March 21, 2011

Japan puts nuclear industry in uncertain state

By Tracy Idell Hamilton
San Antonio Express-News

Nuclear Innovation North America is slowing down development of two additional nuclear reactors at the South Texas Project to give federal regulators and others time to assess the state of the industry in the wake of Japan’s nuclear disaster.

Work on the proposed plants will be limited to licensing and securing the U.S. federal loan guarantee upon which the project depends, according to a Monday release from NINA, the nuclear development company owned by NRG Energy and Toshiba Corp.

"NRG and its partners stand squarely behind new nuclear power as the most important component in our transition to a low-carbon economy," said David Crane, chairman of the board of NINA and CEO of NRG.

"However, our best course of action in this immediate period of uncertainty is to minimize project spend, continue with those activities we can control and wait until there is more information upon which we can base our long-term decisions."

The Obama administration last week called for a safety review of U.S. nuclear plants. Any design or regulatory changes stemming from that review could affect the proposed units near Bay City.

Crane said that since the South Texas Project and the stricken plants in Fukushima are different, it isn’t clear whether modifications would be necessary to the existing or planned units.

NRG also remains committed to an earlier promise it made to shareholders that it would make a final decision about whether to continue with the project by the third quarter of this year, Crane said.

He said the Japanese crisis has added to uncertainty about loan guarantees; the licensing process; the cost to build the plant; customers committed to buying the power; and the project’s eventual ownership.

Tokyo Electric Power Co., or Tepco, which owns the crippled Fukushima plants, had been expected to invest in the expansion. Given the company’s capital needs in the wake of the disaster, that’s now in question, Crane said.

But the Japanese government may still have an interest in putting up loan guarantees, Crane said – though he stressed that NRG has not spoken directly to the Japanese government or Tepco since the earth-quake – since they would support Toshiba.

Most U.S. analysts were bearish on the economics of new nuclear development even before the Japanese crisis; since then, projections have become even grimmer. A report from Standard & Poor’s last week projects "deteriorating economics" for new plant construction.

thamilton(at)express-news.net