Nuclear Industry Eyes a Smaller Renaissance

And those nuke cost just keeps going up

If you look at the October 16, 2007 direct testimony of Florida Power & Light in the Public Service Commission case to show need for more nukes in the Sunshine State, the end cost projections now range from $5000 to $8000+ per kilowatt for a Westinghouse AP1000 or a GE Advanced Boiling Water Reactor. That's as much as $12 billion per unit and they haven't so much as put a shovel in the ground.

The document is posted on the Florida Public Service Commission website:

http://www.psc.state.fl.us/dockets/cms/docketFilings2.aspx?docket=070650

and find document #09467-07. The cost projections are at page 250 of 251

Nuclear power? No thank you.

Paul Gunter of MD @ Mar 05, 2008 15:50:25 PM

A couple of points in reply

Whether an ABWR can be built in 4 years in the U.S. is unknown; history would show it won't be. Meanwhile, the NRC has suspended its review of the application for the first ABWRs proposed (by NRG Energy in Texas) and postponed public hearings because the utility wants to make numerous changes to the certified design. TVA, by the way, wants to make numerous changes to the Westinghouse AP 1000 design too, which will slow down its application....so much for design standardization...

While some of the utilities proposing new reactors are in regulated states and presumably could cover reasonable costs from ratepayers, remember that in the first generation of reactors, all utilities were in regulated states--that didn't prevent WPPSS from defaulting on $2.5 billion in bonds nor the bankruptcy of Public Service of New Hampshire, nor numerous significant cost overruns and cost disallowances.

But several of the utilities (for example, Constellation and NRG) want to build new reactors in unregulated states as merchant plants. These utilities have publicly stated that they will build only if they receive federal loan guarantees. They're not about to try to raise money on Wall Street or risk their own money on reactors unless the taxpayers are on the hook for the potential losses.

The choice isn't nuclear power or CO2, SOX, etc--it isn't between coal and nuclear. It's between nuclear and renewables and energy efficiency. We can achieve a carbon-free, nuclear-free future (check out www.ieer.org) that meets our energy needs at the same percentage of GDP that we currently spend. That's the future we need to be aiming for.

Michael Mariotte of MD @ Feb 26, 2008 09:15:41 AM

Smaller plants might help

A common discussion topic in the Nuclear Renaissance story is the idea that the projects are so large that no single US utility has the capital base required to make the required investment without some kind of government loan guarantee. (Mr. Rowe of Exelon made just that argument above.) It is also well known that the US has not constructed a new nuclear power plant from the ground up in more than 30 years. There is probably a learning curve effect that will make the first plants take longer and cost more than later plants.

It seems logical to wonder, then, why no one - including the vendor - has mentioned that there is an already certified design for a smaller reactor - the Westinghouse AP-600. Presumably, this plant could be built at a substantial discount to the larger units being proposed. In addition to the AP-600, there are a number of other designs at various stages of completion that might lead to an entry level design, one that could allow the industry to develop its expertise in smaller chunks, reducing the risk and increasing the learning opportunities.

It might even make sense to do a Shippingport all over again. The US actually HAS built some reasonably large reactors in the very recent past - they are ships with names like USS George Washington, and USS George H. W. Bush. In the mid 1950s, Congress and the President saw a need to jump start the commercial nuclear power industry and put a successful team led by ADM Rickover onto the project.

Within 4 years, Shippingport was up and running as a commercial plant even though nothing similar had ever been built. With some modifications that eliminate the warship specific features, a modern carrier reactor plant could be built on land in far less time than one of the currently proposed commercial designs.

As Mr. Rowe stated - there is a need to break the ice. Perhaps there is a better way to do than than to provide tens of billions in loan guarantees for projects that do have substantial risk of non-completion. One nice thing about this concept is that the plant vendors experienced in these designs are wholly owned American companies.

Despite the best (mis)information efforts of the N(M)IRS, many of us have figured out that Michael Mariotte is dead wrong about the benefits of nuclear power compared to its competition. Lack of greenhouse gas emissions is just one of a long list of winning features that include reliable operation, low operating costs, high technology jobs, reduced water pollution, reductions in NOX, SOX, CO, and fly ash, reductions in strip mining, reductions in coal train demand and reduced dependence on imported natural gas and oil.

I support a team effort to jump start the US construction capability. However I have a hard time as a patriotic libertarian in cheering multibillion dollar potential costs for American taxpayers for projects that should be immensely profitable for companies like Hitachi, Areva, Mitsubishi, and Toshiba. I hope that does not sound to jingoistic, but we are talking about a business deal here that includes some silent partners who might want a say in where their taxes go.

I am not even very comfortable with guarantees for companies like Exelon, GE, Bechtel, NRG and Constellation. They are far better off than most of their taxpayer partners and have a lot more control over the projects for which they are seeking the guarantees.

Rod Adams of MD @ Feb 24, 2008 17:04:07 PM

Defaulting on Loans

Correct me if I am wrong, but aren't most of the nuclear plant applications for regulated utilities who can pass on the construction costs to the ratepayers (pending oversight approval)?

So technically there is barely any risk of defaulting on loans for most of these plants, right? The muni-bond yields have been rising so maybe they are asking for some sort of low yield loan???

