Missed opportunity
So the Platts conference attendees looked forward with great anticipation to the remarks of Dennis Spurgeon, assistant energy secretary for nuclear energy in the Bush administration. Many in the audience believed that Spurgeon would announce an imminent offering of the solicitation for loan guarantees.
That didn’t happen. Spurgeon spoke barely a word on the subject. His anodyne address was mostly about the administration’s Global Nuclear Energy Program (see "Developing the next generation of reactors") to close the nuclear fuel cycle by resurrecting spent fuel reprocessing and fast reactors—a technology strategy that has repeatedly failed in the U.S., Japan, and Europe. Many in the audience yawned. Others rolled their eyes in disbelief.
Questioned after his remarks, Spurgeon did a classic bureaucratic duck. He’d like to issue the solicitation as soon as he could, said Spurgeon. But he said he isn’t free to do that on his own. He must consult with the White House and Congress, and get a sign-off. It’s a case of “Captain, may I?” he said.
Spiraling plant costs
Hopes for a nuclear renaissance are based on the assumption that new nukes make economic sense. That isn’t clear, even with federal kick-starts. For example, at the end of January, MidAmerican Energy Holdings said it has lost interest in building a new nuclear plant in eastern Idaho.
The Omaha-based company, owned by billionaire investor Warren Buffett, said the Idaho plant would cost too much. Buffett would have financed the project, using his stellar credit rating, but he decided the financial risk had become unbearable. According to Nucleonics Week, MidAmerican was looking at a Mitsubishi 1,700-MW advanced pressurized water reactor for the site but recoiled at the hefty capital costs for the plant, which could exceed $3,000/kW.
The same figure of $3,000/kW of capacity repeatedly came up at the Platts meeting, with some noting that costs are climbing rapidly, particularly for steel. Constellation has said its estimate for the Calvert Cliffs addition is about $3,000/kW, but it also acknowledged that the figure is two or three years old.
The announcement by MidAmerican prompted the anti-nuclear group Nuclear Information and Resource Service (NIRS) to comment: “If Warren Buffet cannot figure out how to make money from a new nuclear reactor, who can?” NIRS noted, “Even before any new nuclear construction has begun in the U.S., cost estimates have skyrocketed and are now 300-400% higher than the industry was saying just two or three years ago.”
Another report from the trenches of the nuclear renaissance came in late January from South Carolina Electric & Gas (SCE&G), which cited rising costs as the reason for putting on hold its plans to apply for a COL for two Westinghouse AP1000 units at its Summer site (Figure 3). Nucleonics Week said SCE&G began backing away from its COL plans last year. A source told the Platts newsletter that the utility might “still pursue a COL, which could be ‘banked’ and used in the future.”
3. Pay to play. South Carolina Electric and Gas began preparing a combined construction and operating license application for a second unit at its V.C. Summer Nuclear Power Plant in early 2006. But the work was recently put on hold due to rising plant capital cost estimates. Courtesy: South Carolina Electric and Gas
John Reed of Concentric Energy Advisors told an SNL EXNET symposium early this year that the realistic cost of a new 2,200-MW nuclear plant would be $5,500 to $8,000/kW, for a total cost of $12 billion to $18 billion.
An article at SNL Interactive in early February commented, “One problem with the excitement around the nuclear renaissance in the power industry is that, in reality, the revival is quite slow.”
Email
Comments
Print
Reuse
