Nuclear Expansion Grows Near & Oyster Creek Gets another 20 years

Listen to Episode 64 of “This Week in Nuclear” Here

President Obama Promotes International Nuclear Fuel Bank

At a speech delivered in Prague, Czech Republic this week President Obama advocated establishing an international nuclear fuel bank. The idea is this: countries who pledge not to develop nuclear weapons programs and who do not enrich uranium would have the assurance of a stable fuel supply for their peaceful nuclear energy programs. Countries who posses the ability to enrich uranium under the International Non-Proliferation Treaty would provide the service for the international community. Much of the initial fuel in the bank would come from diluting weapons grade uranium, essentially continuing efforts begun by Russia and the USA to reduce weapons stockpiles.

President Obama also indicated support for the fuel bank to be located in Kazakhstan, a proposal that was endorsed by the European Union in March. The EU has already pledged $33 Million for set-up expenses, and the International Atomic Energy Agency (IAEA) would have the lead to set up standards and policies and overseeing operations of the bank.

An international fuel bank would eliminate at least one of the obstacles that nations perceive in setting up new civilian nuclear energy programs. If they have no uranium or thorium resources of their own, or no ability to enrich the fuel, they will have to rely on other nations for their fuel supply. As with any commodity with a small number of suppliers, the potential for collusion and political leverage are high. In principle a fuel bank would provide greater assurance that if nations invest to build nuclear power plants they will be able to acquire fuel to run them.

Oyster Creek License Renewed for 20 Years

This week the Nuclear Regulatory commission granted at 20 year license extension to the Oyster Creek nuclear plant in New Jersey. The license renewal followed almost four years of safety and environmental analysis and deliberation by the Atomic Safety Licensing Board. Anti-nuclear groups waged a vigorous fight against the plant’s life extension, but in the end they were, according to the board, unable to provide any scientific analysis or evidence to support their claims that the plant is unsafe.

The NRC called the Oyster Creek review the “most extensive license renewal review to date.” In addition to the analysis done by the NRC staff and the ASLB, the license extension request was reviewed by the NRC’s Advisory Committee on Reactor Safeguards. In the end the NRC commissioners approved the extension on a 3 to 1 vote, the lone dissenting commissioner was Gregory Jaczko.

The Changing Face of the NRC

Commissioner Jaczko, who holds a PhD in Physics, is considered by many to oppose the expansion of nuclear energy for peaceful uses. He formerly worked for Rep. Edward Markey (D-Mass), one of the most vocal anti-nuclear politicians in Washington, and he was appointed to his position on the commission as part of a political deal between Harry Reid and former President Bush. Harry Reid wanted his man on the commission so he could exert greater influence the outcome of the Yucca Mountain license application. The commission normally has five voting members, one of whom serves as the chairman. They all have equal voting power. At present there is one vacancy, and another vacancy will be created when Commissioner Peter Lyons’ term expires in June of this year. It is widely speculated that President Obama will name Jaczko to lead the commission when the current Chairman Dale Klein’s term expires in 2011, or sooner if Chairman Klein were to retire early. Kristine Svinicki, the final commissioner, has a term that will expire in June of 2012. All this means President Obama will have at least two seats on the NRC to fill this year, a chairman to appoint in 2011, and another commissioner to appoint during his last year in office. Commissioner Jaczko’s term does not expire until 2013. It will be interesting to see how the tone and direction of the NRC will change as the new commissioners come on board, and as the chairmanship changes. I’ll be monitoring this in the coming months and will be reporting on it here at “This Week in Nuclear.”

Southern Nuclear Moves Forward with New Nuclear

There is some great news out of Georgia! Executives from Southern Nuclear reportedly gave Westinghouse and Shaw a “thumbs up” to move forward with preparations to build two new nuclear units at their Vogtle station in Georgia. Shaw and Westinghouse have already signed contract with Southern for two new AP-1000 reactors at that location. Last week Southern stated they plan to break ground this summer, but plan to delay the first safety related concrete pour until after they receive their construction and operating license from the NRC.

UAE Nuclear Program Steams Ahead

The United Arab Emirates could be the first nation in the Middle East to have a fully functioning nuclear energy industry. During his last week in office President Bush signed an agreement allowing American companies to share commercial nuclear technology, equipment, and services with the UAE. President Obama is following that lead and has even called the UAE approach “A model for the world.”

