Nuclear Energy Stalls, but Proponents Remain Bullish

The U.S. nuclear energy industry has lost momentum in recent years, as the natural gas boom has made nuclear power seem less economical and the Fukushima reactor crisis in Japan has undermined public and government support for nuclear projects. Can the industry recover from these setbacks?

In March, the Nuclear Regulatory Commission (NRC) upheld the rejection of a license to build a new nuclear reactor in Maryland, while nuclear plants in Wisconsin and Florida are planning to close because they're unable to compete with less expensive natural-gas-based electrical generation. This month also marked the two-year anniversary of the Fukushima nuclear disaster, which did much to damage public perception of nuclear safety.

Only five years ago, industry leaders and politicians were forecasting a "nuclear renaissance" that would add 20 additional units to America's existing 104 reactors. But the planned expansion of nuclear energy has stalled, as the surge in natural gas production has made nuclear power a less cost-effective option and policymakers have grown reluctant to pursue new opportunities for nuclear power generation due to safety concerns.

"Because of the nuclear industry's long history of permitting problems, cost overruns, and construction delays, financial markets have been wary of backing new nuclear construction for decades. The supposed 'nuclear renaissance' ballyhooed in the first decade of this century never really materialized," PennEnergy notes. "And then came Fukushima, a disaster that pushed countries around the world to confront the same basic question: Should nuclear power be part of the energy future?"

Fukushima raised many doubts about the viability of new nuclear facilities, but nuclear industry insiders contend that the effects have worn off and U.S. nuclear power is now widely considered as safe as it was prior to the disaster in Japan.

"Perception-wise, industry surveys and responses show that nuclear energy is basically back to the pre-Fukushima levels of 60 to 70 percent approval ratings from the public," Joseph Pollack, vice president of the Nuclear Energy Institute (NEI), an industry trade group, told IMT. "Although Fukushima was horrific due to the tsunami and the significant damage it caused to the reactors, we in the U.S. nuclear industry have a great safety record that we're further enhancing. We don't see it as being a barrier to the nuclear industry but as a path to improvement and preparedness in the unlikely case of a disaster or emergency. We examined a wide range of scenarios and the industry has built in a great deal of redundancies."

The NRC has also been tightening its guidelines for nuclear facilities by adding safeguards and measurement devices for spent fuel, mandating updated ventilation systems for containment systems, and demanding more robust emergency communications. However, it may not be the regulations that have slowed down the construction of new reactors, but rather the new licensing process that was recently introduced.

"There's a great benefit to U.S. industry from NRC regulations, which come from a sound technical basis. The reason it may seem like there are some delays in expanding is that we've switched to a licensing process that combines a permit to build and a permit to operate the unit at the same time, so the reviews are far more intensive now," Pollack explained. "We're building under the same inspection process as the operating inspection process. In the end, it'll ultimately be quicker, but since it's the first time we're doing it, it's taking a bit longer. This process is being used for the first new generation of nuclear reactors being built today."

Neither Fukushima nor increased attention from regulators pose the greatest barrier to the long-awaited "nuclear renaissance," but market forces, particularly the boom in natural gas, are responsible for the slowdown. According to Bloomberg News, the abundance of shale gas sources has driven natural gas prices to a 10-year low and made nuclear energy a less economical option for U.S. energy, especially in the Midwest.

However, the NEI considers the natural gas surge to be a temporary issue that will be corrected by the market in the short-term future.

"Right now the renaissance is stalled primarily because of the natural-gas market. The short-term impact makes it harder to get an investor into a 10-year horizon for a nuclear facility because it's not the best value for the baseload on the grid," Pollack explained. "Until the natural gas prices come back up, which I believe will happen in a 3-to-5 year range - though some say 5 to 10 years - it'll be tougher to get investment for nuclear facilities. However, gas prices will start climbing and that'll help nuclear bounce back. Supply and demand will balance this stuff out."

In addition to the challenge posed by natural gas, the nuclear industry is also facing difficulties from accelerating wind energy development. Since 2008, there has been a 40 percent plunge in the wholesale pricing of wind energy in Midwestern states, further undercutting demand for nuclear power. Critics claims that government subsidies for wind power generation have distorted the market.

"We're clean energy, and that helps with the ability to market, but we're not subsidized like some industries, such as wind," Pollack observed. "In the president's second inauguration address, he outlined the push for clean air, and the only high-capacity power source that has the ability to meet those goals is nuclear energy - it's definitely the best clean-air energy option. Renewable energies don't yet have the baseload and capacity to meet energy consumption needs. For stability, you need generators working 24 hours a day, seven days a week, and we believe nuclear provides the stability required."

Despite the relatively stagnant growth of U.S. nuclear power plants, the industry has maintained its 20 percent share of domestic electricity generation, with the NRC issuing 73 license renewals for existing facilities. Nuclear energy companies have also improved efficiency and added the equivalent of 24 new 1,000-megawatt units over the past two decades.

"I think there's going to be a continued commitment to nuclear energy, and we'll see the new plants currently planned come on line," Pollack said. "In the end, depending on the growth of the whole industry, I expect us to maintain our 19 to 20 percent share of overall power generation."

Expanding nuclear power's share of the U.S. energy market, though, would require tougher environmental regulations that discourage demand for traditional fossil-fuel-based power generation. According to Pollack, limiting CO2 emissions would benefit nuclear and make it more valuable in the marketplace.


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