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 ready in this decade for construction," Vine says.
The Nuclear Energy Institute (NEI) estimates that "overnight" costs for ALWR-based plants will total $1,000 to $1,200 per installed kilowatt, which, not counting financing costs and construction times, would be competitive with pulverized coal-fired capacity.
But whether such estimates would be borne out in the real world remains uncertain. Because an ALWR plant has never been built in the United States, the true costs of licensing, financing, and building an ALWR-based plant are unknown, and not everyone agrees with the NEI's estimates.
"The nuclear industry tends to be somewhat optimistic with its economic forecasts," says Dave Lochbaum, nuclear safety engineer with the Union of Concerned Scientists in Washington, D.C. The true cost of building an ALWR plant, he says, will prove to be prohibitively expensive. "As the NRC moves through its review, the costs of the reactor go up. I don't expect any to go from blueprint to backyard," Lochbaum says.
One of the best candidates for a new-technology nuclear power plant, the so-called "pebble-bed," high-temperature gas reactor, has been demonstrated in Japan and China, and a project in South Africa would demonstrate a small, commercial-scale plant. However, the pebble-bed design has not been scaled up successfully yet, and fuel issues could hamper development.
The design uses tiny particles of uranium encased in small carbon spheres that serve to prevent chain reactions. Such an exotic fuel could complicate the technology's path to economic viability. And, giving rise to further speculation about the design's viability, last year Exelon Generation withdrew from the South African consortium that is developing the project.
"There is potential there, but they are fooling themselves if they think it will be ready within 20 years," says Allison Macfarlane, a senior research associate with the Security Studies Program at the Massachusetts Institute of Technology (MIT).
Thus economic issues continue to limit the industry's expansion. Research continues, though, and the latest omnibus energy legislation includes more than $1.1 billion in R&D funding for a new advanced reactor for cogeneration of electricity and hydrogen fuel. To the degree research results in more cost-effective designs, the economic picture for new nuclear plants might begin to improve. But another key issue might limit the industry's long-term future: fuel supply.
"There is only enough uranium oxide available, at less than $30 a pound, to keep the global fleet of 352 GW running for another 45 years," says Henry Linden, the Max McGraw Professor of energy and power engineering and management, and director of the IIT Energy + Power Center at the Illinois Institute of Technology in Chicago. "I am a big advocate of resuming the development of breeder reactors."
Linden acknowledges, however, that the political climate in the United States remains hostile to breeder reactor development. The Argonne National Laboratory recently discontinued its development program, but not all research has stopped.
"Breeder reactors eventually will come back," Vine says. "The utility industry is not interested in pushing this solution at the current time, other than a clear recognition in policy that it is an important option for the future. Economics will not favor this solution for many years."
Yucca Mountain Blues
Two issues perennially dominate the policy debate: oil drilling in the Arctic National Wildlife Refuge and a permanent repository for spent nuclear fuel.
The Yucca Mountain debate recently cleared a critical hurdle-namely, in May and July 2002, the U.S. Congress officially approved the site for a national spent fuel repository, over the objections of the state of Nevada. This is the latest step in a process that began, depending on how you count it, in either 1954 or 1982. In any case, the nuclear waste disposal issue is a political football that has been bouncing along for decades and has already cost more than $7 billion.
Unfortunately, congressional approval by no means signals the end of the game.
"Yucca Mountain has been offered as a site for waste disposal, but the NRC has yet to receive a formal application, let alone agree to license it for waste disposal," Lochbaum says. "Even if all schedules are met, it'll be 2010 or so before Yucca receives waste shipment number one."
Meeting that timeline, moreover, will require the Department of Energy (DOE) and the NRC to execute a series of license applications, reviews, and planning processes, any of which hold the potential to delay or scuttle the project.
"The schedule includes a lot of major assumptions about requirements and statutorily imposed deadlines that the government has not shown the ability to meet," says John O'Neill, a nuclear industry attorney with Shaw Pittman in Washington, D.C.
Additionally, the entire Yucca Mountain plan involves transporting spent fuel across thousands of miles of roadways and railways-effectively through millions of backyards. Irrespective of whether the plan poses any appreciable public-health risk, the potential NIMBY problem is staggering.
"The opposition is dormant, but it will grow very quickly," says Robert Kahn, a siting consultant based in Mercer Island, Wash. "You'll always have NIMBY opposition, but nuclear waste is in a unique category of unwanted land uses."
Kahn explains that the mass-media and instant communications technologies of the 21st century make NIMBY sentiment a particularly treacherous problem for siting any type of nuclear facility. "Because of the Internet, we have seen an exponential increase in the potency of NIMBY opposition," he says. "It allows opponents to share information and rhetoric faster than ever before."
Disputes like the recent one at Prairie Island in Minnesota illustrate how long-term storage issues could prevent the industry's expansion. The plant's owner, Xcel Energy, reached agreement in mid-May with the state legislature and the local tribal authority to expand its onsite dry-cask storage capacity, but only after a drawn-out battle that might conceivably have forced the plant to shut down.
