Near-term capital spending in the North American power industry

Britt Burt and Shane Mullins, Industrial Info Resources

Pages: 1 2 3

Nuclear power: Rethinking pros and cons

What a difference a few years make. Before global warming captured the public's attention, American nuclear reactors seemed doomed to suffer the same fate as their counterparts in Europe (with the exception of France): eventual decommissioning. Now, relicensings, uprates, and a potential renaissance in nuclear power are the talk of the U.S. generation industry. Currently, nuclear power—which produces zero emissions of CO2, the primary agent of climate change—accounts for about 20% of total American electricity production. The $64,000 question, however, is whether that share will rise or fall.

Today, the U. S. has 103 operating reactors with a total capacity of over 102,000 MW. Since 1999, nearly 44 of them have had their licenses extended for 30 years. Another eight reactors currently have license-extension applications under review at the Nuclear Regulatory Commission (NRC), and at least another 24 renewal requests are expected to be filed through 2015.

In many cases, power uprates are granted as part of the new license or as an amendment to an existing license. Since the 1970s, those uprates have boosted the collective capacity of the U.S. nuclear fleet by 4,100 MW—avoiding the need to build four typical-sized units. An additional 947 MW are expected to be added via uprates by the end of 2008.

Beyond the uprates, work is well under way to bring the 1,152-MW Browns Ferry Unit 1 back on-line in 2007. In the U.S. and Canada, there are 29 projects at nuclear power plants to either add new generation or overhaul existing units to extend their life. These projects represent investments of over $64 billion in the U.S. and over $4 billion in Canada.

But in the U.S., the answer to the aforementioned $64,000 question (no, not the one about waste) will largely depend on whether some 35 next-generation nuclear units totaling more than 40,000 MW proposed by utilities will be licensed by the NRC. Among the units, which are scheduled to break ground between 2010 and 2015, are several sponsored by NuStart Energy Development, a consortium of utilities and reactor vendors that has lined up six potential sites in the U.S.

Gas-fired capacity: Back on the front burner

Over the past decade in the U.S., several hundred thousand megawatts of natural gas–fired capacity, in the form of simple-cycle combustion turbines and combined-cycle facilities, were rushed on-line. But in short order—as the price of gas shot up, down, and then up again to stay—it became clear that much of this type of capacity (better for peaking and intermediate duty than for baseload service) wasn't really needed in several regions of the country. The continuing volatility of natural gas prices has led to the delay or cancellation of many gas-fired projects that originally were expected to be finished soon.

Despite the painful lessons learned, investors and utility resource planners expect that natural gas–fired plants will continue to be important contributors to meeting growing domestic electricity demand. At present in North America, more than 600 gas-fired simple- and combined-cycle units representing over 82,000 MW are in various stages of development.

Many of these projects are scheduled to break ground between 2007 and 2012. Of the 82,000-MW total, about 52,500 MW have been proposed for intermediate-load service. Of the remainder, 12,500 MW are expected to provide baseload generation, with over 17,600 MW planned for peaking service. The 418 units can be put into the following three categories: