Abstract
Any forthcoming “nuclear renaissance” is likely to meet many stumbling blocks that go beyond the tremendous cost of building new nuclear plants. Our experts outline some of the largest impediments to U.S. nuclear power growth.
WHAT TO DO WITH THE WASTE?
Economics is the greatest impediment, but being a typical academic, I will qualify my answer by saying that solving the nuclear waste problem is also an important factor. But let's start with economics.
It costs a lot to build a nuclear power plant. Current estimates range between $2 billion and $4 billion, with the higher end more likely. It also takes a long time–at least 5 years, probably longer, at least until the industry starts building them in droves. The uncertain price tag in combination with the long time frame adds up to a risky capital venture. Compared to relatively cheap and quick natural gas combined-cycle plants, nuclear plants will need the government subsidies embodied in the 2005 Energy Policy Act to be built at all.
Utility companies that own nuclear power plants claim the federal government needs to remove spent fuel from their reactor sites before an expansion of the industry can occur. This brings us to Yucca Mountain, Nevada, the government's only in-progress nuclear waste repository. In 2002, progress on Yucca Mountain appeared to be moving toward final approval, but the process slowed so substantially in the following years that it may be 2020 before Yucca Mountain opens, if it opens at all. The CEO of Duke Energy, Jim Rogers, recently stated that both the cost and waste issues are giving him pause as to whether the company will build a new plant in South Carolina. We shall see if the much-touted nuclear renaissance ever comes to pass.
DWINDLING WORKFORCE
Nuclear technology's promise and risks cut a wide swath through our political and economic landscape. For instance, it is generally recognized that no effort to meaningfully reduce global carbon emissions, while avoiding widespread economic hardship, can be successful without a significant expansion of nuclear power generation. Almost half of U.S. nuclear power plants in operation today have had their operating licenses extended for another 20 years. The others are in the process of extending their licenses. And U.S. utilities plan to order more than two dozen new plants, particularly in the southeastern states.
One logistical question hangs over this potential nuclear growth: Who will operate these plants? It is estimated that almost one-third of the current nuclear workforce will reach retirement in the next 10 years. While reliable data is scarce, there is significant anecdotal evidence that the Energy Department, the national laboratories, other federal agencies, nuclear technology companies, and university nuclear engineering departments are currently experiencing or anticipating shortages of qualified U.S. nuclear science and engineering students at the undergraduate, graduate, and doctoral levels. This shortage, along with a shortage of skilled nuclear technicians, will likely limit the rate at which nuclear power plant construction can proceed in the United States.
RISK AVERSION
In order to proceed with a new nuclear project, an electric utility or power generation company, its shareholders and investors, and, if applicable, its economic rate regulators, must have confidence that the plant will be cost competitive with other available base-load generating alternatives such as gas- and coal-fired generation. That means the plant must be completed on time and within budget, will commence commercial operation without delay, and will operate reliably over its lifetime. Several critical steps must be accomplished to provide this confidence.
The first step is the continued successful operation of the 103 operating nuclear power reactors in the United States. Sustained strong economic and safety performance of existing plants provides assurance that new plants using designs that have evolved from their predecessors will also operate safely and reliably. This helps maintain the public support needed for new plant commitments.
The second step is the successful validation of the NRC's revised licensing process for new plants. Unlike other forms of power generation, construction and operation of a new nuclear unit must be licensed by the NRC. This process creates the potential for changing requirements and licensing decisions or litigation that could delay commercial operation of a completed plant. The U.S. Congress and the NRC instituted a new licensing process in 1992 that is intended to mitigate the risk of licensing or litigation delays, but this new process has not yet been tested.
The third step is the successful implementation of the various financial incentives in the Energy Policy Act of 2005. These provisions, including the availability of federal loan guarantees, a production tax credit for up to 6,000 megawatts of new nuclear generation, and standby risk insurance for regulatory and litigation delays for the first six units, help to mitigate several of the risks associated with building new units.
The fourth step is the negotiation of appropriate risk sharing arrangements between a plant's owners, manufacturers, and constructors when undertaking new construction contracts. Such arrangements can help mitigate the risk of construction delays and cost overruns by allocating responsibility for the cost of materials and labor.
PSYCHOLOGICAL BAGGAGE
Entrenched “old knowledge,” regulatory inertia, and perceived financial risk continue to impede new nuclear orders. Many political and business leaders, public utility regulators, educators, and investment bankers retain the “knowledge” of nuclear energy's shortcomings from decades ago, while ignoring or dismissing improvements in safety, economics, licensing, and plant operations. This “knowledge” has also been passed on to a younger generation educated that nuclear energy “failed.”
The financial community retains the risk memory from failed nuclear construction programs of decades ago, which discourages new investment. At the same time, public utility regulators place the greatest financial risk on construction of nuclear plants–rather than on gas- and coal-fired plants, where sensitivity to fluctuating fossil fuel prices (and potential future regulation of carbon emissions) gets passed automatically to consumers. Added to this are nuclear owner-operators who desire additional units but are reluctant to be the first to wade into the new, unproven regulatory waters of the revised licensing processes. This obstacle of “old knowledge” can only be overcome through successful deployment of new nuclear plants.
Supplementary Material
2005 Energy Policy Act
Supplementary Material
Oversight of Nuclear Power Plants