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Face-Off: The Renaissance of Nuclear Power

Nuclear power is on the verge of an extraordinary expansion.
Fortnightly Magazine - June 15 2003

on Feb. 20, 2003, six Northeast states and the state of Washington announced plans to sue the federal government to force the regulation of CO 2 from power plants. The states claim that the EPA hasn't updated an analysis of air pollutants from power plants in at least 20 years. What is clear is that the consequences of legislative or regulatory actions will be to further increase coal power plant operating costs. 10

Also, oil and natural gas prices have increased significantly in each of the past two years. Average natural gas prices to utilities increased from under $2/Mcf in 1995 to more than $4 in 2000. Prices rose to nearly $4.50 in 2001. At the end of 2002 natural gas prices to utilities were at $4.60/Mcf and in January of this year rose to more than $5/Mcf. The EIA in its short-term projections shows continued high prices for natural gas. There are also predictions by industry that high natural gas prices are here to stay. Reasons for this include refilling storage sites from their abnormally low levels and low domestic production. Large industrial consumers have found it difficult to switch to less expensive alternatives, due in part to the worker strike in Venezuela and the unstable conditions in the Middle East.

The Longer Term Outlook-Need for Power

Electricity demand has and will continue to increase as the national economy expands. The strong relation between economic and electricity demand has moderated in recent years but has nevertheless continued. Also, while modernization will no doubt bring about increases in energy usage efficiency, it will also continue the longer-term trend toward electrification, particularly of stationary applications.

The National Energy Policy, published in May 2001, and prepared by the National Energy Policy Development Group stated at the outset in its section on electricity:

"Electricity demand is projected to grow sharply over the next twenty years. Based on current estimates, the United States will need about 393,000 MW of new generating capacity by 2020 to meet the growing demand. If the U.S. electricity demand continues to grow at the high rate it has recently, we will need even more generating capacity. To meet that future demand, the United States will have to build between 1,300 and 1,900 new power plants; that averages to more than 60 to 90 plants a year, or more than one a week."

Furthermore, the EIA projects in its that by 2020 electricity consumption will increase by over 40 percent, increasing at a rate of 1.8 percent per year. This growth will result in the need for 355,000 MW of new generating capacity.

The electric industry also is projecting significant electric demand growth and need for new capacity. In its , the North American Electric Reliability Council (NERC) projects significant new generating capacity requirements. NERC electricity demand projection over the next 10 years is an annual average increase of 2 percent.

NERC and the EIA in their most recent project that upward of 75 percent of all new electric generating capacity will be natural gas-fired. With natural gas futures hovering at $6/Mcf,