join Scana Corp., for example, in expanding the V.C. Summer plant in Jenkinsville, S.C. He wouldn't discuss other potential partners.

Investors regard only the largest utilities -- Duke is third-largest in power sales -- as capable of building new plants without partners, industry consultant Bruce Lacy said during a summit financial panel. Three utilities went bankrupt trying to build nuclear plants as costs escalated and regulations tightened in the 1970s and 1980s.

But a 2009 survey also found half the investors polled ready to put money into regulated-utility projects, even without federal loan guarantees to stabilize financing.

"What we really need, from what I hear, is to build a couple of plants and do a really good job of it," Lacy said.

Duke would be prepared to start construction without a loan guarantee, Fallon said. The first of the federal guarantees went to Georgia Power in February.