Economics hinder US new build

16 August 2011

World Nuclear News

The near-term prospects for an expansion in the use of nuclear energy in the USA "will be miserably hard and extremely challenged by economics," according to the head of Exelon, the country’s largest nuclear utility.

Speaking at the American Nuclear Society’s 2011 Utility Working Conference in Hollywood, Florida, on 15 August, Exelon chairman and CEO John Rowe said that the renaissance of the US nuclear industry is being limited by economics rather than technology.

"When making decisions about what to build, the same standards that we say should be applied to renewable, coal and gas must be applied to nuclear." These include costs, energy demand, energy security and government support. "Politicians ignore many of these factors, especially economics, and want to promote their favourite technologies."

Rowe told the conference, "The country needs nuclear power if it is going to tackle the problem of climate change, clean up our generation stack, maintain reliability and improve overall energy security… But we must keep our hopes for new generation harnessed to facts. Nuclear needs to be looked at in the Age of Reason and not the Age of Faith. It is a business and not a religion."

Exelon is America’s biggest generator of nuclear electricity with ten power plants and 17 reactors located throughout Illinois, Pennsylvania, and New Jersey. Approximately 93% of its total electricity generation is nuclear power, making it one of the lowest polluting utilities in the USA.

It also has an uprate program that could see the effective addition of up to 1500 MWe in extra generating capacity by 2017, at a cost of about $3.5 billion – half the cost of building a new plant. This comes on top of about 1100 MWe in uprates added to the units in the decade up to 2009.

Rowe said that 20 years ago he put forward four preconditions for investing in new US nuclear power plants.

The first is that we have the right technology. He said that new designs needed more safety features and to be simpler to operate than earlier designs. "The new reactor designs have made great progress in this area, and this condition has been met," Rowe concluded.

The second requirement is to have a workable solution for dealing with radioactive waste. However, he said, "Unfortunately the federal government is further away from keeping its promise on waste disposal than ever and this condition cannot be met."

Thirdly, there needs to be demand for new generating capacity. "There is not currently a need for new baseload generation because of minimal load growth and excess generation capacity," Rowe said. "This could change with more coal plant retirements, but right now this condition cannot be met."

The final precondition is that there are consistently higher prices for gas, making nuclear a more economical option. However, he noted that new supplies of natural gas "has caused prices to plummet from their historic highs. It is the most affordable fuel for at least one, perhaps two decades." Therefore, "This condition cannot be met due to the influx of shale gas into the market." Rowe added, "Shale is good for the country, bad for new nuclear development."

"So it is not the technology – it’s the economics that we are challenged by," according to Rowe. "Despite not meeting my test for new build right now, nuclear energy presents a challenge and an opportunity, and remains, in my view, a career of choice for bright, talented people."

In 2008 Exelon planned a two-unit nuclear power plant at a new site in Victoria county, Texas, and applied for a combined construction and operating license before backing away in March 2010. It is still, however, pursuing an Early Site Permit for the potential Victoria plant.

Researched and written by World Nuclear News

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