Nuclear power costs an issue in tight-fisted era
Wake up and good morning. Is the nuclear power industry's renaissance getting backburnered? After a flurry of activity and 26 high-profile deals announced in recent years to build a new generation of nuclear power plants, fresh doubts are emerging. That's important to Florida where two nuclear power projects intended to generate electricity -- one by Progress Energy in Levy County north of Tampa Bay and another by FPL Group in south Florida -- have been in the fast lane but are starting to hit some bumps.
A Dow Jones story suggests (subscription required) the U.S. nuclear power sector may have a "few more years in the dark ages" before its long-promised resurgence. Despite nuclear power's improved image, its rising appeal as an alternative to air-polluting coal- and oil-fired power plants, and President Barack Obama's saying nuclear has a place in any plan to reduce greenhouse-gas emissions by 80 percent by 2050, nukes are still struggling to win complete government and market support.
Interestingly, the Dow Jones story notes, the controversy is less about environment (where will we put all that radioactive waste?) and nearby neighborhood fears, and more about cost. Nuclear plants are expensive (though once built they can produce electricity at the lowest price per kilowatt in Florida). Progress Energy estimates its two new reactors north of Tampa Bay will cost $7 billion each. Duke Energy Corp. plans to spend $1.8 billion to build a coal plant near Charlotte, N.C., to produce nearly as much as one reactor.
After criticism over higher rates amid a recession, Progress Energy blinked earlier this year and agreed to reduce a hefty increase in its electricity rates. The company had intended to use the extra funds to finance the ongoing expense of building the nuclear plant.
A recent Gallup Poll shows 59 percent favor the use of nuclear power, the highest percentage since Gallup first asked the question in 1994. How funny, in a way. Just as the nuclear industry seems to have finally won the Big One -- consumer acceptance -- it faces new questions about financial viability. The Dow Jones story quotes Glen Grabelsky, a managing director at Fitch Ratings in New York:
"The cost of these plants is quite high...if you look at the companies sponsoring them, that's greater than their entire market capitalization."
The $14 billion-plus price tag on Progress Energy's two reactors in Levy County, for example, is higher than the entire company's market value of $10 billion..
But if nuclear costs won't come down, raising the price on other forms of energy can help nuclear look more attractive. The Obama administration aims to put a price on emissions, which would raise the cost of power from coal and gas relative to nuclear.
Daniel Lashof, director of the Natural Resources Defense Council's Climate Center in Washington, told Dow Jones that government support should be reserved solely for emerging technologies, which could see costs fall as they are more widely adopted. He added:
"Nuclear power has received the lion's share of subsidies over the last 40 years, and despite all that has not managed to create a competitive technology."
One base of growing fans for nuclear energy in Florida are utilities scrambling to meet electricity demand and environmental mandates. Despite some local protests, the Orlando Utilities Commission is talking to Progress Energy about buying a stake in the Levy County nuclear output.
-- Robert Trigaux, Times Business Columnist