NEW YORK, Feb. 10, 2011—Buoyed by near-record levels of reliability and electricity production in 2010 and progress on construction of new nuclear power plants in three states, the nuclear energy industry is well-positioned to reliably supply low-cost and emission-free power deep into the 21st century, industry leaders told financial analysts here today.
The industry’s widespread economic impact—including direct employment, its ability to power a growing U.S. economy, and exports of new reactors and precise, high-end components to a global nuclear energy market—also was communicated to analysts who attended a briefing sponsored by the Nuclear Energy Institute.
“We have a long-term perspective” that will continue to pay dividends to America’s economy, said Marvin Fertel, NEI’s president and chief executive officer. “Many of today’s reactors will be producing electricity well past 2030. New nuclear plants that start commercial operation in 2016 or so will reach the end of their initial license terms past mid-century and the end of a 60-year period of operation in 2076.
“Our assets will deliver clean energy, generate earnings and provide a hedge against future environmental restrictions and against volatility in natural gas prices almost to the next century,” Fertel said.
Fertel announced that 104 reactors in 31 states produced 806.3 billion kilowatt-hours (kWh) of electricity in 2010, according to preliminary data. Electricity production in 2010 was second only to the 2007 record of 806.4 billion kWh, and included record electricity production from nuclear energy last December. The industry’s average capacity factor last year was 91.1 percent, surpassed only by the 2007 record of 91.8 percent.
“Safety, reliability and high levels of productivity go hand in hand,” he said. “Safe and reliable operation of our existing plants is the platform from which we are launching the next generation of nuclear energy in the United States,” Fertel said.
Executives from Southern Nuclear Operating Co. and South Carolina Electric & Gas Co. discussed the construction progress on advanced reactors at the Plant Vogtle and V.C. Summer sites, respectively.
James Miller, chairman, president and CEO of Southern Nuclear Operating Co., said the Plant Vogtle expansion project is proceeding with 1,500 new employees working at the site. The company anticipates that the U.S. Nuclear Regulatory Commission will approve its application for a construction and operating license late this year, with commercial start-up of the first of two new reactors planned for 2016.
Stephen Byrne, SCE&G’s executive vice president of generation and chief operating officer, said the company has spent $1.4 billion to date on the two-reactor expansion of the V.C. Summer power station, and that its original cost projections for the project have decreased.
Fertel noted that the Tennessee Valley Authority is achieving similar project management success in Tennessee, where 3,500 workers are working toward completion of the Watts Bar 2 reactor. The project is proceeding within the $2.5 billion total budget and on schedule for operations in October 2012.
Over the next five to 10 years, the U.S. nuclear energy industry will transition from importing 75 percent of its uranium enrichment needs to relying heavily on domestic enrichment capacity. Urenco-USA’s facility in Eunice, N.M., which received approval in 2010 to operate its first cascade of centrifuges, is the first of four planned uranium enrichment projects. AREVA’s Eagle Rock uranium enrichment facility in Idaho has received a conditional commitment for a $2 billion DOE loan guarantee and is on track to receive an NRC license and break ground on the facility this year.
USEC’s American Centrifuge plant in Piketon, Ohio has received an NRC combined license and is negotiating a $2 billion DOE loan guarantee. GE Hitachi is developing a new laser-based enrichment technology at its Global Laser Enrichment facility in Wilmington, N.C., and the company has received an NRC license to test this process.
Looking beyond these current projects, the nuclear energy industry believes that the electric sector’s long-term fundamentals remain largely as they were before the economic recession changed the pace of planning for new power plants.
“The United States has roughly 1,000 gigawatts of electric generation capacity,” Fertel said. “Two hundred eighty gigawatts are 30 to 40 years old; 140 gigawatts are over 40. The oldest capacity is coal, oil and gas-steam fired capacity. It’s relatively inefficient and much of it is not equipped with state-of-the-art environmental controls. The Brattle Group estimates 50 to 65 gigawatts of coal-fired retirements by 2020. That capacity must be replaced. We must build to meet the new demand for power.
“The Energy Information Administration assumes one percent annual growth in electricity demand in its latest forecast, but even that produces the need for 220 gigawatts of new electric capacity by 2035,” Fertel added.
To better position the industry to meet the need for new electric generation capacity and decrease the cost of electricity to customers, the industry is seeking improved federal implementation of the clean energy loan guarantee program that was approved by Congress in 2005.
Fertel announced that the industry is working with Congress and federal executive branch agencies to improve U.S. industry’s ability to compete for the growing worldwide market for nuclear energy technology. This initiative will streamline export control regulations, provide financial incentives to companies expanding the nuclear energy supply chain, and ensure that cooperation agreements with other nations do not include unnecessary requirements that would close U.S. suppliers out of international markets.
“Nuclear power plant construction around the world is booming. With 65 new reactors under construction and 156 on order or planned, the global market represents at least a $400 billion opportunity in the next 20 years,” Fertel said.
“We intend to sell reactors, equipment, services and fuel to this market. However, the competition in the global market is fierce and we must demonstrate the same level of U.S. government commitment and coordination as our competitors, and the same seamless government-industry integration.”
The archived webcast is now available. Short clips of NEI’s Wall Street briefing will be available on its YouTube page later today.