Scores of nuclear executives, engineers, and business development people from around the world have visited the Emirates in the last several weeks to seek their shares of what is expected to become a booming business. The UAE states they plan to have their first commercial reactor up and running by 2017, and they are being very open out their willingness to conduct everything with full oversight by the IAEA. They also have no plans to develop fuel enrichment capabilities and they plan to buy their nuclear fuel on the international market.

At the last ANS meeting I had an opportunity to speak with an industry executive who told me the UAE had adopted a very bottom up, systematic approach: first they are creating a regulatory framework and oversight body, then they will select principle partners and a technology or reactor type, and finally they will begin construction. In parallel they are ramping up their education and training infrastructure so they can develop internal nuclear talent and a local workforce.

New “This Week in Nuclear” Website

I’m pleased to announce the roll out of a completely renovated web site at http://thisweekinnuclear.com. My goal with the new site is to create a portal for nuclear energy news and information extending well beyond my podcast.

Features include:

• For Podcasts – a web based audio player, show transcripts, an archive of all prior shows, and the ability to search the shows for key word.

• For News – there’s a new feature that automatically compiles recent nuclear related blog posts and news from around the Internet into a single, easy to read page. The update is dynamic; new news articles and blog posts are added as they are written.

• My blog posts and show notes are right on the home page, so it is easy to locate my most recent podcasts or blog posts.

• I’ve added nuclear related videos to the site, including a page that automatically pulls in new videos from YouTube. Like the news feed, this page is dynamic and new videos arrive as they are created anywhere in the world. I also have some of my favorite videos, and will add more in the future.

• I included a calendar of events that I will be attending. If you are going to be at one of these events please look me up.

• I’ve integrated social networking tools to make it easier for us to stay in touch and up to date. There’s a live Twitter feed, a link to the Facebook Fan Page for “This Week in Nuclear”, and a link to my LinkedIn profile( John Wheeler’s LinkedIn profile).

• Finally, there’s an updated shopping page. When you shop at Amazon.com you can support the show by starting your search at my site. You’ll get the same low prices and I’ll get a small percentage of sales to offset the costs of producing and hosting the show.

I am really pleased with the new web site and I hope you will be too! Please send me a note with comments and suggestions.

I have a favor to ask of my fellow bloggers and web site owners. Please take a few minutes to update any links back to my site to point to http://thisweekinnuclear.com . I know many of you point to my Blogger where I post show notes, or to my podomatic site where the podcasts are hosted. In a few weeks I will stop updating both of those sites since my new site has the capability handling everything in one place. As a web developer, one of my goals with this update was to consolidate my three sites (web site, blog site and podcast hosting site) into one, and to use technologies that will make it easier and less time consuming to make updates. I’ve accomplished that, and after a reasonable transition period those other sites will go dormant because I will stop updating them.

I would like to give a special “thanks” to those of you who have donated to the show via the Paypal link on the web site. It means a lot to me to know that you value the show enough to contribute financially. Every little bit helps, and your financial support and encouragement keep me going.

Have a great week!

John Wheeler

More Wind = More Gas and More CO2

I have been saying for months that despite what T. Boone Pickens and Greenpeace would like us to believe, increasing wind generation will INCREASE burning of fossil fuels and raise CO2 emissions. Apparently major European electricity producers agree with me.

"The deployment of high levels of intermittent renewables for electricity generation will require the construction of additional carbon-emitting plant as back-up for when renewables are not available to meet demand," EDF argued. "This is likely to be predominantly gas-fired and will therefore undermine efforts to reduce dependence on non-domestic fuel sources."

Anti-nuclear activists are fighting back, claiming the nuclear industry is trying to “steal” the renewable energy market and undermine efforts to reduce greenhouse gas emissions.

"We should be maximising renewables and harnessing as much of that clean, safe energy as we possibly can – not propping up the French nuclear industry."

Funny…last time I looked EDF was awash with cash from selling their clean, cheap nuclear-generated electricity to the rest of Europe where expensive gas and wind are draining national bank accounts.

