The Ups and Downs of U.S. Nuclear Power

Washington, D.C., June 30, 2014 – There appears to be a cyclical element to the story of nuclear power in the U.S., an ebb-and-flow that repeats itself over time. There’s no lock-step periodicity, but the tides of hyperbole and deflation occur with some regularity.

The most recent case of the binge-and-repent cycle in nuclear comes from the now-deflating balloon called “small, modular reactors.” The news for SMRs is retrenchment, after the pumped-up optimism of a few years ago. Babcock & Wilcox was the first winner in the Department of Energy sweepstakes to win big government support for SMRs. Now, B&W is backing away from its SMR program, failing to win market traction for reactors that are smaller than the big boys being bought in China but which cost just as much on a dollars/KW basis.

Most recently, B&W has laid off about 100 workers in its mPower SMR unit. The company is unable to sustain the investment it has undertaken to develop a machine for which there is no commercial market.

Earlier this year, Westinghouse, a legacy powerhouse in nuclear power, scrapped its SMR program after failing to win DOE support for development of the reactor design. A Westinghouse executive said, “The problem I have with SMRs is not the technology, it’s not the deployment — it’s that there’s no customers.”

Further evidence for the air going out of the SMR balloon comes from Platts, which has hosted a conference on SMR prospects for the last several years. Earlier this month, Platts queried those who attended its SMR conferences on whether they would support combining the SMR confab with the company’s annual overview of nuclear power prospects. The results of the Platts survey aren’t available, but the simple fact of the survey suggests that SMRs are no longer the next big thing in nuclear power.

Chris Paine of the Natural Resources Defense Council attended the most recent Platts SMR conference, held in Washington in May. He described the mood of the meeting as “restrained, even somber,” adding that the tenor of the meeting was a “decided contrast to the ebullient mood I had experienced at a similar conference three years ago in Columbia, South Carolina.”

The collapse of enthusiasm for small nukes follows the deflation of the optimism for their bigger brothers, as the “nuclear renaissance” of the early days of this century has turned into nuclear retrenchment in the century’s second decade. Congress in 2005 came through with authority for federal loans to new nuclear construction, leading to wild optimism about a rebirth of U.S. nuclear power

Rebirth didn’t happen. Southern Co.’s Vogtle project, the only recipient of a Department of Energy loan, is running into the same sort of problems that bedeviled the first generation of nuclear power in the 1970s and 1980s. As reported in this magazine, the Vogtle project is running behind schedule and torching its budget. As the great American philosopher Yogi Berra said, it’s a case of “déjà vu all over again.”

When the first boom in U.S. nuclear power in the 1970s turned to a bust in the 1980s, the industry turned inward, with great results. Under the prodding of industry giant Bill Lee of Duke Power, the nuclear industry acknowledged that its performance was substandard and unacceptable. It created a new culture and new institutions, including the Institute for Nuclear Power Operations, to right its listing ship.

Building on that, the nuclear industry then turned to uprating and license extensions to keep its fleet afloat in an environment in which it was clear than new units would not materialize. That was a successful strategy and the industry delivered on its promises of better-behaved, more economical nuclear power.

How will the nuclear industry respond to the latest challenges, which seem to forestall any future boom in new units? That’s unclear. Some in the industry will push a political agenda, attempting to hitch a ride on the global warming bandwagon, a tactic we have already seen. That’s a losing approach in my mind. The public hasn’t warmed to the pleas about combating a warming climate, so it’s hard to see how the nuclear industry pitch can gain any traction.

A better strategy? The industry might look to ways to further improve nuclear plant performance, along with adopting a new paradigm on nuclear waste management recognizing that spent fuel will remain at utility storage sites for the foreseeable future. That might stave off retirements of existing nuclear units.

As for more new units in the U.S.? Don’t put any money on that outcome. Here’s the assessment of NRDC’s Chris Paine, a long-time and critical observer of the industry:

“Today, both small and large nuclear reactor proponents confront a U.S. economic landscape that has shifted against nuclear power in the near term, while the longer-term outlook remains cloudy and uncertain at best, even with the prospect that gradual carbon emissions regulation in the electric power sector – a 15% reduction from present levels by 2030 — will advantage low-carbon electricity resources, including nuclear.”