Fukushima Disaster Continues to Cloud Nuclear Outlook

With new reactors finally under construction, this should be an optimistic time for nuclear power in the U.S. But cheap natural gas, rising construction costs, and the Fukushima accident’s lingering pall have darkened the mood.

Although the events in Japan that destroyed much of Tokyo Electric Power Co.’s Fukushima Daiichi nuclear power station were more than a year in the past, their memory provided the backdrop for the nuclear track at the ELECTRIC POWER Conference in Baltimore in May. The events in Japan of March 2011 clearly changed the nature of the discussion of nuclear power and its future.

In the 14 months since the Fukushima accident, the rest of Japan’s once-considerable nuclear fleet had gone offline. By the time of the Baltimore meeting, Japan was without any nuclear-generated electricity for the first time in 42 years. The country once had an ambitious nuclear program that provided a third of its electric generating capacity, and there were plans to build more reactors. (See “Japan Scrambles to Revamp Its Energy Sector” in POWER’ s June 2012 issue, and the web supplement “Japan’s Nuclear Infrastructure,” at http://www.powermag.com for a detailed look at where the nation’s energy policy was headed before last year and where it is being redirected.)

As the nuclear track was under way, British author Mark Lynas wrote in the UK’s Guardian newspaper that “the long shadow cast by Fukushima has extended over a much wider area than any scientific assessment of radiological hazard would argue is necessary.” Parents in a village 20 kilometers from the reactor reportedly refuse to let their children play outdoors and believe that dosimeter readings barely above background levels are incorrect.

Lynas contrasted Japan’s widespread revulsion toward nuclear power with the response in South Korea, which today gets some 30% of its generation from nuclear plants and plans to increase that amount to 60%. South Korea—like its neighbor Japan—also faces limited domestic energy resources.

Despite the emergence of a small but vocal anti-nuclear movement, Korea’s government has made clear it plans to stay the nuclear course. But Heung Gyu Park, a senior vice president of KEPCO E&C, the country’s nuclear engineering and construction company, said in Baltimore that his country has made changes since the Japanese disaster.

Soon after the events in Japan, Korea Electric Power Corp. (KEPCO, parent of KEPCO E&C) initiated a full-scale review of its 21 operating units and concluded that they were capable of withstanding events similar to those that devastated the Japanese units. As in Japan, all of South Korea’s reactors are sited on the coast and cooled by seawater. The country is also located on the seismically active Pacific “ring of fire.”

In addition to the KEPCO review, a South Korean government inquiry followed the Japanese event. That effort developed an action plan for steps KEPCO should take to improve its emergency preparedness and operational safety.

A key to the government’s response, Park said, was creation of a new regulatory agency, the Nuclear Safety and Security Commission, launched last October and located in the office of the South Korean president. The new, higher-level agency replaces the South Korean Institute of Nuclear Safety as the primary regulatory body, separating nuclear power promotion from its regulation. The institute has become a technical advisor to the new board.

South Korea remains on track to build eight nuclear units, all of the advanced Korean-designed (in conjunction with Japan’s Toshiba) 1,400-MW pressurized water reactor. KEPCO broke ground for two of these units the same week that Japan’s final operating nuclear unit shut down and just prior to ELECTRIC POWER.

Muted Celebration

J. Frank Russell, senior vice president at Concentric Energy Advisors, described the ambiguous status of nuclear power today from a U.S. perspective. By many counts, he said, “this should be a year of celebration for ‘new nuclear’ in the U.S.” because Southern Co. is building Vogtle Units 3 and 4, and Scana Corp. has a green light from the Nuclear Regulatory Commission (NRC) for the two new units at its V.C. Summer station.

In contrast to what could be justified optimism, “the reality is different,” Russell said. “The pipeline is empty, with other proposed units stalled or delayed by the sponsors.” The promise of “up to a dozen” new units that was common in the industry a few years ago “has mostly gone away,” and the industry has awakened to a less-friendly environment.

