A Nuclear Tomorrow?
A Nuclear Tomorrow? Notes
Considering the Costs and Benefits of Nuclear Power: The Pros and Cons of New Nuclear Plants a panel held on October 22, 2008, contributes to an animated national forum on the future of our electric power system.
Co-sponsored by the Sallan Foundation, the Energy and Environmental Protection Committees of the New York City Bar Association and the Environmental Law Institute, four experts discussed and debated the role of new United States nuclear power plants in relation to global warming and increasing worldwide energy demand.
These experts on the finance, construction and operation of nuclear power plants and on the risks of proliferation and the storage and disposal of radioactive waste, provided a complex and sometimes contradictory picture of today's nuclear power landscape. The panel's perspective gained added depth with the presentation by Maggie Lemmerman, a representative from the British Embassy, on England's pro-nuclear power policy.
Nancy Anderson, Executive Director of the Sallan Foundation, made closing remarks and raised questions about the costs of new nuclear power in a era of carbon constraint and the role of government in an era of merchant-built power plants. What should government's role be in an industry where a return on investment is no longer guaranteed though agency rate-setting? Should government policy seek to "level the playing field" between all fossil and non-fossil fuels?
This is not an abstract question because by 2015 nearly one half of US nuclear power plants will be forty years old and nearing the end of their useful lives. What will replace them? Turning to the nation's energy policy and regulatory framework, Dr. Anderson concluded that good policy must be grounded in the reality that every energy choice has opportunity costs. Investments of money, material, siting, infrastructure capacity and human capital cannot be undone.
A robust analysis is needed of which investments will yield the greatest returns in terms of safe, non-carbon emitting, reliable power supplies. Finally, as debates over nuclear power have made graphically clear, energy policy makers must not and cannot ignore the role of public opinion.
Advantages of New Nuclear
Carey Fleming, Senior Counsel, Nuclear Generation, Constellation Energy, described the goals of Unistar, a joint venture of Constellation Energy and French electricity group EDF for creating a standardized fleet of nuclear power plants and plant operations that will increase power generating efficiencies. Today, in much of the U.S. and New York State, the electricity system is merchant owned and merchant-generators cannot rely on government rate setting to make a profit.
Given this reality, the US nuclear industry faces major challenges. The first challenge is safety, but that is true for all energy technologies. Other nuclear-specific challenges include radioactive waste management, standardization of plant design and operations, the limited availability of major reactor parts, shortages of skilled labor, including design engineers and skilled construction workers.
Caren Byrd, Executive Director, Investment Banking Division, Morgan Stanley focused on investor issues germane the nuclear power industry. Existing nuclear power plants have financially outperformed conventional, fossil-fuel plants and their operational track record in New York State as elsewhere has only improved over the last decade. Morgan Stanley is a supporter of investing in new capacity. However, the question is still open whether new nuclear power plants, in fact, can be financed.
On the positive side, there is a pressing need for new base load electric capacity and from an investor's perspective, putting money into this sector of the energy industry is a good way to achieve portfolio diversity with the additional economic and environmental advantage of not having to pay for carbon abatement or carbon allowances.
On the negative side of this equation, the US has not yet set a price on carbon, current capital markets are very difficult right now for all investments and utility stocks have gone down 25-50% in value. These facts will make it harder for project developers to raise money because new nuclear power plants are very expensive with cost estimates ranging form $4-11 billion. The current federal licensing process is new and investors do not yet know if it will work, how long it will take and what it will cost. Investors are also concerned whether merchant-owned plants will be able to make a profit, since power prices and rates of return on investment are no longer set by regulation and this means loan guarantees are necessary to assure potential investors.
Disadvantages of New Nuclear
Edwin Lyman, Senior Staff Scientist, Global Security Program, Union of Concerned Scientists stated that UCS is neutral on the question of whether the US should construct new nuclear power plants but it identifies unresolved questions especially about safety and proliferation.
Regarding operational safety, while the design of US plants is very different than the USSR's Chernobyl, the risk of a core melt down and containment breach here is 1% a year and the human health and financial consequences of an accident grow as the number of plants in operation increases. Although new plants have safety features that older plants lack, these features impose costs that conventional or clean power sources don't have.
A related risk posed by new nuclear power plants is the gap between design costs and actual construction costs, as well as known costs associated with securing plants from terrorist threats and a host of other federal security requirements.
Robert Alvarez, Senior Scholar, Institute for Policy Studies focused on the issue of standards for the disposal of radioactive waste from nuclear power plants. US policy is moving in the direction of the UK, France, Japan and India by allowing the recycling of spent fuel from new domestic reactors.
The safety of recycling technology in the US is currently unknown; Sweden and Finland continue to reject recycling in favor of developing permanent disposal sites. Older US plants store high-level radioactive fuel waste on site in the absence of a national repository at Yucca Mountain, Nevada. [Fuel waste is 95% uranium, 4% radioactive isotopes and 1% plutonium. From a weapons proliferation risk perspective, the plutonium is the component of concern, because plutonium can be used to make nuclear weapons.]
According to the National Academy of Sciences, the risks associated with "dense compaction" dry casks storage that could arise from "acts of malice" are fixable, but the costs are "scary" and despite Bush administration policy, Congress has not funded the fixes. Regarding the risks that must be taken into account when making siting decisions for new nuclear power plants, seismic considerations are of particular importance because of modern plant designs. So too, as climate change alters rainfall patterns over the US, this will have a great impact on nuclear plants requiring large volumes of cooling water.
The Sallan Foundation, the Environmental Law Institute, and the Energy, Environmental Law and International Law Committees of the New York City Bar Association hosted this great debate.