NEW YORK—Buoyed by their ability to reliably produce large amounts of low-cost, bulk electricity, nuclear power plants continue to increase in value, industry executives told Wall Street analysts here today.
The energy woes gripping California and other parts of the United States reflect changes in the competitive electricity marketplace that are creating market opportunities for low-cost nuclear power, industry executives said. In addition, changing conditions are fostering "a high level of confidence" that construction of new nuclear power plants will begin later this decade.
Christian Poindexter, chairman, president and chief executive officer, Constellation Energy Group, Inc. and chairman of the Nuclear Energy Institute’s board of directors told the analysts that nuclear energy plants continue to perform at record levels of safety and reliability. As a result, he said, "The value of nuclear power plants in today’s market has increased significantly in the last year, and we see that value continuing to increase."
Nuclear power plants are this nation’s largest source of emission-free generation. NEI President and Chief Executive Officer Joe Colvin said this attribute will become more important—and more valuable—as Clean Air Act requirements limit companies’ ability to find sites for new coal-fired and gas-fired power plants and increase the cost of coal- and gas-fired generation.
Poindexter highlighted several key achievements from the past year:
The average nuclear plant capacity factor industrywide is at an all-time high. The industry averaged over 86 percent in 1999, and estimates 90 percent for 2000. NEI estimates that year 2000 production will top 1999’s production record of 728 billion kilowatt-hours by 5 percent. With nuclear production costs declining to 1.83 cents per kilowatt-hour, nuclear production costs are the lowest of all large, expandable fuel sources, and have dropped below average coal-fired production costs for the first time since 1987.
Safety performance is at record levels.
Constellation Energy Group was the first company in U.S. history to renew an operating license for a nuclear station. Additionally, owners of approximately one-third of U.S. nuclear plants have notified the Nuclear Regulatory Commission of their intention to apply for 20-year extensions of their licenses.
The nuclear industry continues its positive trend of consolidation. This leads to ownership and operating responsibility concentrated in the hands of fewer, larger generating companies for whom nuclear power is a core business.
Marvin Fertel, senior vice president for business operations at NEI, said the industry started laying the foundation more than a decade ago for policy changes to set the stage for new nuclear plant construction. Three essential conditions have converged to establish a compelling business case for construction of the next nuclear power plants in the U.S.:
Growing electricity demand and need for new generating capacity;
Greater certainty in the NRC licensing process; and
Programs to reduce capital costs for new nuclear power plants.
"The Department of Energy’s latest forecast shows a need for 393,000 megawatts of new capacity by 2020, assuming electricity demand grows by 1.8 percent a year—somewhat lower than the 2.2 percent annual growth rate we experienced between 1990 and 1999," Fertel said. "At a 2.5 percent growth rate, we would need an additional 564,000 megawatts. Given these numbers, and given the broad recognition that fuel diversity is one of the great strengths of our electricity supply system, new nuclear plants could easily represent a substantial share of new capacity by 2020.
"Nuclear plants are important in assuring a reliable electric supply system. We recognize that decisions to build new nuclear plants must have a solid business basis. Given this, our efforts are intended to provide a sound foundation for these business decisions, so that investments in new nuclear plants will be as valuable to their owners as existing plants. New nuclear plant orders are possible in the next five years."
The Nuclear Energy Institute is the nuclear energy industry’s policy organization. This news release and additional information about nuclear energy are available on NEI’s Internet site at http://www.nei.org .