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Mon Aug 12, 2013, 10:19 AM

The U.S. Nuclear Power Industry's Dim Future [View all]

Pretty good recap, except it starts with one of the nuclear industry's favorite myths. It wasn't Three Mile Island that derailed the nuclear bandwagon market of 70s and 80s, it was the same problem they face now - nuclear power simply can't deliver on the promises its sales force makes on its behalf.

Five years ago the nuclear energy industry looked set for its first run of serious growth since the late 1970s, when the Three Mile Island disaster put the brakes on reactor expansion in the U.S. In 2008, Congress authorized $18 billion in federal loan guarantees for plant construction. Utilities submitted 24 applications by the end of that year, anticipating that lawmakers would eventually put a price on carbon with a cap-and-trade bill that would make coal-fired plants less profitable. In 2007 and 2008, the price of the nuclear industry’s two biggest competing sources of power, coal and natural gas, skyrocketed as part of a global rally in commodity prices.

That optimism has given way to despair. Four reactors have closed so far in 2013—a record for the industry. Because of the shale energy boom, natural gas prices crashed, followed by coal. Electricity demand fell during the recession and has yet to regain its 2007 peak. Bolstered by billions of dollars in green energy subsidies in the 2009 stimulus package, renewables, especially wind, have come on faster than many anticipated. Cap and trade never happened. And Japan’s Fukushima disaster in 2011 reminded the world just how dangerous nuclear power can be.


A year ago, Exelon (EXC), the largest operator of commercial nuclear plants in the U.S., killed plans to build a 3,000-megawatt plant in Victoria County, Tex. After shuttering its Crystal River reactor in Florida, Duke Energy announced in May that it would not build two plants in North Carolina. In June, MidAmerican Energy, majority-owned by Warren Buffett’s Berkshire Hathaway (BRK/A), decided not to go ahead with new nuclear plants in Iowa. Of those 24 applications for reactors filed in 2008, only four have resulted in new construction. “In a competitive market, you can’t even come close to making the math work on building new nuclear plants,” says Daniel Eggers, a utilities analyst with Credit Suisse (CS). “Natural gas is too cheap, demand is too flat, and the upfront costs are way too high.”


With fewer new plants, the average age of America’s fleet of reactors will steadily rise. A report by Credit Suisse projects that the total annual operating costs of running a nuclear power station could rise by 5 percent a year. Unless they get license extensions, 43 reactors will have to close within 20 years. The pressures on nuclear will only increase as more renewables come online. Thanks to production tax credits from the federal government, plus no fuel costs to worry about, wind producers get paid to push power into the market no matter what the price. According to Credit Suisse’s Eggers, this has led to power being sold at negative prices recently during off-peak hours at night and on the weekend in parts of Texas and in the Chicago area.

More at http://www.businessweek.com/articles/2013-07-18/the-u-dot-s-dot-nuclear-power-industrys-dim-future

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Reply The U.S. Nuclear Power Industry's Dim Future [View all]
kristopher Aug 2013 OP
mbperrin Aug 2013 #1