The Straight Scoop on Clean vs. Renewable vs. Carbon-Free Energy

“CLEAN is in the Eye of the Beholder” or

“The Laws of Nature Can’t be Legislated”

Listen to the Podcast here

This week Senate Majority Leader Harry Reid let it be known that congress plans to tackle climate change by imposing federal standards that will require utilities to generate a percentage of their electricity from “renewable” energy sources. On the surface this may sound like a good idea, but Reid’s careful selection of words betrays his intent. He emphasized he would push “renewable” energy, not “low-carbon” or “clean” energy standards. This distinction makes all the difference in the world. It’s curious, too, because if they are in fact trying to reduce CO2 emissions as Reid states, then why wouldn’t he be promoting CO2-free energy? In truth, Harry Reid has another agenda in mind and is using the climate change soapbox to further his cause.

This week I’ll share the true intent of Harry Reid’s plan, and I’ll demonstrate that “renewable” energy standards will do little to reduce CO2 emissions. On the other hand, a regulatory framework that penalizes CO2 emissions and rewards low carbon generation would have an immediate and dramatic effect on reducing global warming gasses.

First, let’s discuss the difference between the phrases “clean energy” , “renewable energy” , and “low-carbon energy.”

“Renewable” Energy

The government has defined “renewable” energy as solar, wind, geothermal, hydro, waste to energy, and biofuels. Even though uranium and thorium supplies will last for hundreds or thousands of years, nuclear energy is not considered “renewable.” The phrase “renewable portfolio standards” or RPS refers to government mandates that require utilities to purchase a certain percentage of energy from renewable sources, regardless of price. This equates to a hidden tax and renewable energy subsidy because it forces the electricity rate payers to buy energy that could otherwise not compete in the market place. An RPS subsidizes renewable energy providers using inflated energy bills. About 25 states have some sort of RPS, and the Obama administration has started talking about implementing renewable portfolio standards on a national level. This would be a very bad idea but more on that later.

“Clean” Energy

“Clean Energy” is perhaps the most misused phrase in the energy business. Everyone claims to be clean! We’ve all heard industry trade association claims about “clean coal” and “clean natural gas.” There’s even a company out there called Clean Energy that is in the business of promoting natural gas as a transportation fuel. Clean Coal refers to coal power plants with mechanisms to remove a large percentage of the chemicals and particulate from the exhaust, but “clean coal” still has all the CO2 of “dirty coal.” Clean or not, burning coal releases about 2 pounds of CO2 for every kW-hr of electricity generated. A typical 1000 MW “clean” coal plant releases an astronomical 2 MILLION pounds of CO2 per hour! Natural gas burns more cleanly than other fossil fuels with fewer chemicals and particulates in its exhaust. However, burning natural gas still dumps huge qualities of CO2 into the atmosphere. For every one kW-hr of electricity generated, natural gas produces 1.3 pounds of CO2, only about 1.3 MILLION pounds of CO2 per hour for a 1000 MW plant!

Biofuels claim to be clean, but their production is resulting in the deforestation of the Amazon jungle in Brazil, and farm equipment uses diesel fuel which emits CO2 and other pollutants. Hydro power is certainly clean unless you are concerned with the thousands of square miles flooded and natural habitats lost. Solar energy is a huge consumer of land; about 35 square miles for the same output as a large coal plant but without the reliability. At their end of life used solar panels are hazardous waste. The environmental web site “TreeHugger.com” reports that solar panels contain “extremely toxic materials with unknown health and environmental risks.” Interestingly, unlike used nuclear fuels these toxins never decay, yet the people opposed to nuclear energy don’t see the irony in their bias.

Wind has its own dirty problems. No one is talking about who will pay to decommission and remove old wind turbines when they break down and their owners go out of business. Thousands of broken down and abandoned windmills scattered around the country could hardly be called “clean.” Many environmentalists are concerned about the thousands of migratory birds and bats that are killed by wind turbine blades every year. Its not just animals that are at risk; I read a report this week that says 41 workers and 16 members of the public have been killed in the last several years from wind turbine accidents , blade failures, and other related hazards. Again, the irony escapes those who call nuclear plants unsafe – not a single worker or member of the public has ever been killed from radiation at a US nuclear plant. Once again, “clean” is in the eye of the beholder.

Nuclear energy has "clean" issues, too. The industry needs to maintain control of its used fuel until reprocessing begins in a few years. Once that happens the long term used fuel issue will be virtually eliminated because the remaining material will be even smaller. On the positive side, the current amount of material that needs to be controlled is miniscule and can very easily and safely stored. Nuclear energy is the only energy source that is 100% accountable for the physical plant and all by-products for the life of the plant and though decommissioning. Other power plants do not have to set money aside to pay for returning the plant site to a green field.

