Nuclear Downsizing Accelerates

The struggling US nuclear industry suffered three blows this month.

First, French utility Electricite de Frances (EDF) officially began withdrawing from the market – it transferred ownership of several jointly owned plants under the Constellation Energy Nuclear Group entirely to Exelon, the biggest US nuclear operator.

Constellation operates three US power plants on the East Coast with five nuclear reactors that generate more than 3,900 megawatts (MW) at full power. EDF still owns 58 nuclear reactors in France and 15 in the United Kingdom.

"We see no room for nuclear to expand in the US at this time," EDF Chairman and Chief Executive Henri Proglio told The Wall Street Journal, citing a dramatic drop in US gas prices compared with other types of energy. "So we are being realistic; US nuclear is no longer a priority for us."

Instead, EDF is turning to solar and wind, through which it generates 2.3 gigawatts (GW) and manages another 7 GW for other companies.

One day after EDF’s announcement, Duke Energy Corp. officially abandoned its plan to build a new nuclear plant in Levy County, Florida. This follows its decision in February 2013 to retire the Crystal River 3 facility rather than invest in a "complex and costly first-of-a-kind repair." 

Duke seeks to recover up to $1.47 billion in costs related to the project under a proposed multi-year settlement with the Florida Public Services Commission. The company has been billing its 1.7 million Florida ratepayers since 2009 for both Crystal River repairs and the proposed Levy Country project. Duke says it’s evaluating various sites in Florida for a new, state-of-the-art natural gas plant as an alternative.

“The revised agreement represents an effective balance between moderating rate impacts to customers, providing clarity on recovery of past investments and allowing us to move forward with planning for Florida’s energy future,” says Alex Glenn, Duke Energy state president – Florida. “We continue to believe that a balanced energy portfolio, including renewable energy, energy efficiency, and state-of-the-art cleaner power plants are critical to securing Florida’s energy future, and nuclear energy should remain an option to meet Florida’s future energy needs."

In fact, Duke has been placing a higher priority on renewable energy investments. In April, it disclosed in its 2012 sustainability report that it wants to double the wind, solar and biomass energy in its portfolio by 2020. Duke Energy Renewables currently owns most of its renewable generation assets – about 1,700 megawatts from wind projects in six states and seven solar farms in North Carolina, Texas, Arizona and Florida.

Duke is also an equity investor in solar company Clean Power Finance.

Lastly, Entergy Corp. announced it will shut down Vermont’s only nuclear plant – and one of the oldest in the US – by the end of next year. The 40-year-old Vermont Yankee Nuclear Power Station is closing because it can’t compete with cheap natural gas, according to Entergy, but the company has been in a court battle with the state, which did not want the plant’s license renewed for another 20 years.

"Closing Vermont Yankee reflects the growing realization in New England and around the nation that it is time to move towards a safer, more affordable clean energy future of wind, solar, geothermal, along with well-regulated, domestic natural gas," says Senator Ed Markey (D-MA). "While nuclear energy was once advertised as being too cheap to meter, it is increasingly clear that it is actually too expensive to matter."

Latest In String of Setbacks

In 2008, Congress authorized $18 billion in federal loan guarantees for nuclear plant construction and many believed it would be the start of a nuclear renaissance.

Utilities submitted 24 applications by the end of that year, pinning their hopes on high coal and natural gas prices and the likelihood that US lawmakers would pass a cap-and-trade bill that would make coal-fired plants even less profitable.

Of those applications, only four have resulted in new construction. Many of those projects, including those in South Carolina and Georgia, have – as in the past – been plagued with millions of dollars in cost overruns and delays.

“In a competitive market, you can’t even come close to making the math work on building new nuclear plants,” says Daniel Eggers, a utilities analyst with Credit Suisse, told Bloomberg Businessweek. “Natural gas is too cheap, demand is too flat, and the upfront costs are way too high.”

The Fukushima nuclear disaster in 2011 and its current fall-out of runaway radiation has accelerated the rush away from nuclear.

In recent months, four reactors have been shut down, including the San Onofre facility in California – the largest plant to close in 50 years. Expansion plans have been cancelled in Minnesota, Illinois and Pennsylvania.

"What we are seeing today is nothing less than the rapid-fire downsizing of nuclear power in the United States," says Mark Cooper, senior fellow for economic analysis, Institute for Energy and the Environment, Vermont Law School. "It is important to recognize that the tough times the nuclear power industry faces today are only going to get worse."

Cooper adds: "The nuclear experience in Florida should not only be a permanent reminder to policy makers across the nation of the lunacy of advanced cost recovery, it also should be a loud call to move beyond the antiquated concept of base load generation. With new reactors too expensive to build and old reactors too costly to operate, decision makers should aggressively pursue alternative resources and cutting-edge information, control and storage technologies to build a 21st century electricity system."

It’s not just the US, either.

Global electricity generation from nuclear plants fell by a historic 7% in 2012, after falling by 4% the previous year, according to the latest World Nuclear Industry Status Report. Today, 31 countries generate nuclear energy but only those in Europe get at least 30% of their power from it. 

"Making significant improvements to the economics of nuclear power plants was central to the promises of the ‘Nuclear Renaissance’," write the authors of the nuclear status report. "Simplification of designs was meant to reduce both the cost and the risk of problems in the construction phase. By making construction more predictable, this was expected to make nuclear projects less economically risky and therefore easier and cheaper to finance. These promises are in tatters with cost estimates now roughly seven times the level predicted a decade ago …"

Download the latest World Nuclear Industry Status Report:

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Comments on “Nuclear Downsizing Accelerates”

  1. Tom Clements

    The new reactor industry took another hit this week in South Carolina with the release of a letter from the Nuclear Regulatory Commission to Duke that the schedule for the Lee reactor AP1000 project has slipped another three years. The NRC is backing away from the review of that project, set for Cherokee County, South Carolina, and Duke doesn’t appear to be too enthusiastic about it given mounting schedule delays and cost overruns with the other two AP1000s projects in South Carolina (VS Summer) and Georgia (Vogtle). As the public service commissions in Georgia and South Carolina do not require least-cost options to be pursued first, the nuclear cart was put before the efficiency and conservation horse and the most expensive option was pursued. The ONLY reason the new reactors are being pursued in GA and SC is because of biased “construction work i progress” laws which force rate payers to pay in advance and assume all risk. Duke will not proceed with the Lee project until that same type of unjust law is in effect in North Carolina and there will be major push-back by the public if they try to raise such anti-free market lefislation.

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