Challenges For Nuclear Power

Tough Economic Environment for Nuclear Power

The now multi-year run of cheap natural gas prices has had a significant impact in the energy world, and has been a disrupting factor in electricity in particular.  It’s been hard for other energy sources to compete in the low price environment that has been created by cheap abundant natural gas in the U.S.

Nuclear power is not immune to this.  Citing low wholesale electricity rates among other factors, several nuclear power plants across the country have been scheduled for retirement in the past year.  In total, five reactors representing a total capacity of around 4,200 megawatts have been slated for shutdown.  In each case, for various reasons, the owners of the plants feel that they can no longer make money in the current environment.

Nuclear reactors are expensive undertakings.  They required massive amounts of capital and years to build. It’s not common to see them retired and their owners don’t take such decisions lightly.  The current round of retirements represent the first nuclear power plant shutdowns in the U.S. since 1998.

Low Electricity Rates and High Regulatory Burdens

The largest recent retirement is the San Onofre Nuclear Generating Station (SONGS) near San Diego.  Southern California Edison, the owner of the facility recently made the decision to retire two reactors (units 2 and 3) totaling a combined output loss of 2,150 MW.  The two units have been offline since January of 2012 awaiting repairs.

While the company had originally planned to restart the reactors after repairs were made, they have recently changed course and decided that the cost of repairs and length of the regulatory approval process involved in restarting the units make them no longer viable.

While there were a number of complicating factors leading to the shutdown of the SONGS units, the owners of the Vermont Yankee facility in Vermont are laying the blame for their recently announced shut down specifically on low natural gas prices and what they call “wholesale market design flows” that have kept wholesale electricity rates low in the region.  Consequently, they didn’t feel like the facility could continue to be economically viable.  They will start decommissioning in the fourth quarter of 2014.

The other recently announced closing are:

  • The Kewaunee Power Station in Wisconsin – retired in May 2013
  • Crystal River Nuclear Generating Plant Unit 3 – the plant has been shut down already.

See Also: The Prospects For Nuclear Energy In The US
See Also: Natural Gas Exports Mean Likely Higher Electricity Rates in Texas

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The High Cost For Japan Of Going Nuclear-Free

This is the first time in over 40 years that Japan has been 100% nuclear-free.  Late Saturday night, Japan shut down the last of its 54 nuclear reactors, bowing to pressure from the Japanese populous who are worried of another nuclear meltdown.  Now worries of a different kind are beginning to take hold.

With summer coming in Japan, the government is already warning of impending rolling blackouts, and electricity rationing is already being discussed. 

Before the tsunami of March 2011, 30% of Japan’s electricity came from nuclear plants. Since those plants have now been removed from the equation, Japan is scrambling to fill the void.  At a cost of $100 million dollars per day, Japan is now forced to import substantially more oil and natural gas, 90% of which comes from the turbulent Middle East.  The increased use of fossil fuels is expected to increase Japan’s greenhouse gas emmissions by over 15%, and still there will not be enough power to avoid rolling blackouts this summer.

Japan’s Prime Minister, Yoshihiko Noda, recently told The Washington Post that the country desperately needs to restart the reactors, and do so soon. “I think it’s the government’s responsibility to ensure that there won’t be too much stress on the people and on mid- to small-size corporations,” Noda said. “So we must explain to the people of Japan clearly, with that in mind.”

If Japan began switching its nuclear reactors back on this summer, the economy could expect to grow 1.9% this year and would be able to run a trade surplus for the year, instead of the projected $57 billion trade deficit it is staring at due to the tremendous amount of oil and gas it is having to purchase.

The Prospects For Nuclear Energy In The US

Nuclear Power PlantNow that the anniversary of the Three Mile Island incident is upon us, let’s take a few minutes to examine the status of our nation’s nuclear energy prospects.

The U.S. has not broken ground on a nuclear power plant since the 1970’s, though the Nuclear Regulatory Commission recently green-lighted the building of two new nuclear complexes — the twin Vogtle reactors near Augusta, Georgia, and a pair of reactors in South Carolina. With a price tag of $30 billion dollars for the two locations, and several other companies laying out hundreds of millions of dollars for the planning of other reactors that may or may not get to the groundbreaking stage, we may be witnessing the onset of a nuclear renaissance in North America.

The U.S. nuclear industry has had three substantial hurdles to get past in recent years: the unimaginably low price of natural gas, the ongoing economic recession, and last year’s Fukushima disaster.

The industry does, however, have two things going for it: the increasing demand for electricity and the worries (founded, or not) of global warming. In the recently published book "The Doomsday Machine," authors Cohen and McKillop state “Even if global warming science was not explicitly invented by the nuclear lobby, the science could hardly suit the lobby better.” Along those lines, the industry has recently begun an ad campaign aimed at improving its image by stressing the fact that nuclear power is by far the largest zero-carbon energy source in the United States.

In fact, even the Japanese incident is being pointed to as a reason to move forward with building new reactors. The nuclear power plants being built in Georgia and South Carolina will be utilizing the AP1000 model, where the letters stand for "advanced passive," because the emergency cooling will rely on readily occurring forces like gravity and evaporation, as opposed to the Fukushima model that used pumps and valves that required electricity to operate.

Westinghouse Electric, the maker of the AP1000 line, argues “If an AP1000 had been there, we wouldn’t be having this discussion today; that plant would be back on line.” Even General Electric, which designed the Fukushima reactors, claims the same for its new “passively safe” design.

The jury is still out as to whether or not these two nuclear plants are the beginning of a new trend in meeting America’s energy needs. The headwinds facing nuclear power are still present, and will need to be overcome before our nation’s nuclear power industry can assert the renaissance has begun in earnest.