By contrast, coal plants are free to release their gaseous waste into the air and dump their solid waste into ponds and landfills. One such coal waste pond at a power plant in Tennessee failed on December 23^rd and flooded 400 acres with 12 feet of toxic muck containing lead, arsenic, and uranium. Fifteen homes were damaged or destroyed.

[This paragraph edited on 3/26/09] Another bit of irony is this: that coal slurry spill in Kingston, Tennessee released about 20,000 curies of radioactive uranium that was naturally present in the original coal, but concentrated in the coal ash. The enormous volume of the coal sludge means the event was most likely the largest “spill” of radioactive material in history, yet we didn’t hear a sound from the anti-nuclear establishment! The same groups that go ballistic at when nuclear plants release minute quantities of tritium had absolutely nothing to say! By the way, tritium is a mildly radioactive form of hydrogen that decays relatively quickly. The Union of Concerned Scientists and Nuclear Policy Research Institute were strangely silent on this single largest uncontrolled release of radioactive waste in the history of the USA.


Do you think the coal industry will be forced to spend billions of dollars to install redundant safety systems at all their coal sludge ponds? Now, honestly, that amount of radioactive material poses absolutely no threat to anyone, but this serves to illustrate the bias that exists in the media and in our energy policies.

The bottom line is this: the definition of “clean energy” depends on who you are hearing it from. If the goal is reducing CO2 emissions, then the term “clean energy” when used by the coal and natural gas industries is completely meaningless. The only exception might be research and development into carbon capture and sequestration technologies, but that is still completely unproven and has many serious safety and cost hurdles to overcome. It will be many, many years before we see carbon capture from coal or gas plants on an industrial scale.

“Emissions-Free” Energy

The terms “Low-Carbon” or “emissions free” energy are pretty straight forward. They refer to sources of energy that have very low CO2 emissions. This includes wind, nuclear, solar, hydro, and other renewables. By far the largest source of low carbon energy is nuclear. In fact, nuclear energy accounts for more than 70% of the USA’s emission free electricity generation.

So now we have discussed the differences between “clean energy”, “renewable energy” and “emission-free energy.” If the goal is reducing green-house gasses, then the focus should be on “emissions free” energy. If congress really wants to reduce CO2 emissions then they should create a financial and regulatory framework that taxes CO2 emissions and rewards emissions free producers, then stand back and let the market decide which technologies can do it most quickly and cheaply. Playing favorites with any one or two technologies is a sure way to fail.

“Hey Nuclear, Don’t Bother to Apply”

On a level playing field nuclear energy would continue as the emissions-free leader because it is a proven technology and the lowest cost provider of reliable carbon-free electricity. Unfortunately, it is not a level playing field. Harry Reid is calling the shots and he is doing everything he can to block the expansion of nuclear energy. He did exactly that during the final hours of negotiation on the stimulus bill when he removed a provision that would have allowed companies to access government loan guarantees for new nuclear construction projects. The original text of the stimulus bill stated “renewable and clean” energy projects were eligible for the guarantees, but Harry made sure the final version said only “renewable energy” could apply.

A Focus on Solar and Wind Means More Fossil Fuel Burning, Not Less

Because wind and solar are intermittent, for every MW of wind or solar capacity that is built, another MW of natural gas powered generation must be located nearby. Since the wind only blows about 32% of the time, and solar panels operate at only about 19%, those gas turbines will be running (and emitting CO2) between 68% and 81% of the time. This is why investing in solar and wind will only prolong our dependence on fossil fuels. Every year that we waste trying to supply our energy grid with wind and solar power is another year fossil fuels will continue dominating the energy supply. On the other hand, every new nuclear plant that is built steals market share from coal and gas plants. A current example is the two reactors that Progress Energy plans to build in Florida. The company has already stated publically they plan to shut down a large coal plant when the new nuclear plant comes on line. I’m sure the coal industry didn’t like hearing that story!

Harry Reid is promoting wind and solar projects that will end up in desert states like his home state of Nevada. What he is really doing is grabbing a lion’s share of government funds for Nevada while limiting the competition for those funds. The wind and solar projects he is pouring money into are not in the nation’s best interests because they are hugely expensive and will not provide reliable energy. All the money and government mandates in the world can not change the laws of nature. They can not turn an intermittent power source into a stable one. The state of California tried to do exactly that when they created renewal portfolio standards and they wound up in a horrible mess. Remember the California energy crises? Their electricity prices went through the roof, blackouts became routine, and they nearly bankrupt every utility in the state.

