Japan disaster dims hopes for US nuclear rebirth
Energy Secretary Steven Chu, center, tours the Vogtle nuclear power plant last month with executives including Southern Co. President and CEO Thomas Fanning, left. The Nuclear Regulatory Commission has approved plans to build a third and fourth reactor at the site near Waynesboro, Ga. They will be the nation's first new commercial reactors in more than 30 years.
By John W. Schoen, Senior Producer
Long before the accident at Fukushima, Japan, the U.S. nuclear power industry faced major headwinds, led by the rising cost of generating kilowatts by smashing atoms. The tsunami and subsequent meltdowns at the Japanese plant made matters worse.
When first developed for commercial use in the 1950s, nuclear power was touted as the energy source of the future that would one day be "too cheap to meter." But over the past six decades the rising cost of engineering, licensing and building a modern nuclear power plant has proven to be the industry's undoing in the United States. More recently, a sharp drop in natural gas prices and slowing demand for electricity due to conservation and a weak economy have forced the industry to shelve ambitious plans to build dozens of new plants.
Now, as a handful of utilities press on with plans to build new reactors, they face the prospect of more stringent safety regulations.
"The cost of nuclear is going up," said Mark Cooper, a researcher at Vermont Law School's Institute for Energy and the Environment. "Every time there's an accident, people take a hard look, and what they discover is that the reactors are not as safe as we thought. And safety is cost."
The explosions and meltdowns at Fukushima the March 11, 2011, earthquake and tsunami that also crippled emergency power systems designed to avert a wider disaster. The accident left tens of thousands of people homeless, exposed a larger number to potentially deadly radiation and polluted large sections of nearby farmland and ocean. The cost of cleanup is expected to amount to tens of billions of dollars
Though the accident sparked a fresh review of plant safety around the world, the global response has been mixed. Some developed countries, including Japan and Germany, have moved to reduce their reliance on nuclear power. In developing economies, including China and India, nuclear power construction is proceeding rapidly; more than 60 reactors in 14 countries are under construction or development.
Americans remain ambivalent about the role nuclear power should play in the nation's energy future. While 58 percent told a Gallup poll shortly after the Fukushima disaster they felt nuclear power is "safe," they were just about evenly split on the need for nuclear power in the country's energy mix. Some 46 percent said they believe "nuclear power is necessary to help solve the country's energy problems," while 48 percent think the "dangers of nuclear power are too great," according to the poll. Those results are roughly the same as a similar question Gallup asked a decade earlier.
Long before Japan and Germany put the brakes on nuclear, the American nuclear power industry had been struggling to launch a new wave of construction, known in the industry as the "nuclear renaissance." In 2005, Congress approved a series of loans guarantees for new plants. New standard designs and safety features promised to lower costs, and regulators said they would streamline the lengthy permitting process.
The results of those efforts are just now being seen. The first operator to win a license after nearly three decades, Atlanta-based Southern Co., hopes to bring two new reactors at its Vogtle site south of Augusta on line as soon as 2016. The Nuclear Regulatory Commission approved the company's $14 billion plan last month.
But the "renaissance" is expected to be short-lived. The only other pending application is from South Carolina Electric & Gas, which wants to add two reactors to its Summer plant in Jenkinsville, S.C.
Only a handful of other nuclear operators are potential candidates to build new reactors on existing sites. (Even the more ardent proponents concede it's extremely unlikely a new site would be licensed. Most of the 65 power plants in the U.S. designed to accommodate up to four reactors now house only one or two.)
Future applicants face a number of hurdles that nuclear proponents didn't anticipate, including a deep split within the NRC over Fukushima-related safety concerns. NRC Chairman Gregory Jaczko, who cast a lone vote against the Vogtle license, said the company hadn't promised to make safety changes prompted by the Japan disaster.
"We've given them a license," Jaczko said shortly after the vote. "They have not given us any commitment they will make these changes in the future."
But economics have played a much larger role than public opinion in sidelining plans for new nuclear plants. Several major forces are at work, including a slowdown in demand for power that accompanied one of the worst recessions in decades. New Orleans-based Entergy Corp., the nation's second-largest nuclear operator, suspended plans to add reactors to its River Bend plant in Baton Rouge, La., and its Grand Gulf plant in Mississippi.
"Both of those were economic decisions, because the load growth didn't come anywhere close to matching the projections that we were dealing with pre-recession," said Randy Douet, head of nuclear business development at Entergy.
Those economic headwinds had been building long before the 2007-09 recession.
After an original construction boom that lasted more than a decade, the economics of building nuclear power plants began to short-circuit in the late 1970s. Widespread public safety concerns after high-profile disasters at Three Mile Island in Pennsylvania and Chernobyl in Ukraine severely curtailed construction of new plants.
But it was economic catastrophe, typified by the Shoreham plant on Long Island, that dealt a final blow. Plagued by cost overruns and local opposition, the $6 billion project was shut down before it produced a single watt.
Other projects were canceled as costs skyrocketed. For those projects that continued, soaring interest rates added to cost overruns. By the end of the 1980s, the nuclear power industry was buried under a pile of debt.
In the 1990s, deregulation created another headache for nuclear power builders. Lower-cost "merchant power" plants undercut nuclear operators with cheaper rates, making it harder to recoup the billions needed to build a nuclear plant. Today financing a new plant is all but impossible without a state utility regulator's permission to recapture capital costs from future rates.
More recently nuclear industry executives hoped a carbon tax would help level the playing field by forcing operators of fossil fuel plants to raise their rates. Because nuclear plants emit virtually no carbon into the atmosphere, that would have given them a huge economic advantage over plants that burn oil, coal and natural gas.
But government efforts to reduce greenhouse gases have cooled substantially. Worse, the playing field has tilted even further against nuclear as natural gas prices have plunged 70 percent from peak 2008 levels.
Though the short-term economics aren't favorable, nuclear proponents argue that alternatives like wind and solar power will never provide the "baseload" power required to meet demand. And as the economy recovers, conservation and efficiency gains from new technology will only go so far in offsetting demand growth, said Leslie Kass, senior director of business policy and fuel supply, at the Nuclear Energy Institute, a trade group.