WASHINGTON, D.C.—Construction of new nuclear energy facilities will significantly boost electricity supplies and job creation. However, the need for federal action to allow carbon-free nuclear energy technology to reach its potential for the betterment of the American people and the nation’s economy is clear, the Nuclear Energy Institute’s chief executive told a congressional committee today.
“Nuclear energy is one of the few bright spots in the U.S. economy – expanding rather than contracting, creating thousands of jobs over the past few years. In that time period, the nuclear industry has invested over $4 billion in nuclear plant development, and plans to invest approximately $8 billion more to be in a position to start construction in 2011-2012,” said Marvin Fertel, NEI president and chief executive officer. Fertel testified before the Senate Energy and Natural Resources Committee.
Fertel gave an overview of the U.S. nuclear industry and recommended policy actions that will help the industry build advanced reactor designs to bolster U.S. energy security and increase supplies of low-carbon energy. Chief among them was the establishment of “an effective, long-term financing platform to ensure deployment of clean energy technologies in the numbers required.”
He noted that reactors operating in 31 states had a banner year in 2008, producing more than 800 billion kilowatt-hours of electricity and supplying the nation with nearly 75 percent of its carbon-free electricity. Their performance prevented the emission of nearly 700 million metric tons of carbon dioxide that fossil-fueled power plants would have released to produce the same amount of electricity.
Energy companies have submitted license applications to build as many as 26 reactors with the U.S. Nuclear Regulatory Commission, Fertel said. In preparing for these new projects, the nuclear industry’s investment to date has created 15,000 jobs and has the potential of creating more than 100,000 additional jobs if all 26 reactors are built. A recent study by the Brattle Group, an independent consulting firm, shows that even in a period of weak economic growth the United States will need between 133,000 and 216,000 megawatts of baseload generating capacity by 2030, with the higher figure assuming carbon constraints.
When new, advanced-design reactors begin operating, they will produce electricity at competitive rates, Fertel said.
“The key factor is the cost of electricity from the plant at the time it starts commercial operation relative to the other alternatives available at that time. Based on NEI’s own modeling, on the financial analysis performed by companies developing new nuclear projects, and on independent analysis by others, nuclear energy will be competitive,” Fertel said.
Among the key challenges facing the industry is financing these projects whose scale exceeds the financing capability or financial strength of the U.S. electric power sector that consists of relatively small companies. A properly funded and administered federal loan guarantee program as authorized by Congress in 2005 is essential to the success of these projects. However, the program has been underfunded and the project office understaffed due to delays in the federal budgeting process.
“The difficulties associated with the loan guarantee program are not insurmountable, and the majority of the problems associated with it can be corrected through revised rules that can come about through the cooperation of the Energy and Natural Resources Committee and the Department of Energy,” Fertel said.
He described as a “formidable financing challenge” the electric sector’s need to invest $1.5 trillion and $2 trillion to meet increases in electricity demand and reduce carbon emissions. To help meet achieve these goals, the sponsors of 10 nuclear power projects have applied to DOE for approximately $93 billion in loan guarantees.
Noting that senators from both parties in prior sessions of Congress have introduced legislation to establish a “clean energy deployment” entity, Fertel said, “We encourage this committee to start with those legislative proposals and address clean technology financing in the new energy legislation now being developed.”
If the 26 reactors in the planning stages were built by 2030, that expansion would maintain nuclear energy at 20 percent of the nation’s electricity supply. However, climate change goals in place for 2050 require a construction rate that, though more ambitious, has historic precedent, Fertel said.
“Build rates of four to six plants per year were achieved in the 1970s and 1980s despite the challenges we encountered during that period. With standardized designs and improved construction techniques, this accelerated deployment is feasible after the first wave of plants is constructed.”
He addressed the challenges incumbent with development of a national used fuel strategy in light of the administration’s rejection of the proposed repository at Yucca Mountain, Nev. Fertel pointed out that the administration’s categorizing of Yucca Mountain as “not an option” doesn’t absolve the federal government of its legal responsibilities for managing used fuel.
He expressed industry support for the establishment “by the Executive Branch of an independent, qualified commission to undertake a reassessment of the federal government’s program to manage used fuel and produce a roadmap for a sustainable long-term program.” A credible program includes interim storage and recycling of used fuel, as well as a permanent disposal facility, he said.
The federal government also should continue to play a strategic role in ensuring regulatory stability regarding the licensing of new plants; the need for continued support for research and development for nuclear energy to “realize its full potential in the nation’s energy portfolio;” favorable tax policies to encourage the resurgence of the manufacturing base to provide components for clean energy technologies and to encourage the training and development of the next generation of a skilled workforce.
“The need for advanced nuclear plants is well established and it clearly can and must play a strategic role in meeting national environmental, energy security and economic development goals,” Fertel said.