Nuclear Energy Needs To Revive Itself, Again
Just when nuclear energy industry has revived
itself, it has gotten knocked on its butt, again. A
new study is predicting that it won’t get back up,
saying that some recent major nuclear closures and
‘uprate’ cancelations are just the beginning.
It’s an analysis written by the Institute for
Energy and the Environment at Vermont Law School,
which in the past, has given unfavorable reviews to
the nuclear energy sector. But the author’s main
point is that the fuel source is unable to compete
in a low-cost natural gas environment. And while
President Obama’s climate policies would tend to
favor low-to-no-carbon fuels such as nuclear power,
it will be a decade before those laws would kick in.
Until then, those nuclear plants won’t be
competitive, and developers won’t build new ones
here either.
"Recent developments have sent what are truly shock
waves through the industry and Wall Street,” says
Mark Cooper, senior fellow and author. “The spate of
early retirements and decisions to forego uprates
magnify the importance of the fact that the 'nuclear
renaissance' has failed to produce a new fleet of
reactors in the U.S. With little chance that
the cost of new reactors will become competitive
with low carbon alternatives in the time frame
relevant for old reactor retirement decisions, we
need to start preparing now for more early
retirements ...”
Beside the current closures or uprate cancelations,
of which there are nine, there remains 38 reactors
in 23 states that are at risk of early retirements,
with 12 of those facing the greatest risk of being
shutdown, he adds. Uprates are the increasing of a
plant’s current output -- a phenomenon that has been
put on hold because of current cheap natural gas
prices.
Here in the United States, three relatively
high-profile closures have taken place: Southern
California Edison’s San Onofre Generation Station in
Southern California, Duke Energy’s Crystal River in
Florida, Dominion Resources Kewaunee plant in
Wisconsin. The first two were caused by ongoing
maintenance issues while the latter was caused by
low natural gas prices.
In the case of Dominion, it had an operating license
through 2033. And, the power purchase purchase
agreements that had kept it viable were about to
expire. Therefore, “Dominion was not able to move
forward with our plan to grow our nuclear fleet in
the Midwest to take advantage of economies of
scale,” says Thomas Farrell, in a press release.
Meanwhile, Cooper’s nuclear analysis says that
Exelon’s Clinton unit in Illinois and Entergy’s
Indian Point in New York may also go. Both companies
have seen their stock prices suffer as a result of
the present dynamics. He also list TVA’s Browns
Ferry in Alabama, FirstEnergy’s Davis-Besse in Ohio
and Constellation Energy Group’s Nine Mile Point in
New York.
Diverse Portfolios
Nuclear Energy now comprises 19 percent of the
electric generation mix. Natural gas makes up 30
percent, all according to the
Energy Information Administration.
For years, building up to what had been termed the
Nuclear Renaissance, the return of nuclear power
seemed inevitable. The fuel form, which is
relatively emissions-free, is a bonus for climate
advocates while the uranium that is used to feed the
reactors is plentiful. And for three-plus decades,
the plants had become reliable and efficient,
running at 90-plus percent capacity rates -- more
than any other form of electric generation. To top
it off, no major accidents had occurred here.
Then Fukushima happened. And that caused the world
community to pause and to reexamine its nuclear
energy options. While those considerations have been
ongoing -- nuclear concerns around the world are
cooperating in an effort to prevent such a disaster
again -- the shale gas phenomenon keeps persisting.
Such unconventional natural gas is not just cheap
and abundant but it can also be used in combined
cycle generators that are efficient and that can get
easily permitted.
“As someone who loves nuclear, it is a large
speculation,” says John Rowe, former chief executive
of Exelon, at an
EnergyBiz Leadership Forum. “It is 30 years
before it breaks even. I think the combination of
low natural gas prices and Fukushima will set a real
nuclear renaissance back by several decades.”
While natural gas may now be the path of least
resistance, experience has taught utilities that
they must always diversify. As demand surges,
supplies may fall and prices may skyrocket. As such,
once a new nuclear plant is built, the operational
costs are nominal. Over a 40-year time period, those
facilities have been cost effective -- especially in
a carbon-constrained world.
That’s why President Obama is trying to increase the
amount of loan guarantees awarded to nuclear
developers, of which the prominent recipients thus
far are Southern Company and its partners that have
two units going up in Georgia. Meantime, the U.S.
Senate has introduced bills that would financially
assist the developers of small nuclear reactors of
300 megawatts, compared to the base-load size of
1,000 megawatts.
The U.S. Senate is furthermore working on
legislation to provide the funding to build two
interim storage sites to house spent nuclear fuel.
And, finally, Congress is trying to hammer out a
bill that would give funding to fourth generation
nuclear reactors, which advocates say reduces the
odds of radioactive leaks to almost zero.
Nuclear Energy has been declared dead before. Today,
low natural gas prices and certain poor maintenance
records are plaguing it, all in a post-Fukushima
environment. Once again, the industry will need to
lift itself up and prove that it can remain a
powerful presence in tomorrow’s energy world.
EnergyBiz Insider has been awarded the Gold for
Original Web Commentary presented by the American
Society of Business Press Editors. The column is
also the Winner of the 2011 Online Column category
awarded by Media Industry News, MIN. Ken Silverstein
has been honored as one of MIN’s Most Intriguing
People in Media.
Twitter: @Ken_Silverstein
energybizinsider@energycentral.com
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