The Nuclear Solution is Neither Easy nor Cheap

Tag : reprocessing plant


By John Carey
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To power America's future, Sen. John McCain (R-Ariz.) has an energyplan with a distinctly French accent. "The French are able togenerate 80% of their electricity with nuclear power," thepresumptive Republican presidential nominee points out. "There's noreason why America shouldn't."
In a mid-June speech, part of a continuing blitz on energy issues,McCain laid out his vision for 100 new nuclear plants -- 45 of themto be built by 2030. They would help meet America's energy needs,and because nukes don't emit greenhouse gases, they would fightglobal warming as well. McCain also wants to borrow from the Frenchplaybook by reprocessing and reusing spent nuclear fuel and byproviding government incentives to get all this done.
Nukes now produce 20% of U.S. electricity, says McCain seniorpolicy adviser Douglas J. Holtz-Eakin: "To move north of that, wehave to be aggressive."
BUDGET BUSTERS
But McCain may not want to follow the French example too closely.While France's existing 59 atomic plants are relativelytrouble-free, its largest nuclear company, Areva, has run intodifficulties building next-generation reactors in France andFinland. The Finnish project is two years behind schedule and morethan $1.5 billion over budget, while construction of the otherplant, in Normandy, was temporarily halted in late May because ofquality concerns. And while France has the world's biggestfuel-reprocessing program, it still hasn't found a permanent homefor a growing pile of highly radioactive waste that's left over.The waste sits in heavily guarded storage at Areva's La Haguereprocessing plant.
The U.S. nuclear industry believes that delays and cost overruns,which helped kill new plant construction in the late 1970s, areless likely today, thanks to now-standardized reactor designs and astreamlined U.S. government licensing process. That process has yetto be tested, though, and costs for new plants are climbing. Twoyears ago, the price of a 1,500-megawatt reactor was pegged at $2billion to $3 billion. Now it's up to $7 billion and rising, as thecost of concrete, steel, and other materials and labor soars.
MidAmerican Energy Holdings, a gas and electric utility owned byWarren Buffett's Berkshire Hathaway, shelved its own nuke planearlier this year, saying it no longer made economic sense.
"The country badly needs new nuclear plants to deal with theclimate issue," says John W. Rowe, chief executive officer ofExelon, currently the largest nuke operator, and chairman of theNuclear Energy Institute, the industry's trade group. "But they arevery expensive, very high-risk projects."
So risky and expensive, in fact, that building new ones won'thappen without hefty government support.
NRG Energy, Dominion, Duke Energy and six other companies havealready leaped to file applications to construct and operate newplants largely because of incentives Congress has put in place. Thesubsidies include a 1.8 cents tax credit for each kilowatt hour ofelectricity produced, which could be worth more than $140 millionper reactor per year; a $500 million payout for each of the firsttwo plants built (and $250 million each for the next four) if thereare delays for reasons outside company control; and a total of$18.5 billion in loan guarantees. The latter is crucial, since itshifts the risk onto the federal government, making it possible toraise capital from skittish banks. "Without the loan guarantees, Ithink it would be very difficult for the first wave of plants tomove forward," says David W. Crane, CEO of NRG.
Even $18.5 billion won't guarantee the debt needed to build dozensof reactors, though. And the current limit on the loan guarantee isjust one bottleneck.
Only two companies, Japan Steel Works and France's Creusot Forge, aunit of Areva, are capable of forging key reactor parts such asmassive pressure vessels. There are also shortages of contractorswith nuclear certification and of skilled workers -- even a lack ofpotential sites for new reactors. The proposed plants are all nextto existing reactors. Builders of the power plants, utilityexecutives say, are unwilling to commit to fixed prices and fixedschedules. Most companies want to be paid their actual costs,including overruns, plus a reasonable return, says one CEO.
That's why experts say the much-heralded nuclear "renaissance" willbe slow to flower. "I'm not quite sure the number McCain put out isobtainable," says Adrian Heymer, senior director for new plantdeployment at the Nuclear Energy Institute. "If there are anyhiccups in coming in on time or on budget, it will be a struggle togo much beyond the first eight or 10 plants."
Exelon's Rowe adds that the industry can't grow until thegovernment solves the waste problem, either by opening a proposedstorage site in Nevada, or by setting up surface storage facilitiesaround the country. And in the long run, to cut the amount ofwaste, he says, "it's very clear that we've got to have afuel-recycling technology."
The trouble is, separating out plutonium in the spent fuel forreuse is costly and dangerous, argue critics like PrincetonUniversity physicist Frank N. von Hippel. And in any case, worriesover separated plutonium being diverted to make bombs led the U.S.to ban reprocessing 31 years ago.
The upcoming election will pull many of these issues into thelimelight. The nuclear industry's call for still more governmentsupport will find a more sympathetic ear in McCain than in Sen.Barack Obama (D-Ill.). The presumptive Democratic nominee agreesnuclear energy could help combat global warming, but he says thereare better alternatives. Indeed, many Democrats and renewable poweradvocates are upset that the playing field is tilted so far infavor of nukes. Robert Fishman, a veteran utility executive who isnow CEO of solar startup Ausra, says the investment tax creditsought by the solar industry would cost less than 1% of the dollarsgoing to nukes and fossil fuels.
"I don't think we've done a good job laying out to Senator McCainwhat the renewable industry can do for the country," Fishman says.
So it looks like a few nuclear plants may come online in the U.S.-- some as early as 2016 -- but not as many as McCain wants.
With Carol Matlack in Paris, Michael Arndt in Chicago, and KenjiHall in Tokyo