Many reasons account for faded nuclear dreams in the U.S., Russell said. The 2008 recession lowered demand for power and reduced financial markets’ appetite for risk. The collapse of natural gas prices as a result of the shale gas revolution undercut the economics. So did the federal government’s failure to put a price on carbon emissions. Fukushima also played a role. But the key factor dogging the U.S. nuclear sector has been the high and growing cost of nuclear power plants. “While many of these issues may be considered temporary,” said Russell, “the sheer total cost of large-scale new nuclear units is just too large for many companies to bear.”

Few companies have the capitalization and appetite for risk to take on a project that could cost $10 billion, the current estimate for a new nuclear unit in the U.S. For a merchant generator, finding the equity capital for such an undertaking is problematic. “Even with a loan guarantee,” he said, “the equity may be impossible to raise.”

What will it take for a real U.S. nuclear turnaround? Russell offered a list, with each item necessary to achieving rebirth but none sufficient in itself. He said that demand growth will have to return and that the current generating capacity surplus must decline. Natural gas prices will have to double to at least $4/million cubic feet. A carbon price also must be put in place. The Vogtle and Summer units must come in on schedule and must meet budget targets (an outcome already put in doubt by cost increases recently announced at Vogtle). And policy makers and the public must be positive and supportive.

Last, Best Hope?

A bright spot, Russell said, may be found in the development of small, modular reactors (SMRs), which have emerged as perhaps the last, best hope for new nuclear in the U.S. The case for these downsized nukes is well known and widely hyped at industry meetings, including a session at ELECTRIC POWER. Factory-built, trucked to the site, offering high power density in smaller financial bites, and featuring entirely passive safety systems, SMRs offer a lot to like.

During ELECTRIC POWER, Ameren-led Missouri Electric Alliance and Westinghouse Electric Co. announced a collaboration called the NexStart SMR Alliance to put a Westinghouse-Toshiba 225-MW integrated pressurized water reactor at the utility’s existing Callaway nuclear station site. A year ago, the Tennessee Valley Authority, a quasi-government power agency often in the vanguard of nuclear power, signed a letter of intent to build six 180-MW units of the mPower SMR machine at its ill-fated Clinch River Breeder Reactor site. The mPower reactor is a joint project of Babcock & Wilcox and Bechtel. In March, NuScale Power of Corvallis, Ore., owned by Fluor Corp., announced a deal with the Department of Energy (DOE) to move forward on siting NuScale’s 45-MW light water reactors at the DOE Savannah River weapons site in South Carolina.

The DOE is funding a competition among SMR developers for a $450 million, five-year, 50% cost-sharing program. Applications were due at the DOE on May 21 (NuScale, mPower, and NexStart all applied). The program’s aim is to support design certification and licensing at the NRC.

DOE Technical Advisor Tom Miller said his agency expects to pick two winners in the competition, a decision driven by the size of the funding pool the DOE hopes to have available. Miller said the DOE sees the role of SMRs as “improving the affordability of nuclear power.” But he added that it doesn’t see SMRs as competitors to conventional, large units. Rather, he said, they are likely to fit into niche markets and applications. Miller said it is uncertain when the DOE will announce the awards and start the federal funds flowing.

Despite the positive developments, it’s not smooth sailing for SMRs either. A key obstacle will be the regulatory one. The SMR conceptual designs, though focused on well-understood light water physics, are technically novel and present engineers at the NRC with many new and unique issues. Whether it is possible to control costs—which has proven exceptionally difficult even with well-known and well-practiced nuclear technologies—is far from given.

As Jim Colgary, a former captain in the nuclear Navy and now a top lobbyist for the Nuclear Energy Institute, told the Baltimore session with regard to SMRs: “This is going to be hard.” His comment applies equally well to all of nuclear power these days.

Kennedy Maize (kenmaize@gmail.com) is a contributing editor to POWER and executive editor of the online magazine MANAGING POWER (http://www.managingpowermag.com).