Pay Attention and Hold Your Elected Officials Accountable

In the coming week and months please listen to the news about climate change legislation. The USA is going to end up with some variation of either a national renewable portfolio standard or some form of carbon tax or cap-and-trade program. For all the reasons I’ve mentioned in this show, we should oppose a renewable portfolio standard and support a carbon tax or cap-and-trade program. Pay attention and let your congressmen and senators know how you feel. There is no question the price of electricity is going to go up to pay for mitigating climate change. If that is destined to happen then we need to make sure we get something for the money we spend. The best way to make that happen is to support the construction of new nuclear plants.

Peace!

John Wheeler

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Nuclear Energy and the Obama Administration

Episode 62 of This Week in Nuclear

Listen to the podcast here

It’s hard to get into any kind of discussion about energy these days without someone asking, “What will happen under the new administration?” or “Do you think we’ll start building new nuclear plants with President Obama in power?” Those are tough questions to answer. Probably the best way to predict the future under the Obama administration and congress is to look at the recent statements and past actions of the people who are in positions of authority or influence in the new government. You cannot focus just on President Obama and his White House team; you also have to look at congress and at the various committees that will create new energy and climate legislation. In this episode, I’ll try to provide my views on a few of the leaders who will guide the creation of new laws and policies that will influence the near term, and perhaps the long term future of nuclear energy in the USA.

I’ll start with the obvious. Senate Majority Leader Harry Reid of Nevada is a long time opponent of any legislation that might benefit the nuclear industry. His opposition goes well beyond a practical and fact-driven position to the verge of fanatical. Yucca Mountain, the designated long term geological storage facility, is in his state and he will do anything and everything to block or slow its progress. In fact, he’s already doing that with the power that congress has over the budget. He’s slashed the Yucca Mountain budget to the lowest amount in years which has the same effect as killing the project all together. The nuclear industry will get no help from Harry Reid.

Representative Nancy Polosi of California, the Speaker of the House, was once strongly anti-nuclear. Fortunately she has become more supportive of nuclear energy over the last two years or so because she realizes that any credible strategy to reduce greenhouse gas emissions has to include expanding nuclear energy. While she’s saying some of the right things, she has yet to demonstrate leadership through real action to support new nuclear construction, so the jury is still out on Nancy Polosi.

Rep. Henry Waxman, also from California, and the new Chairman of the House Committee on Energy and Commerce is a strong advocate for raising automobile mileage standards, reducing energy consumption through efficiency, and expanding wind and solar energy. Rep. Waxman is influential because new energy and climate legislation will originate in his committee. While I was unable to find a single instance in which Mr. Waxman demonstrated support for nuclear energy, in a reasonable and logical world his strong opinions on climate change would translate into support for new nuclear plants. Unfortunately Washington is not always reasonable or logical. Case in point: Mr. Waxman has appointed Rep. Edward Markey (MA) to draft his committee’s climate change laws. Markey is rabidly anti-nuclear and entrenched with people who hold the irrational fear that nuclear plants are bombs waiting to happen. He’s active in the Nuclear Policy Research Institute, an anti-nuclear advocacy group. Edward Markey will never sponsor legislation that would put nuclear energy on level playing field with other energy options.

Steven Chu, the new Secretary of Energy, comes across as philosophically neutral on nuclear power. On a number of occasions he has stated that nuclear energy has the “potential” to contribute to energy security and climate change, but he is concerned about costs and about nuclear waste storage. On the other hand, Sec. Chu is vocally supportive of efficiency efforts, wind and solar energy, and biofuels. I continue to believe that any fair and logical person, when presented with the facts on safety, cost, and performance will recognize the need to give nuclear energy a priority in our energy policy. I am cautiously optimistic that Sec. Chu will work in favor an objective and fact-driven assessment of the nation’s energy options, and if that is the case Nuclear Energy will get the support needed.

Carol Browner, the new White House Coordinator for Climate and Energy Policy is President Obama’s primary adviser on how to integrate our nation’s actions to meet the goals of energy security and greenhouse gas reduction. She has been around Washington for years. As the EPA Administrator under Bill Clinton, Browner revised water quality standards for Yucca Mountain in a way that many experts feel was unreasonable and was, in reality, a tactic to delay the project. She has also stated reservations about nuclear energy because of what she termed “the waste issue.” Carol Browner is comes from the Al Gore school of climate change, and Al Gore has consistently avoided acknowledging nuclear energy’s advantages as our largest source of CO2-free energy, Browner will probably do the same.

