[Watchdogs] Nuclear Energy's Chances

[joesummy at moment.net]

 		 FEBRUARY 22, 2010 

 Ken Silverstein
 EnergyBiz Insider
Editor-in-Chief

 		  [4] 

Respond to the editor.  

The passion surrounding nuclear power is engaging Washington as two issues
have reentered the public domain: increasing loan guarantees to new
projects and the casting aside of a permanent storage facility for nuclear
waste. 

While the nuclear industry has gotten a second wind, it is still getting
sideswiped by opponents. As such, it may be too soon to pronounce its
official revival. But the reality is that the energy source has earned
bipartisan support. The Bush administration saw it as a way to increase
the
nation's energy independence while Obama's team mostly views it as a
potential tool to combat climate change. 

Under the 2005 Energy Act, Congress authorized loan guarantees and then
instructed the U.S. Department of Energy to devise the program. At the
time, $18.5 billion had been allocated for such purposes. Now, that level
has increased to $54.5 billion -- with the first two totaling $8.3 billion
for reactors to be built in Georgia. 

"Coupled with the solid bipartisan support for nuclear energy that exists
in Congress, the Administration's initiative will make a meaningful
difference in bringing about development of the nuclear energy facilities
that our nation needs to meet rising electricity demand and increasingly
stringent environmental requirements," says Marvin Fertel, president and
chief executive of the Nuclear Energy Institute and a panelist at the
upcoming EnergyBiz Leadership Forum [5]. 

The active nuclear applications for 22 new reactors pending with
regulators would be in addition to the 104 reactors that are currently
operating in the United States. But no such reactors have been ordered
here
since the 1970s. Since then, the financial risks have been high as lenders
fear project delays and excessive capital costs. 

Backers of the loan guarantees emphasize that they are not taxpayer
handouts but rather a form of insurance that will entice Wall Street
bankers to invest in their enterprises. Understandably, financial
institutions see an opportunity to lend billions to new deals -- a
potential that remains elusive with the current set of regulatory and
financial risks. 

Opponents of those guarantees, conversely, say that nuclear plants are
expensive and uncompetitive and have a proven track record of cost
overruns. If they are unable to receive private financing then taxpayers
should not become a backstop. 

"With hundreds of billions in bailouts already on the shoulders of U.S.
taxpayers, the country cannot afford to move forward with a program that
could easily become the black hole for hundreds of billions more," writes
the National Taxpayers Union and other conservative groups to the
president. 

The one thing that both sides can agree on is that the capital costs
associated with constructing nuclear power plants are tremendous.
According
to Moody's Investor Services, the number is akin to $9 billion per reactor
-- a lot more than a conventional fossil-fired plant or a renewable energy
facility. 

GAINING GROUND 

The Union of Concerned Scientists fears that the huge increases in loan
guarantees will sop up money that could go to other, greener energy forms.
It's particularly concerned about escalating construction costs, which it
says will lead to ever-rising electric rates. 

The group is also highlighting previous failures in the nuclear sector,
saying that taxpayers and ratepayers once paid an estimated $40 billion in
costs for abandoned nuclear plants. Ratepayers also shelled out, it adds,
$200 billion in today's dollars to compensate for earlier cost overruns by
the industry. Close oversight is essential, emphasizing that the Energy
Department estimated in 2002 it would cost $3 billion for a new reactor
and
by 2008 it increased that estimate to $9 billion. 

Higher construction costs, though, are not the exclusive domain of one
power sector. The rising cost of steel, concrete and copper that are used
to build everything from windmills to combined-cycle natural gas plants to
nuclear facilities are infectious. According to Cambridge Energy Research
Associates, a power plant that cost $1 billion in 2000 would run on
average
$2.17 billion today. 

While the thirst for power is now stalled, the government is projecting
energy demand to be 23 percent greater in 20 years than it is now.
According to the Energy Information Administration, the nation needs about
50,000 megawatts by 2014 and 258,000 megawatts by 2030. That will cost
about $412 billion through 2030. 

Nuclear power is positioning itself to be part of the long-term solution.
Clearly, with the focus on curbing greenhouse gases and becoming energy
independent, the movement to resurrect the nuclear industry is gaining
ground. 

But just as the Obama administration awarded the sector substantially more
in loan guarantees it simultaneously ended the possibility that Yucca
Mountain in Nevada would become a permanent resting place for spent fuel.
Instead, the industry must continue to store such material in above-ground
dry cask storage. Long-term, though, it must choose among expanding
existing sites, finding a permanent place or discovering a scientific
breakthrough to allow the spent fuel to be recycled. 

"The industry does not support the termination of this (Yucca) program but
believes that, if it is going to happen, it should occur in an orderly
manner to permit the licensing process to be restarted if ever warranted,"
says Fertel. 

The move to end Yucca Mountain had been expected. The decision to increase
the level of loan guarantees had not. While the industry considers both
matters central to its future, its more immediate objective is to show
that
new plants can be both safe and economical. Its day will come, to the
dismay of some, although the waiting period is likely to be longer than
the
industry would hope. 

More information is available from Energy Central: 

	*  Nuclear Topic Center [6]

	*  The New Captain of the NRC: A Stillborn Nuclear Renaissance?,
EnergyBiz, Sep/Oct 2009 [7]

	*  Report from Yucca Mountain - Federal Budget Could Provide Signal,
EnergyBiz, Jan/Feb 2009 [8]

   [9]