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Nuclear power a viable competitor in US energy market, study finds

High costs of building nuclear power plants may put the industry at a disadvantage to fossil-fuel-burning energy producers, says a study from MIT. But reprocessing spent nuclear fuel, a controversial practice, won't be necessary, it finds.

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The economics of nuclear power was also a major focus of the report. To prime the pump and give investors greater confidence that nuclear plants can be viable, it recommends pushing ahead with federal loan guarantees to build seven to 10 nuclear power plants.

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But such government support "should not be extended" beyond that first group, the study says. That recommendation runs counter to moves in Congress to extend federal loan guarantees for nuclear plant construction beyond the $54.5 billion sought by the Obama administration. Some 27 applications for permits to build new plants have been made – but no construction has begun.

"We believe that nuclear energy should be able to compete on the open market as should other energy options," the report states. Even so, nuclear power will have a hard time competing with traditional fossil fuels like coal and natural gas unless "a modest price on carbon dioxide emissions is imposed," the study says.

Some criticized the report's findings, saying it failed to consider the full range of alternatives to costly nuclear plants and radioactive waste, including renewable energy and energy efficiency.

The fundamental problem of getting nuclear construction going is not just investor uncertainty over the cost of the first power plants, as the MIT report suggests, says Mark Cooper, a senior fellow for economic analysis at the Institute for Energy and the Environment at Vermont Law School. It is, instead, what he calls the long-term escalation of nuclear power's cost structure that makes it both a poor alternative to fight global warming and uncompetitive with other renewable fuels.

The cost estimates for new reactors that are cited in the MIT study are too low – about $4,000 per kilowatt of capacity, well below the $5,000 to $6,000 per kilowatt that utilities use to calculate these costs, says Dr. Cooper. Some independent estimates put new nuclear construction as high as $10,000 per kilowatt of capacity – well above the cost for wind power, he notes.

With its price declining, natural gas now has a significant cost advantage over nuclear. Indeed, indications are that nuclear power will have a tough time competing in the energy marketplace unless Congress puts a price on carbon emissions.

In June, Exelon, the largest US nuclear power producer, withdrew its application with the Nuclear Regulatory Commission to build and operate two reactors in Texas. The company is turning instead to natural-gas-fired turbine plants, company officials say.

"We think natural gas will stay cheap for a very long time," John Rowe, Exelon CEO, told Bloomberg last week. "As long as natural gas is anywhere near current price forecasts, you can't economically build a merchant nuclear plant."

IN PICTURES: Nuclear power around the world