Nuclear Power's Uncertain Future
“I’m too old,” exclaimed T. Boone Pickens, the legendary oil, natural-gas, and wind energy investor, when I asked him in 2009 if he would invest in nuclear power. The vigorous octogenarian explained that he would not earn a return on his investment during his remaining lifetime. He is not alone in this thinking.
On March 8, 2011, just three days before the huge earthquake and tsunami that triggered the series of events resulting in three reactor meltdowns at the Fukushima Daiichi Nuclear Power Plant, industry leader John Rowe said that “natural gas is queen.” The CEO of Exelon, the U.S. utility with the largest share of nuclear-power plants, Rowe is avowedly pronuclear and a smart businessman. He has a responsibility to his shareholders (full disclosure: I’m one of them) and his customers to provide competitively priced and reliable electricity. Knowing that widespread use of hydraulic fracturing has unlocked massive supplies of cheap shale natural gas in the United States, Rowe foresees that natural-gas power plants will make nuclear power uncompetitive economically.
On March 11, 2012, another pronuclear but pragmatic analyst Dale Klein, a former chairman of the Nuclear Regulatory Commission, cautioned that nuclear plants will not “move off the blackboard and into construction. . . . Not as long as natural gas remains as cheap and plentiful as it is today.” Joining Klein’s ranks is The Economist magazine, which declared in its March 10th issue that nuclear power is “the dream that failed”: the plants are too costly and uncompetitive with alternatives. The Economist does point out, however, that a price on greenhouse emissions would favor nuclear power. A carbon tax would disfavor fossil fuels, which emit carbon dioxide, a major greenhouse gas, when burned in power plants. But the political will has been lacking in the United States and most parts of the world for taxing carbon or enacting a cap-and-trade scheme.
The Economist, Dr. Klein, Mr. Rowe and Mr. Pickens: They are not stalwarts of the antinuclear movement. If the economics were right, they would see a bright future for nuclear power. But hasn’t there been some new construction in the United States in Georgia? And what about the nuclear plants being built and planned for in China, India and South Korea as well as newer nuclear entrants such as the United Arab Emirates, Jordan and Vietnam? Notably, all those countries, except the United States, have strong centralized-government planning and control over electricity generation.
Without the $8.3 billion federal loan guarantee, the construction project at the Vogtle Nuclear Power Plant in Georgia would not have started; in February, regulators approved the combined construction and operations license for the two new reactors that will likely start operating toward the end of this decade. In 2005, Congress passed an energy-policy act that offered loan guarantees and other subsidies to stimulate building of new nuclear plants. But because a large nuclear reactor can cost several billion dollars, the 2005 act will likely only result in a handful of new reactors this decade. Meanwhile, the U.S. reactor fleet is aging. While most U.S. reactors have received license renewals for another twenty years of operation, the fleet faces a retirement cliff starting in 2030. If nuclear power cannot compete economically with natural gas and the falling prices of renewable energies such as solar and wind, the United States will likely have few operating reactors by mid-century.
Nuclear Optimism in Asia and the Middle East
On the opposite side of the world, China has about two dozen reactors under construction and many more planned. After the Fukushima accident, Beijing temporarily halted construction and said the right words about making sure safety is a top priority. But the real test will be its follow-through in training the legions of people who can safely operate and inspect these reactors. The toughest challenge will be instilling a safety culture in which everyone at a nuclear plant can report safety violations without fear of retribution. Although China’s rate of nuclear construction is impressive, the pace of its building coal plants as well as installing wind turbines and solar power is even more brisk.
India also has grand nuclear-expansion plans, but antinuclear protesters have stymied completion of a Russian-built plant at Kandukulam as well as startup of new projects. In December 2004, the great tsunami that swept through the Indian Ocean raised concerns about the vulnerability of some Indian nuclear plants.
In response to Fukushima, South Korea gave its regulatory agency more authority. While also vulnerable to earthquakes and tsunamis, the country has a severe shortage of indigenous sources of fuels, so its national policy has emphasized expanding nuclear power’s capacity to generate more than half of its electricity by 2030.
Seoul has also developed a successful model for building nuclear plants, paying close attention to costs and project management. Its most recent plant was reportedly built within budget and on time. The Koreans are determined to demonstrate this model in the United Arab Emirates, which in December 2009 ordered four large reactors from South Korea at the price of about $20 billion. If successful, the UAE project could set the stage for competitive nuclear power.