Tuesday, January 25, 2011

Sarah Gardner
Marketplace

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Plans for new nuclear power plants in the U.S. lose appeal as Congress doesn’t act on carbon emissions rules and natural gas becomes plentiful and cheap.

Kai Ryssdal: Three years ago, Marketplace’s Sarah Gardner did a story about American nuclear power, about how that industry was gearing up for a big comeback. There were new tax credits, building permits and regulatory changes in the air. Suffice it to say, a lot has changed.

Sarah Gardner: It’s always instructive and humbling to go back to stories I’ve reported and see how things turned out. It’s like playing "Where Are They Now?" but with news events, not celebrities.

So I dug up that 2007 "nuclear renaissance" piece from the Marketplace archives. It opens with a sound bite from David Crane, the CEO of NRG Energy. His company had just filed the first petition to build a nuclear power plant in the U.S. in nearly 30 years.

David Crane: It’s important for all of us to recognize that that was then, and this is now. The nuclear industry today is not the nuclear industry of the 1970s.

When I interviewed Crane in 2007, he was jazzed about safety advances in nuclear technology and new federal loan guarantees. Other utility execs were too. By 2008, they’d drawn up plans to build at least two dozen new reactors here. Fast forward to 2011…

Crane: All I would say is that the process has taken a very long time.

Crane still hasn’t gotten a desperately needed loan guarantee. And his company’s already shelled out half a billion on this nuclear venture, and they haven’t broken ground yet.

Paul Patterson: I think the reality caught up with the hype, so to speak.

Energy analyst Paul Patterson says it’s not just NRG’s nuclear power dreams that are on hold. In fact, most of a few dozen proposed reactors are in limbo. Congress never did pass a cap on greenhouse gases emitted by coal burning power plants, which would have made fossil fuels more expensive and nuclear power more competitive. And federal subsidies never reached the levels nuclear lobbyists hoped for. But the biggest, baddest enemy of that "nuclear revival"? Cheap natural gas.

Again, CEO David Crane.

David Crane: It was absolutely not predicted by anybody, expert or soothsayer.

A glut of natural gas has driven down prices and now makes nuclear look wildly expensive. Natural gas is a fossil fuel, but emits half the greenhouse gases of coal. Energy companies have discovered and tapped into huge reserves of shale gas in the U.S.

Bernard Weinstein is associate director of the Maguire Energy Institute in Dallas.

Bernard Weinstein: We’ve got at least a 200-year supply of natural gas in the United States. So if you’re a utility executive and you’re scratching your head, maybe I don’t want to commit to a nuclear plant right now.

Peter Bradford, a former nuclear regulator, says nuclear power’s always been a hard sell. Its history of cost overruns and plant cancellations means Wall Street won’t touch it. And the feds are cautious too. Last fall, Constellation Energy walked away from a promising nuclear project in Maryland.

Bradford said the Department of Energy demanded what Constellation called a "shockingly high" fee for a government loan guarantee.

Peter Bradford: And the nuclear industry’s position now is "We can’t go forward in the face of a fee like that. We need something that’s more like a gift."

And right now, any gifts from the feds are unlikely. So, what happens another three years from now? Well, if the experts are right this time, the industry will be lucky to have a few nuclear reactors under construction. Of course, as this story’s taught me, things can change.

I’m Sarah Gardner for Marketplace.