Advancing America’s Nuclear Infrastructure

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.

America’s Largest Source of CO2-Free Power

Representing over 70% of the country’s emission-free electricity, nuclear energy is an important hedge against a possible future tax on carbon emissions and further regulatory constraints on air emissions and water usage.

Maintaining a balanced energy portfolio and reducing power plant emissions will require us to build new nuclear plants. Over the next few years, nuclear energy’s contribution to our energy mix and to our economic well-being could begin to decline with some plants retiring. For the nuclear sector to remain at its current or an expanded contribution level, we must continue investing in new facilities today.

In these uncertain economic times, building infrastructure provides near-term and long-term benefits. New nuclear energy projects offer more than clean, predictable, reliable, and affordable power. They also create American jobs; spur local investment; generate federal, state, and local tax revenues; and increase our nation’s energy security.

At AREVA, we are investing in new energy infrastructure and new technologies, and taking steps to rebuild a supply chain. We continue to progress with major U.S. projects such as our Eagle Rock Enrichment Facility in Idaho and the MOX Fuel Fabrication Facility in South Carolina, which we are building in partnership with the Shaw Group. Projects such as these are already creating jobs, providing energy and industry advancements, and contributing to regional economies.

New Nuclear Plants Create Jobs, Spur Local Investment

Each new nuclear plant project creates thousands of jobs and represents billions of dollars of investment. In this vein, AREVA is still moving steadily toward construction of the first U.S. EPR reactor. Design certification of the U.S. EPR technology is proceeding well, and we expect U.S. Nuclear Regulatory Commission approval to go according to schedule. We are working hard to build a domestic supply chain to support the construction of new nuclear facilities.

We are constantly gaining valuable experience from our international projects that will enable us to build faster and more economically here. Today AREVA is building four Generation III+ EPR reactors: one in Finland, one in France, and two in China.

The improvements included in the EPR design are based on decades of experience building and maintaining reactors around the world. For example, the EPR reactors feature a double containment structure designed to withstand an aircraft impact. Layers of diverse and redundant safety systems, combined with efficient energy production, reduce the long-term uncertainty associated with ownership and operation.

As an industry, we will carefully examine the experience in Japan so we can make our designs and operations even safer and more efficient. At AREVA, we are already developing solutions aimed at these objectives to help our customers operate existing plants.

These measures are prudent investments in America’s energy infrastructure as well as our future prosperity. We are grateful for the Obama Administration and other policymakers’ steadfast support for nuclear energy. But we must continue moving forward with new investments today so that the next generation of Americans will continue to reap the benefits of a vibrant nuclear sector and the predictable, reliable, and economic energy it provides.

Mike Rencheck is chief operating officer of AREVA Inc.

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