It is fair to say that 2011 is bringing some uncertainty into the nuclear energy industry. The tsunami and subsequent events at Fukushima present Japan and our industry with new challenges but also serve as a catalyst for continuous improvement. In the U.S., we are learning from these events and improving our operations, designs, and emergency response approaches to make our plants safer, more efficient, and more environmentally friendly.
One aspect that has not changed: the fundamentals of energy. Our nation is one of the world’s two largest electricity consumers, and this demand is expected to increase by nearly 25% over the next two decades. How can we meet rising demand with sources that are available and affordable while controlling environmental emissions? Meeting that challenge will require realistic and long-term evaluation of our choices. In the end, we will discover that we must invest in a range of sources, including nuclear energy.
Nuclear energy remains a safe, reliable, and economical way to produce baseload electricity. America’s nuclear energy industry produces 20% of our electricity, reduces dependence on fossil fuels, avoids environmental emissions, and keeps electricity prices predictable and affordable. For America to continue reaping these benefits, we must continue to renew operating licenses, uprate the power of plants where practical, and continue building new nuclear facilities. As older fossil units retire and demand grows, we will require new plants.
Although new nuclear power plants require appreciable up-front capital investment, the electricity produced by them is affordable, predictable, and reliable over their 60-year lifespan. The production cost of existing nuclear plants is approximately 2 cents/kilowatt-hour, lower than any major source, including coal and natural gas.
Nuclear energy enjoys great cost predictability, especially in terms of fuel costs. Fuel is only 15% of the operating cost of a nuclear plant, whereas the price of gas is about 60% of the operating cost of a gas-fired plant. Consequently, the cost of electricity from gas plants can change significantly based on gas prices. We have seen price volatility over past decades and, even with current supply predictions, uncertainties related to environmental and production issues remain.
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