At the Platts Third Annual Nuclear Conference in Washington this February, most of the several hundred participants were extremely enthusiastic about the long-stalled future of U.S. nuclear power. During the keynote address, Nuclear Regulatory Commission (NRC) Chairman Dale Klein said, "I am a regulator and I am prohibited by the law that created [my agency] from engaging in any activity that promotes nuclear energy, including discussion of opportunities. Let me start out, though, by indulging in a bit of optimism."
To reduce Klein's comment to a Monty Pythonism, he was saying, "Wink-wink, nudge, nudge, say no more, say no more." The NRC anticipates a nuclear resurgence, no question about it, and obviously welcomes it.
Indeed, a month later the NRC approved Exelon Corp.'s application for an early license for a nuclear unit that could be added to the Chicago-based company's existing site in Clinton, Ill. (Figure 1). In effect, Exelon is "banking" the site for future use, which could cut months from the regulatory review process should it decide to build a new plant there. That's a decision the company says it has not yet made.
So far, some 16 firms, representing about 32 new units, have expressed their intentions to file applications this year or next for combined construction and operating licenses (COLs). The Nuclear Energy Institute has a chart on its web site that details these great expectations. Having approved Exelon's Clinton COL, the NRC has another three applications in its queue. All of the sites are at existing nuclear stations.
This January, Standard & Poor's Ratings Services issued a bullish report on the prospects for nuclear power, based on the U.S. Energy Information Agency's (EIA's) prediction that U.S. electricity demand will grow 45% by 2030. What's significant about S&P's sanguinity is that debt raters are among the most pessimistic analysts in the financial world. Bond holders generally face more things that can go wrong, and fewer things that can go right, than equity investors. So the debt raters are generally gloomy about almost anything.
Merchants of menace?
S&P's Dimitri Nikas, who wrote the red-blooded S&P report, told the Washington meeting that it should be possible for conventional, regulated utility companies building new nuclear plants to get investment-grade bond ratings. But he also warned that without long-term power sales agreements in advance of groundbreaking, merchant nukes will have a hard time getting an investment-grade rating.
That speaks to one of the cloudy edges around the sunny mood of the nuclear power folks. How do merchant generators fit into the nuclear revival?
It's a key question, because wholesale power generation is a competitive business in about half of the U.S., including the dominant markets in the Northeast and Middle Atlantic states (ISO-New England, NYISO, and PJM), as well as the unique Electric Reliability Council of Texas market. For many nuclear power developers, it's a jungle out there.
Some merchant gencos are bullish about nukes. NRG Energy, for example, plans to file a COL application for an advanced GE boiling water reactor to be located at the South Texas nuclear site. Constellation Energy, another merchant, is leading the charge for new nuclear construction, although the Baltimore-based company stresses that it hasn't made a final decision to move forward.
So it looks very much like the generating ball is teed up for nuclear success, for both conventional power companies and non-utility generators. But there's a darker side, not often expressed directly, but present nonetheless. Who is going to be the Tiger Woods to smack that ball way down the fairway and set up a success?
Asked about the possibility of new near power plants in the U.S. at the Platts conference, many lips said, "Yes." But the eyes (and some of the scuttlebutt) said, "Maybe, we hope, let's keep our fingers crossed."
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