Impact of Fukushima on the U.S. nuclear renaissance?
Impact of Fukushima on the U.S. nuclear renaissance?
It's less than you think
The Nuclear Energy Institute, the trade association for the utilities that own and operate the nation's 104 nuclear reactors, has some thoughts on how Fukushima might affect the nuclear renaissance on this country. In an updated briefing paper posted on its website April 15, 2011, NEI says it has an optimistic view of the future.
"New nuclear power plant construction in the United States is in the early stages and proceeding in a deliberate fashion. There is ample time to incorporate lessons learned from these events during the construction period.
Nuclear energy has been and will continue to be a key element in meeting America’s energy needs. The nuclear industry sets the highest standards for safety and, through our focus on continuous learning, we will incorporate lessons learned from the events in Japan into the ongoing process of designing, licensing and building new nuclear power plants.
Two companies have started site preparation and other construction-related activities for new nuclear power plants in Georgia and South Carolina, with the expectation that they will receive their combined construction-operating licenses from the Nuclear Regulatory Commission in late 2011 or early 2012.
We expect those new reactor projects to proceed. Both projects use a light water reactor design with advanced safety features – i.e., the reactors rely on natural forces like gravity (rather than engineered safety features like pumps) to deliver water to cool the reactor core."
NEI is referring to the Westinghouse AP1000 reactor design which is specified for both of these sites. But is there more to NEI's optimism than just a set of technical standards?
Financing rules right after safety
The critical success factor for new nuclear reactor construction in the U.S., after safety, is financing. President Barack Obama, after a slow start in dealing with the issue, now has a 2012 budget request that calls for a increase of three times the current level in federal loan guarantees for nuclear power plant construction.
The Department of Energy, which is currently administering a program of $18.5 billion in loan guarantees, would get authority for an additional $36 billion. An initiative to help develop technology for small modular reactors would get $67 million in new resources. The measure was introduced for the 2011 budget, but was not approved by Congress.
Getting the measure passed in 2012 will be difficult. House Republicans are in a "slash and burn" mode regarding all manner of federal programs. However, there is bipartisan support for nuclear energy and the loan guarantees don't cost the government anything as applicants pay fees to apply for them as well as the cost of the credit risk insurance.
The Department of Energy says that the crisis at Fukushima in Japan will not affect the loan guarantee program. Jonathan Silver, the federal program manager, told Congress in late March that the agency is evaluating applications for loan guarantees from Texas, Maryland, and South Carolina.
"From an investment perspective, the Fukushima incident does not affect our timeline . . . to put the capital to work."
Silver added that despite initial setbacks with the Calvert Cliffs III reactor project, the agency expects to be able to move forward with it once foreign ownership issues are resolved, which means finding a U.S. investor to take 51% of the project. More likely, it will be a consortium of investors rather than a single entity.
The loan guarantee process has two steps. In the first step, the agency issues a "conditional commitment" which is the result of a first round of due diligence and analysis of the application. Typical conditions imposed on applicants to complete the process in the second round include obtaining the NRC combined construction and operating license.
Foreign ownership a barrier at Calvert Cliffs
The Nuclear Regulatory Commission (NRC) said April 8 that Unistar Nuclear Energy is not eligible for a license to build and operate a nuclear reactor at Calvert Cliffs III. The reason is that it is not a U.S. company. Unistar is owned by Electricte de France, a state-owned firm in France. However, the NRC also said it would continue to review the license application while Unistar finds U.S. investors.
TEPCO trials at Fukushima trim Texas prospects
The likelihood of success for NRG's expansion of the South Texas Project (STP) suffered a significant setback March 11. The reason is that TEPCO and the Japan Export Bank were part of the financial package NRG was depending on to prove to the Department of Energy it qualified for a federal loan guarantee. TEPCO had planned to invest up to $275 million in the twin reactors to be built by Toshiba based on a Hitachi design. The Japan Export Bank was also expect to provide financing since Japanese firms has such a high stake in the project.
With cleanup costs for the devastated reactor site in Fukushima said to be in the range of $12 billion, it is unlikely TEPCO will be making any offshore investments. David Crane, CEO of NRG, the utility planning to build the two new reactors at STP, said the project's odds of success have now dropped substantially.
Crane told an energy conference in Houston April 12 the loss of financial support from Japan leaves a huge financial gap in the project. He added he's not ready to walk away from the project just yet even though some financial analysts think it might be in his firm's best interests. Crane said he is still has confidence that Texas is the best place to build new nuclear reactors.
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