Nuclear power surge coming

In the next 15 months, US regulators expect applications for up to 28 new plants.

from the September 28, 2007 edition

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That huge startup cost might make financial sense, given a reactor's low operating expenses, especially if government begins to charge utilities for the greenhouse gases they produce. Nuclear power is virtually emission-free.

But the last time that the nuclear industry was on a building spree – in the 1980s – roughly half of the power plants proposed were never finished, in part because of fears caused by the accident at Three Mile Island. Those that were finished were delayed for years and cost far more than estimated. A number of power companies went bankrupt. In late 2003, NRG – the company that filed Monday's permit application – emerged from bankruptcy caused by overexpansion in the 1990s.

If defaults occur in the new round, critics worry federal costs will be huge.

"This is the second or third 'nuclear renaissance' I've seen," says Tyson Slocum, director of energy program at Public Citizen, Ralph Nader's consumer-protection group. "When you look at the cost of these plants and the massive financial subsidies by US taxpayers, I think that money would be better invested in cheaper sources of emissions-free power that don't have the fatal flaws nuclear power does."

In 2003, a Congressional Budget Office analysis warned of potential default rates of 50 percent or more on new plants.

Wall Street is also skeptical. In a July letter to the Department of Energy, six investment banks, including Citigroup and Goldman Sachs, made it clear that federal guarantees were required. "We believe many new nuclear construction projects will have difficulty accessing the capital markets during construction and initial operation without the support of a federal government loan guarantee," they wrote.

The risks might be worth the cost if nuclear power can have a substantial impact in slowing global warming. But even some industry experts doubt that's possible. To reduce carbon dioxide emissions by 1 billion tons annually, the level set by some scientists as a goal for nuclear power, the world would need to build 21 new 1,000-megawatt nuclear plants per year – about five of those annually in the US – for the next 50 years, says a Keystone Center report endorsed by the NEI. The US industry reached that level in the 1980s. But even under its most optimistic assessment, the Energy Information Administration recently projected that only about 53 nuclear power plants would be built by 2056. At that rate, this would not even replace the existing nuclear capacity expected to be retired during that time, the Keystone report said.

While such a conclusion would seem to blunt nuclear power's appeal, industry experts predict that climate legislation is likely to boost the cost of carbon-dioxide emissions. When it does, nuclear power construction will be suddenly very competitive with coal power – and that will accelerate growth faster and farther than predicted, they add.

Nuclear power "clearly can't do it all, but will do its share" to mitigate greenhouse-gas emissions, says Mr. Genoa.

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