High costs delaying nuclear power
Several nuclear power plants are in the planning phase, but astronomical costs have given utilities pause.
BY MARK WILLIAMS
COLUMBUS, Ohio — A ghost from the nuclear industry’s early years has reappeared.
It is not public apprehension about safety or disposal issues this time, but the staggering cost of building nuclear reactors.
A wave of new reactors now in the works is intended to solve at least part of the nation’s energy problems as it attempts to shift away from fossil fuels. But cost is likely to plague every upcoming nuclear project.
This month in Missouri the first of the next generation reactors was put on hold because of the $6 billion price tag.
Whether or not AmerenUE’s Missouri reactor was a casualty of the current economic climate, the legal fight in several states shows how big the cost hurdle will be.
Some states have altered laws so that consumers begin footing the bill now, even before construction begins. Missouri did not.
”A large plant would be difficult to finance under the best of conditions, but in today’s credit constrained markets, without supportive state energy policies, we believe getting financial backing for these projects is impossible,” said Thomas Voss, AmerenUE’s president and chief executive.
Reactors were expensive 40 years ago at around $1 billion. The cost of AmerenUE’s Missouri project dwarfed even the market value of its parent company.
The cost of labor, raw materials and technology have all grown exorbitantly. Because much of the new technology and building techniques are untested in the U.S., construction will be lengthier, more expensive and riskier, according to a report issued by Standard & Poor’s.
Residential electricity rates would have risen 1 percent to 3 percent annually for AmerenUE customers, up to 12.5 percent during construction, then actually dropped once the plant was in operation. A coalition of business and senior groups ran ads claiming rates could have increased 40 percent.
Including AmerenUE’s proposal, 18 companies say they want to build at least 26 reactors that would cost $6 billion to $8 billion apiece, according to the Nuclear Energy Institute.
As many as eight new nuclear plants are supposed to come on line by 2016, said the NEI’s Richard Myers. That is the beginning of what is expected to be a massive rejuvenation of the nation’s electric system which, in human terms, is approaching its golden years.
About 45 percent of the nation’s generating capacity infrastructure is at least 30 years old and one-third of the coal-fire generation is 40 years old. The U.S. has 104 nuclear plants that generate about a fifth of the nation’s electricity.
”These are big projects. They definitely serve a national need,” said Myers.
Demand for electricity is expected to grow 21 percent by 2030 and the ability to meet demand even now is problematic.
Construction will undoubtedly play out on your utility bill.
That cost, critics say, is too great and there are better ways to power homes.
”It is so phenomenally costly that it crowds out capital needed for energy efficiency and renewable energy,” said Mark Haim of Missourians for Safe Energy, a group that has been fighting Ameren’s plans.
Yet Republican lawmakers in Washington want more government funding for nuclear power.
In a radio and Internet address, Sen. Lamar Alexander of Tennessee, who sits on the appropriations subcommittee on Energy and Water Development, said the U.S. should build 100 more nuclear plants rather than spend ”billions in subsidies” for renewable energy.
He pointed out that nuclear plants provide 80 percent of France’s electricity, and the country has one of the lowest electric rates and carbon emissions in Europe.
The nuclear energy industry lobbied hard for $50 billion worth of federal loan guarantees, but that was stripped from the stimulus bill.
So states are revamping laws to help raise money.
Florida and Georgia have already done so and Oklahoma is studying the idea.
Florida’s largest utilities hiked rates this year under a state law meant to encourage investment in nuclear power, rather than plants that burn coal and gas.
Some legislators were caught off guard when Progress Energy, which has about 1.7 million customers in central and northern Florida, raised rates by $11.40 per month for 1,000 kilowatt hours, slightly less than what a typical consumer uses. At the same time, Progress said the cost of fuel was going up, meaning overall rates were set to jump about 25 percent at the beginning of the year.
Progress has since cut the nuclear rate charge for this year to $3.62, and fuel costs have fallen.