To the degree Yucca Mountain is delayed, the industry's growth will be constrained-if for no other reason than state regulators' reluctance to approve new nuclear plants without certain knowledge that a national repository will be made available to store spent fuel.
"The courts have said that the deadlines mean something, and damages will accrue while the industry is waiting," O'Neill says. "The delay increases capital costs for existing facilities and creates disincentives to go forward with construction of new nuclear plants."
Preventing Disaster
To a certain degree, the waste-disposal issue represents a red herring that anti-nuclear groups have used as a rallying cry against the industry. The true safety issues involving transportation and storage of spent fuels are relatively minor, compared with more credible risks to public health: terrorism and weapons proliferation.
After the Sept. 11 terrorist attacks, the nuclear industry undertook an exhaustive study of terrorism risks affecting nuclear plants. The details are classified, but EPRI concluded that the risks of a terrorist attack on a nuclear plant are "on the same realm of other low-probability sequences in the design basis today, and consequences are small," Vine says.
Independent researchers, however, are less sanguine about the issue.
In a February 2003 study, analysts from Princeton University, MIT, and three security-policy think tanks found a significant risk of "catastrophic radiation release" in the water-cooled tanks that store older spent-fuel rods. An attack that would drain the tanks could result in effects that exceed Chernobyl in terms of the magnitude of contamination, according to the study. Building new storage facilities to house spent fuel would cost the industry an estimated $3.5 billion to $7 billion.
"Is it worth spending a few billion dollars?" asks Frank von Hippel, a professor of public and international affairs in Princeton's program on science and global security, and one of the study's authors. "We can't calculate what the probability is, and it becomes a political question."
What is troubling about this issue is that the industry's regulators and research institutions don't seem interested in discussing it, according to von Hippel. "The industry seems to treat any problem as a PR problem, not a real problem," he says. "It would be to their benefit to say, 'You've raised an interesting question and we'll look into what can be done about it.' But instead they just say, 'There's no problem.'"
MIT's Macfarlane, who was also an author on the Princeton/MIT study, points out that in the 1970s the German nuclear industry conducted terrorism-risk analyses of its spent-fuel storage systems, and its response was to build interim dry-cask storage and to reinforce some containment structures.
"A lot of reactors will have to purchase dry-cask storage before Yucca Mountain begins taking waste," Macfarlane says. "But if the industry supports that, it would be admitting there is a security problem, so they don't want to support it."
While such security threats raise concerns, perhaps the more pressing nuclear-related problem involves proliferation of nuclear weapons. One needs to look no further than the daily newspaper to understand the nature of the threat, but tying that threat to the U.S. nuclear power industry requires connecting a few dots. In short, to the degree the industry expands in this country, other countries would likely follow suit, and that creates more proliferation risks.
"People who promote nuclear power as an answer to the greenhouse problem have the proliferation question before them," von Hippel says. "The public debate does not push the nuclear power advocates on this issue." Furthermore, von Hippel says the environmental movement has been counterproductive by focusing attention on radioactive waste disposal instead of the more serious proliferation threat.
The magnitude of this threat is difficult to estimate. In principle, expanding nuclear power globally could increase risks by disseminating technology and materials that could be diverted for nefarious purposes. But in practical terms, a commercial power plant is not a very logical platform for building nuclear weapons.
"There is no such thing as a proliferation-proof reactor," Vine says. "In the hands of someone dedicated to using materials in the wrong way, you could process nuclear fuel to make a bomb, although there are much easier ways. There is no reactor design that would totally prevent it. What is needed is safeguards to prevent it, and that's why the International Atomic Energy Agency (IAEA) is involved."
As recent experience in North Korea demonstrates, however, IAEA involvement will not prevent peaceful nuclear power plants from being used to fabricate materials for weapons. "There is a clear connection between nuclear energy and nuclear weapons, and what the United States does sets the stage overseas," Macfarlane says. "The industry has to try harder on this issue."
Nuclear Standoff
Given the array of issues it faces, the nuclear industry will be hard pressed to muster a significant renaissance any time soon. In order for nuclear power to emerge as the economic winner for new construction, three major developments must occur:
- carbon taxes that make fossil-fired plants less competitive must be instituted;
- capital costs must fall by 25 percent or more; and
- natural gas prices must rise dramatically and permanently.
When the uncertainty of such developments is combined with the real political and security issues regarding waste disposal and proliferation, a nuclear renaissance in the United States seems improbable.
As Dominion's Capps said, "It is too much risk. It is not economical. You would have billions of dollars out there for years, not earning a return, and that is just not good."
Helpful Links
© American Physical Society outlook on nuclear power http://www.aps.org/public_affairs/popa/reports/nuclear.html
© EPRI aircraft-crash impact analysis http://www.nei.org/documents/EPRINuclearPlantStructuralStudy 200212.pdf
© Press release on Princeton/MIT et. al. terrorist-attack risk study http://www.princeton.edu/pr/news/03/q1/0213-nuclearfuel.htm
© Natural Resources Defense Council's nuclear site http://www.nrdc.org/nuclear/
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