[BETA] Fortnightly

Persistent economic and political issues continue to prevent the expansion of nuclear power.

Supporters of nuclear power are more optimistic today than they have been in decades. Recent policy developments regarding spent-fuel disposal and plant licensing support the industry's optimism, and nuclear-centered business strategies have proven relatively stable in a topsy-turvy utility market. But while these signals might be interpreted as the beginning of a nuclear power renaissance in North America, the industry still faces several stubborn roadblocks that impede significant expansion. Namely:

• Capital costs for nuclear power technology remain prohibitively high in a competitive power market, and new construction financing will remain elusive until that situation changes;
• Long-term waste disposal is a nagging political and social issue, which, despite some recent progress in Congress, shows no signs of being resolved any time soon; and
• Proliferation concerns (i.e., North Korea, Iran, etc.) are raising questions about the wisdom of revitalizing the global nuclear industry in the post-9/11 world.

In short, while life is getting better for the nuclear power industry, the outlook favors a continuation of the status quo rather than a new-construction renaissance. As Thos. E. Capps, chairman, president, and CEO of Dominion Energy, told the in its , "Right now I don't think anyone in this country is going to build another nuclear plant. We certainly are not. There is too much risk. It is like bidding part of your company on one plant. Nobody is going to do that."

Weighing the Costs

Perhaps the biggest shot in the arm for the nuclear power industry has come from improvements in operating performance. Reductions in refueling time and the application of preventive maintenance routines have improved operating efficiency dramatically, such that nuclear-generated power is competitive in today's wholesale power markets. Nuclear proponents hope it will become even more competitive as environmental issues force greater costs onto fossil-fired power plants.

"It will become more apparent to policy leaders throughout the world that nuclear energy is key to a clean environment," says Gary Vine, Washington representative for nuclear energy at the Electric Power Research Institute (EPRI). "The Europeans are committed to the Kyoto Protocols, and they are having a tough time achieving those goals. Absent nuclear, global efforts [to limit CO2 emissions] will fail."

In the United States, however, carbon taxes remain a political non-starter, and new nuclear power plants present a tricky financing problem in the competitive wholesale power market.

While today's operating nuclear plants-with capital costs fully depreciated or written off in the transition to competition-produce power, new plants would not enjoy such a capital-cost windfall. Given their historically high capital costs, nuclear plants are generally considered unfinanceable.

In an effort to overcome this hurdle, the industry has spent millions in research and development to design new nuclear technologies that would, theoretically at least, reduce the capital costs of new facilities. Specifically, the Nuclear Regulatory Commission (NRC) licensed three advanced light water reactor (ALWR) designs in the 1990s. "Those designs are available now. Additional ALWR designs are undergoing NRC review that are based on sufficiently proven technology, so they will be