Could somebody please explain this desire for loan guarantees in more depth, hopefully with some numbers? Thanks.

Frank of GA @ Feb 23, 2008 11:00:23 AM

Update: The complex loan guarantee story

Jon Block, who manages the Union of Concerned Scientists’ Nuclear Energy and Climate Change Project, above correctly pointed out my error—nuclear loan guarantees were not in the energy bill. They were part of (and the details are complicated) the giant omnibus federal spending bill passed the same week in the pre-holiday flurry of lawmaking last December. Block is correct that the language was not in the bill itself. The rationale: No need for an appropriation unless the nuclear investors actually default on their loans. But the report accompanying the bill specifies $18.5 billion for nuclear power facilities. Congress does many things in the reports accompanying budget bills; most notably, that’s where all those earmarks are, directing how money should be spent—what institutions and pet projects should get funding. Nuclear would get the largest share of the loan guarantees, with $2 billion additional for advanced nuclear fuel cycle facilities, but there would also be $6 billion for coal power with carbon capture and $2 billion for coal gasification and $10 billion for renewable energy.

Another interesting point: Some analysts have noted a discrepancy between the language in the law and in the report over that second point that Block mentions. The law says that the Department of Energy must give Congress an “implementation plan” 45 days before approving a loan guarantee. But the report adds the extra caveat that no funds can be made available until the plan is “submitted and approved.” That would give Congress a chance to block any project. However, that language is only in the report, not the law. Of course, the loan guarantee provision itself is only in the report too! You’ve got to love Washington.

When something gets this complex on Capitol Hill, it’s fair to say it’s because there’s a bit of disagreement. In order to do justice to this issue, I will come back to it again soon. The biggest question that I’d like to address is how do you measure the value of these loan guarantees, the likelihood of default and the amount that the taxpayer could be on the hook? I daresay that the difficulty of answering this question is the reason that Congress specified $18.5 billion for nuclear in the aforementioned complicated fashion instead of straight-out including the $50 billion in loan guarantees the nuclear industry had been seeking. But for now, I wanted to correct my error and thank the Union of Concerned Scientists for bringing it to my attention—the loan guarantees were not in the energy bill.

Marianne Lavelle of DC @ Feb 22, 2008 20:55:20 PM

You are wrong!

I would just like to tell you nuclear power is the best and only way to save this planet. It is ridiculous to tax people who want coal plants, so we can pay for killing this world. The only reason we are behind the curve is because of oil companies.... they are greedy! France is the best example of a country that is 80% of its energy is from nuclear power. Who cares if it cost billions of dollars to build these nuclear plants, if we don't we will have catastrophic consequences to deal with.

We needed to start this 50 years ago. I promise you one thing nuclear power is coming in a huge way. Uranium was $8.00 a pound three years ago and sits at a price of $95.00 a pound now. I appreciate your insight but the truth is there is so much you are not aware of!

John of NC @ Feb 22, 2008 18:01:23 PM

Construction times

GE and Toshiba built a bunch of ABWRs in Japan in 4 years. I think that design will be the one which makes the 2016 cut. It is already NRC approved and the COL licensing is already underway. So 2 ABWR reactors by 2016.

I disagree on the fact that no carbon emissions is nuclear energy's only advantage over other sources. Remember the existing plants are making huge profits now so it is already economic. Wind and solar have roughly a 30% capacity factor so you have major problems with that already. Coal is going to have a tax or cap and trade cost escalation plus the US is now exporting a lot of coal to other countries. Natural gas hit $9/million BTU yesterday and I don't see that going anywhere but up due to foreign growth. Uranium prices should also rise but that is only a small portion of the cost of nuclear power.

Will 30-40 new nuclear plants make a huge difference in carbon emissions? Probably not a lot. But if you add this contribution to energy efficiency contributions, renewables, alternative transportation fuels, etc. then I think this country is on the right track. The emissions contribution of nuclear is overstated, the economy needs cheap energy to keep running at a decent growth rate and nuclear power is going to be a big part of that, especially in the South.

An interesting thing to think about is how will the so-called recession or a potential rebound of the US dollar affect construction prices?

Alex of GA @ Feb 22, 2008 11:59:43 AM

NEI overly optimstic

As usual, the Nuclear Energy Institute is spreading overly optimistic projections. Moody's Investor Service already projects construction costs for new reactors of $5,000-$6,000/kw. The recent filing to the Florida Public Service Commission by FP&L ($12-$24 Billion for 2 reactors depending on which design is chosen) and Areva's real-world experience in Finland bears out Moody's projections.

Moreover, there is no chance any reactors will be on-line by 2016. Nuclear construction historically has taken far longer than projected, and again, the current Finnish experience confirms nothing has changed. The reactors applying now have a slim chance of completion by 2018--but I wouldn't bet any money on that.

And, of course, a few reactors--even 30 or 40--would make essentially no difference in our carbon emissions, which is nuclear's only potential advantage over other energy sources.

If we're serious about climate, and we should be, we need to invest now in wind, solar (see, for example, Scientific American January 2008) and energy efficiency which can be implemented faster, cheaper, cleaner and safer.

Michael Mariotte of MD @ Feb 22, 2008 10:19:23 AM