Thursday, February 14, 2013

Guest Post: Nuclear Energy’s Value Proposition Still Strong, Will Reassert Itself in Next Decade

J. Scott Peterson
The following guest post was written by J. Scott Peterson, NEI's senior vice president, communications.

NEW YORK CITY—Despite challenging electricity markets and natural gas prices at a 13-year low, industry leaders are confident in the long-term prospects for nuclear energy and its contributions to the electricity mix and U.S. economic growth.

On average, America’s 104 commercial reactors are the most efficient power producers on the grid—operating at 86 percent capacity factor. Capacity factor is a measure of efficiency, with a 100-percent rating equaling full power production 24/7, 365 days. Absent reactors in California, Florida and Nebraska that have been closed virtually all year for extended maintenance, the capacity factor at the other 100 reactors was just shy of 90 percent.

“We continue to invest in these facilities to preserve their asset value,” NEI President and CEO Marv Fertel told nearly 200 financial analysts and journalists at the Institute’s annual briefing in New York. “We want them in position to operate beyond 40 years—perhaps more than 60 years—and to incorporate new upgrades to maintain the highest possible level of safety.”

Depressed natural gas prices, which set electricity prices in many markets, and flat electricity demand are putting near-term pressure on some nuclear energy facilities in deregulated markets. But Fertel and industry leaders are focusing on nuclear energy’s role providing fuel diversity in the electric sector for the longer-term and the value chain of nuclear energy that extends beyond low-cost, reliable power production.

“Our plans must be flexible to adapt to high- and low-price markets and must balance short- and long-term views,” Entergy Corp. CEO Leo Denault told analysts Feb. 8. He added that Entergy, which operates 12 reactors, would continue to advocate for markets that value nuclear energy’s added value: “a source of clean energy with effectively zero emissions, grid reliability…fuel diversity, and jobs and other contributions to the regional economy.”

Fertel echoed Denault’s value chain for nuclear energy on Thursday. “Low-carbon, baseload electricity is a crucial element of sustainable development and it is why many nations are building or planning to build more nuclear energy facilities. The value proposition for nuclear energy is still strong and will reassert itself as we move beyond the near term.”

Recognition of this value chain is growing among policymakers, environmental leaders and consumers. Eighty-one percent of U.S. adults in a Feb. 8-10 survey by Bisconti Research/GfK said nuclear energy is important to America’s electricity mix.

That value chain includes:
  • Production of large quantities of electricity around the clock—nearly 770 billion kilowatt-hours in 2012;
  • Job creation, including thousands of jobs at new reactor projects in Georgia, South Carolina and Tennessee and a doubling of uranium enrichment production in New Mexico;
  • Providing clean air compliance, including the prevention of controlled emissions under the Clean Air Act and reducing the carbon compliance burden that would otherwise fall on natural gas and coal-fired power plant;
  • Providing voltage support to the grid;
  • Providing forward power price stability, particularly for large industrial users of electricity;
  • Contributing to fuel and technology diversity that is one of the foundations of America’s reliable and resilient electric sector.
“We continue to believe that our [nuclear] assets are some of the lowest-cost, most dispatchable baseload assets,” Exelon CEO Christopher Crane told The Chicago Tribune on Feb. 8.

Nuclear energy facilities are increasingly important for fuel diversity as natural gas use for electricity generation grows. In Florida, where more than 60 percent of electricity is produced by burning natural gas, Florida Power and Light recently completed uprates totaling 490 megawatts at its Turkey Point and St. Lucie reactors. Based on the FPL’s latest projected price of fuel and other factors, this investment is projected to save customers $3.8 billion on fossil fuel costs that otherwise would have been used over their operating lifetime.

“This value proposition will become increasingly self-evident and will drive a bright long-term future for nuclear energy,” said Fertel.

3 comments:

David E Grider said...

This rosy scenario ignores the cost to deal with the hazardous waste produced. At present the costs of dealing with some of the worst pollution the world has ever seen are being ignored.

California has shown that electricity demand can be leveled at reasonable cost. In the US, conservation and efficiency are much more cost effective than building any new power plants.
By the time this situation changes (at about ½ the energy per dollar of GDP that presently obtains), the cost of nuclear will have increased more, and the cost of wind and solar will have decreased some more. Before a new nuclear plant can be completed in the US, the levelized cost of wind and solar will be lower than that of nuclear (averaged over a 25 year life cycle), making investment in nuclear very risky.

Anonymous said...

Nobel Prise winner Richard Smalley postulated that as much as 3 Terra Watts of solar energy could be generated by paving over the American southwest. So we are all set for the day time!

David Bradish said...

This rosy scenario ignores the cost to deal with the hazardous waste produced.

Actually, since the 1980s, the nuclear industry pays about $750 million each year to the Nuclear Waste Fund to manage its used fuel. The fund has collected and earned over $30 billion to date.

Before a new nuclear plant can be completed in the US, the levelized cost of wind and solar will be lower than that of nuclear (averaged over a 25 year life cycle), making investment in nuclear very risky.

That sounds like a rosy scenario to me. Does your analysis include the costs of managing solar's toxic wastes?

It's interesting how a 25 year life cycle is pointed out in the cost analysis. I guess over a new nuclear plant's 60-80 year lifespan, we'll have to replace wind and solar plants at least three times. Is that included somewhere in the cost analyses?