[ RadSafe ] FW: experts debate economic viability of new nuclear power plants

[Rogers Brent]

The following is public domain, published by the Bureau of International
Information Programs, U.S. Department of State.  Links to the first two
articles in the series are posted under "See also:" at the bottom of the
piece.

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Brent Rogers
Manager Radiation Operations Unit
NSW Environment Protection Authority
Department of Environment and Conservation
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WASHINGTON FILE 
U.S. Department of State, Office of International Information Programs  
04 May 2006
Experts Debate Economic Viability of New Nuclear Power Plants
Proponents of nuclear energy argue for initial government subsidies
By Andrzej Zwaniecki
Washington File Staff Writer

This is the third in a series of articles on nuclear energy.
Washington -- As the nuclear power industry moves forward with plans to
expand its reach into the U.S. energy market, a debate on whether the new
plants will be viable economically continues.
According to the Nuclear Energy Institute (NEI), an energy industry group,
nuclear power plants planned for construction in the next decade will be
competitive with other electricity sources.
"Once we get past the uncertainties and some of the hurdles associated with
first-of-a-kind construction, nuclear can be seen as a very competitive
technology," Steve Kerekes, a NEI spokesman said in a March 23 interview.
Many experts support the industry's view. A 2004 study by the University of
Chicago concluded that new nuclear power plants are economically competitive
with other types of large-scale electricity generation once initial
engineering costs are absorbed, construction experience gained and other
near-term financing issues resolved.
CAPITAL COSTS AND PUBLIC GOOD
Those opposed to nuclear energy, however, question whether the industry will
ever be competitive because of high construction costs.
"I don't think there will be a lot of capacity added because of [high
capital] costs," Thomas Cochran, director of the nuclear program at the
Natural Resources Defense Council, said in a separate March interview.
These costs range from $1,400 to $2,000 per kilowatt (kW), according to
various sources. Thus, building a 1,000 megawatt (MW) plant would require at
least $1.4 billion-$2.0 billion in initial costs.
With multiple orders for nuclear reactors, however, capital costs can be
brought down to $1,100-$1,200 per kW, Kerekes said. By comparison, capital
costs for coal-fired plants are around $1,300 per kW and those of gas-fired
plants around $600 per kW, according to industries' sources.
Kerekes said nuclear power capital costs are comparable with those of
clean-coal technology designed to produce electricity with few harmful
emissions. (Nuclear power produces no harmful emissions.)
The investors and utilities that order new plants also consider production
costs, which for nuclear power, mostly due to lower fuel costs, are a bit
below those of coal-fired plants and roughly about one-third of gas-fired
plants, he said. 
Industry analyses indicate that in the United States nuclear power can be
competitive with electricity generated from natural gas when gas prices go
over $5 - $6 per million British thermal units (Btu). In recent months,
these prices have consistently exceeded $7 per million Btu. 
A 2005 study by the Nuclear Energy Agency and the International Energy
Agency concluded that in countries that consider commissioning new nuclear
plants by 2010-2015, nuclear electricity is the cheapest potential energy
source nearly everywhere.
Andrew Paterson, an Energy Department policy analyst, says another factor
should be added to cost analysis. In an April 20 interview, he argued that
public good created by nuclear power in the form of reduced air pollution
should be priced and included in cost estimates to make comparisons among
energy sources genuinely fair.
Financial markets, which for a long time have ignored nuclear power, have
been showing more enthusiasm for the industry since it consolidated and
became competitive. Stocks of leading nuclear-energy companies such as
Exelon and Entergy have been rising, and some financial analyses view the
industry's expansion as inevitable.
"It is no longer a matter of debate whether there will be new nuclear
plants," Fitch Ratings Ltd., a leading global credit rating agency, said in
a March report. "Now, the discussion has shifted to predictions of how many,
where and when." 
CASE FOR SUBSIDIES
Some environmental groups argue, however, that the industry is in a position
to grow only because the federal government, by providing subsidies,
distorts market forces and gives it an unfair competitive edge over
clean-energy rivals.
"The [energy] companies recognize that if they make no commitment to build a
new [nuclear] plant, the administration will continue to feed them with an
ever-increasing sum of taxpayer-supported largesse," Cochran said in 2005
remarks.
Amory Lovins, the head of Rocky Mountain Institute, said in a 2005
commentary that these subsidies amount to a government "bail-out" of a
"failed but still powerful industry."
But James Muckerheide, a nuclear engineer and professor at the Worchester
Polytechnical Institute in Massachusetts, argues that the U.S. government
heavily was involved in large infrastructure projects before, including The
Tennessee Valley Authority, which in the 1930s brought electricity to
thousands of mostly rural residents. 
Paterson said government financing for the first few new reactors is
necessary to help the industry address the risks regulated by the government
such as commissioning and regulatory uncertainties. 
He said other forms of energy development also are subsidized, some of them
heavily, including oil exploration and renewable energy. The U.S. government
has invested billions of dollars in solar research since the 1970s and
offered production tax credits for wind power since 1992.
See also "Nuclear Gaining Favor as Clean Energy Source for World"
http://usinfo.state.gov/gi/Archive/2006/May/03-382182.html and "U.S. Nuclear
Power Industry Sees Expansion in Near Future"
http://usinfo.state.gov/usinfo/Archive/2006/May/03-212802.html. 
For additional information, see Energy Policy
http://usinfo.state.gov/gi/global_issues/energy_policy.html. 
(The Washington File is a product of the Bureau of International Information
Programs, U.S. Department of State. Web site: http://usinfo.state.gov)  



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