Tuesday, January 23, 2007

Our nuclear energy dilemma

Switch the first two letters in the word "nuclear". What do you get?


That basically describes the current status and future of the U.S. nuclear energy these days. The industry continues to position itself as one of the -- if not the -- best option available for simultaneously addressing energy demand and concerns about climate change.

But questions regarding economics, safe operation of plants and disposal of spent radioactive fuel linger. Nonetheless, as the acknowledgment that climate change is real and is already changing our world increases (apparently even among skeptics like the President), so to does the pressure to reconsider the nuclear option. (GW)

Nuclear Energy's Potential Comeback

Ken Silverstein
EnergyBiz Insider

America may like an underdog. But, it's still unclear whether the public will take to nuclear energy. While the technology has been in the shadows of national energy policy for nearly three decades, it has subsequently emerged from obscurity and is continuing to get an ever-increasing amount of attention.

Future electricity demand and stricter emission limits have combined to give nuclear energy a shot of energy. Unlike the fossil fuels, there is a near endless supply of uranium to keep such plants perking along while almost no greenhouse emissions are thrust out the smokestack.

Some key issues stand in the way. The first, which at this point appears intractable, is that of where to store the radioactive nuclear fuel after it is burned. Exelon Corporation, which is the nation's biggest nuclear operator, says it won't build until the matter is resolved. And, the second, which could be overcome after a few new plants are built, is how to persuade Wall Street to finance such ventures when in the past they have been hugely expensive.

"While nuclear generation can provide many benefits, the challenges of successfully completing the next construction cycle will be significant and are bound to test the industry's resolve in addressing increasing demand and the evolving and the increasingly stringent emissions regulations," writes Dimitri Nikas, credit analyst for Standard & Poor's in a recent report on the subject.

To put the matter in perspective, consider that the U.S. Energy Information Administration is predicting a 45 percent increase in energy demand by 2030, necessitating an additional 350,000 megawatts of new generation. The primary alternatives, natural gas and coal, each come with problems -- namely supply shortages and dirty emissions, respectively. Nuclear energy plants, meanwhile, have shown themselves to be safer and more productive than ever before.

In 2001, the Bush administration's National Energy Policy recommended the expansion of nuclear energy. More recently, the president has called for a national strategy to deal with carbon emissions and as such has backed the expansion of nuclear projects. The 2005 Energy Policy Act grants $1 billion in tax credits as well as $500 million in insurance to protect against delays in construction that are directly tied to regulatory logjams. And, finally, the first six reactors to get built in the 21st Century are promised millions in loan guarantees.

At present, 103 operating nuclear reactors exist in the United States. But, none have been ordered here since the 1970s. The partial meltdown at Three Mile is to blame along with cost overruns and construction delays. Now, however, things have changed. Given the market dynamics and the government incentives, about 30 such plants are under consideration. Before the energy act was signed, only a few were on the drawing board.

Alternative Strategies

Consider TXU: it is planning to file applications with the U.S. Nuclear Regulatory Commission to build new nuclear plants in the range of two to six gigawatts. It says it will have the applications completed in 2008 while the actual facilities could be up and running between 2015 and 2020.

"While new nuclear generation cannot come on line in time to meet the growing power needs of Texas for the next 10 years, TXU continues to aspire to be a leader in the commercialization of the next generation of low-cost, clean technology," says John Wilder, CEO of TXU. "Nuclear generation offers the potential to deliver our customers lower, stable prices and continue to reduce Texas' over-reliance on natural gas."

The matter of huge capital costs and government subsidies is important to both the industry and to nuclear opponents. The price tag to build a nuclear facility in the days before Three Mile Island totaled about $1 billion. After, the sunk costs amounted to about $6 billion. And in the days before that event, it would take about five years from the time it took to initially site a plant to the time pre-construction might begin. After that, the time frame doubled to 10 years.

There's also a lot of discussion over where to store the spent nuclear fuel. While Congress has authorized the building of Yucca Mountain 90 miles from Las Vegas, its future is uncertain because of continuous legal and political battles. Understandably, Nevada's citizens are dubious of a permanent nuclear waste site located in their back yard. And, they might have the political muscle to stop it as Senator Harry Reid, a Democrat from the state, is now the majority leader.

"Nuclear power will divert resources from other technologies," says Stephen Smith, director of the Southern Alliance for Clean Energy. "We need to direct our resources to things that are not as dangerous and to where we know we can move forward."

Advances in nuclear technology could alter the landscape. The difference between the so-called Very High Temperature Reactors and the current design is that the future ones will operate three times the temperature of today's light water reactors. That results in a more efficient use of fuel and the ability to create hydrogen in the process. All of that makes the proposition a lot more economically attractive.

Meantime, the reactors are cooled by helium gas and not water. That means that the reactors rely on gravity and not on mechanical instruments to flush water through the system in the event of emergency. Therefore, the odds of any leaks and subsequent meltdowns are close to zero, say advocates of the design.

"We have to prove to Wall Street that nuclear works and that it operates as planned and that the financials look good," says Dan Keuter, vice president of nuclear business development for Entergy Nuclear. "If we are able to build the first few, there will definitely be a renaissance."

No one disputes that new energy forms are a must. All forms are potentially viable and especially renewable technologies. Surely, the overall demand for power will be so expansive that any newfound resurgence in nuclear energy cannot be ignored.


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