By Kennedy Maize
Washington, D.C., 6 August 2012 — It’s been a rough road for nuclear advocates in the U.S. of late, although nothing seems to dent the Pollyanna armor of the nuclear crowd, always appearing to believe a revival is just over the horizon and headed into view. Here are a few fraught developments for the nuclear business that suggest the positive vision just might be a mirage.
* GE CEO Jeff Immelt in a recent interview with the Financial Times revealed a surprising and somewhat uncharacteristic realism with regard to the company’s nuclear future and that of its partner in radioactivity, Hitachi. In London for the Summer Olympics, Immelt told a reporter for the FT, “It’s really a gas and wind world today. When I talk to the guys who run the oil companies, they say look, they’re finding more gas all the time. It’s just hard to justify nuclear, really hard. Gas is so cheap, and at some point, really, economics rule.”
For the nuclear industry, economics has always been the fundamental enemy – not the green-tinged, hairy anti-nuke activists, but the folks with the green eye shades, sharp pencils and, today, even sharper spreadsheets. The nuclear execs long have pursued governments as their bulwark against markets, and that has often worked.
Today, as Immelt notes, gas has made the market forces so overwhelming, at least in those places such as the U.S. where gas is astonishingly abundant, that even government likely can’t come to the rescue of nuclear power. Could that have something to do with the abject failure of the 2005 Energy Policy Act’s loan guarantee provisions, which have not worked for renewables any better than they have worked for nukes? Indeed, the threat of gas is at least as potentially toxic for many wind and solar projects as it is for nuclear and coal new build.
* In Georgia, the Southern Company is facing what looks like growing problems with its Vogtle project, which aims for two new nuclear units using the unproven but promising Westinghouse AP1000 reactor design. With its federal loan in jeopardy (Southern says it can go ahead without taxpayer funds) and the project running behind schedule and over budget, the Atlanta-based utility now faces lawsuits brought by the reactor vendor and the construction contractor Shaw Group. The amount in dispute, some $29 million, is tiny compared to the multi-billion-dollar price tag for the project. But it may be revealing of ruptures in the deal.
Robert Marritz, an energy lawyer and veteran industry observer, publisher of ElectricityPolicy.com, commented that “the very filing of a lawsuit at this stage of the first nuclear plant construction in decades is stunning, reflecting stresses in a relationship that should, one would think, be contained and resolved rather than boiling over into public view.” Indeed, the parties are also engaged in a larger, perhaps nastier, dispute involving $800 million that has not gotten much public exposure. And that’s real money.
* Moving to California, the long-running saga of Edison International’s San Onofre Nuclear Generating Station (SONGS, how’s that for an inept acronym?) continues, with little clarity in sight. The plant has been out of service since January as a result of unexpected and still unexplained tube wear in the plant’s steam generators. According to Bloomberg New Energy Finance, the outage is costing the utility about $1.5 million a day just in lost revenue. The cost to the state in jeopardized reliability hasn’t been calculated, although Edison has started up mothballed gas capacity to fill the supply gap.
There is no firm date for restart at the nuclear plant. In the meantime, the California Public Utilities Commission is planning a formal investigation of the outage and Edison’s response, but recently decided to delay that until the utility files a legally-required report with the CPUC November 1. CPUC President Mike Peevey is a former executive with the Los Angeles-based utility.