Nuclear Energy Insight
June 2007—Financial, regulatory and communications challenges are among those that still must be met to bring the emerging “nuclear energy renaissance” to fruition and meet the nation’s energy and environmental challenges, industry leaders say.
“The outlook for nuclear energy is bright and growing brighter. But that is not the whole story,” said John Rowe, chairman of the Nuclear Energy Institute (NEI). Rowe also is chairman, president and chief executive officer of Exelon Corp., the nation’s largest operator of nuclear power plants.
The industry has proven its ability to operate nuclear power plants on a sustained basis at high levels of safety and efficiency at a time when demand for reliable electricity from clean-energy technologies is increasing. Despite this favorable situation, “significant regulatory, financial and infrastructure challenges stand between where we are and where we need to be,” Rowe said.
He cited used nuclear fuel management, financing of capital-intensive projects and future work force needs as among the key challenges facing the industry.
NEI President and Chief Executive Officer Skip Bowman identified a need for better communication to solidify political and public support among people and groups who are increasingly—but sometimes tenuously—embracing nuclear energy.
“Yes, we see growing support for nuclear energy because it is a carbon-free technology, but it is not unqualified or unambiguous support,” Bowman said. “There are solid steps we can take—must take—to shore up that support, to make it less ambiguous, more solid, more sustainable.”
As the industry prepares to meet future electricity needs and reduce emissions of greenhouse gases, 16 energy companies and consortia have announced their intentions to file license applications with the Nuclear Regulatory Commission to build as many as 30 new nuclear power plants.
“We are at long last moving to a time when companies will make business decisions to build new nuclear plants. I firmly believe that we will need 20 to 30 new plants by 2030 if we have any hope of addressing climate change and enhancing our energy security,” Rowe said.
Against this backdrop, the federal government should develop a temporary storage alternative for used nuclear fuel pending licensing and construction of the federal geologic repository planned for Yucca Mountain, Nev., Rowe said.
On new-plant financing, Rowe cautioned that, typically, it is companies with market values many times larger than the largest U.S. electric power company that take on projects the magnitude of nuclear power plants.
“While the federal government must play a role in providing the initial incentives to jump-start the industry … over the long term, both state regulators and the industry will have to step up if we are to successfully build the nuclear capacity the nation needs,” Rowe said.
Major financial institutions are “ready and willing” to invest in expanding the U.S. fleet of nuclear power plants, said Jeffrey Holzschuh, vice chairman of Morgan Stanley. In terms of environmental and climate change issues, “the long term is going to be incredibly positive for your industry,” he said.
The success of combined operating and construction licenses and the industry’s ability to demonstrate that new plants can be built on time and on budget will be key indicators for unlocking investment for new nuclear plants.
However, Holzschuh said, the capacity for investment “is not going to be an issue.” Economic, political and operational factors will be the issues that will concern investors. Loan guarantees authorized by the Energy Policy Act of 2005 are critical for the economics of the first wave of new nuclear plant projects, and the industry could not afford any “mishaps or surprises.”
—Read more articles in Nuclear Energy Insight and Insight Web Extra.