Secretary of State Hillary Clinton recently stated that energy security and supply is a mater of national security, and I could not agree more. In the past she has been a tough critic of nuclear power. She has been particularly opposed to Indian Point nuclear plant that is located only a few miles from her home in New York. In fact, she sponsored an addition to the Energy Policy Act of 2005 that singled out the plant for new emergency warning system requirements. I would not oppose new nuclear regulation if I believed it would have a positive impact on safety that was commensurate with the costs, but in this case the result was millions of dollars of added costs with virtually no increase in safety. Like Nancy Polici, Mrs. Clinton’s position on nuclear energy has moderated in the last two years, so I am optimistic that she will weigh the pros and cons with objectivity and will thus support nuclear energy’s expansion as a means to increase energy security and reduce reliance on imported oil.

During the campaign President Obama was repeatedly asked about his position on nuclear energy. His consistent response was nuclear should be “on the table” while he emphasized his concerns over cost and safe storage of used fuel. There’s a common theme here; except for Edward Markey who is an anti-nuclear extremist, the two main concerns shared by leaders in the new government nuclear power are the long term storage of used nuclear fuel and the cost of new construction. If you listened to episode 60 of This Week in Nuclear you’ll know that building wind capacity is at least 2.5 times more expensive than nuclear, and new solar plants would cost 14 times more than nuclear plants for the same amount of energy generated. As for the waste issue, it is a political one, not a technical one.

It remains to be seen if the new government will be able to look beyond the panacea of cheap, abundant wind and solar energy and instead make policy based on science, fact, and engineering realities. If they are able to be objective, they will reach logical conclusions that nuclear energy can create a secure, constant, emissions-free, and cost effective energy supply we need.

On the other hand, if congress and the new administration stick to their out-dated perceptions and bias, then we’ll embark on a different course. In that case, the USA will spend the next several years and hundreds of billions of dollars promoting wind and solar energy. That scenario will NOT provide the quantity of constant, clean energy we need. Just look at Germany; their experiment into wind energy has failed – their grid in unreliable, they are growing ever more dependent on Russian natural gas, and they are importing more coal than ever. In fact, the United States exports coal to Germany! A focus on wind and solar is equivalent to the status quo: burning coal and gas at ever increasing rates. The winners under that scenario will be manufacturers of wind turbines and solar panels, and of course the coal, oil and gas suppliers.

Clean, cost-effective, carbon-free nuclear energy – that’s the CHANGE we need!

John Wheeler

This Week in Nuclear Website

Printable Version

Investors Recognize the Value in US Nuclear Plants

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There have been a number of recent developments in the US nuclear industry that amount to a shaking out of the various technologies, vendors, and utilities who are likely to emerge as leaders in the race to build the first new nuclear plants in the USA. A good analogy is the multi-stage bicycle race, the Tour de France. Each stage of the race has a winner, but the winner of any one stage will not necessarily win the race. I’d say we’re still not quite at the half way point of the race, but each month it’s becoming more and more clear which projects are in the lead pack, which are trailing, and which are in the race simply because they think it’s cool to wear the colored jerseys.

GE ESBWR Reactor Dropped by Exelon, Entergy and Dominion

There are growing indications that one new design is not progressing at the pace needed to support new construction anytime soon. Work on the General Electric Environmental Safe Boiling Water Reactor (or ESBWR) has yet to reach the level of detail that would enable GE to make firm costs estimates. As a result, three large customers, Exelon, Entergy, and Dominion Resources, have all announced they are no longer considering the ESBWR for their new plant projects. This is unfortunate for a number of reasons; the ESBWR is, in my opinion, a move in the right direction. It is a simplified design with fewer components and passive safety features. It should end up costing less than other reactors of similar capacity because it would have fewer expensive pumps and valves. It’s also a setback for the companies that were supporting that design - Exelon’s Texas project, Entergy’s plans for new reactors in LA and MS, and Dominion’s plans in VA will all experience delays as they regroup to select a new reactor type and negotiate with new vendors. At this point, the only remaining project for an ESBWR is from DTE Energy for their Michigan Unit 3 project. I have to wonder about General Electric’s commitment to the effort, particularly when their potential reactor business is but a small fraction of their projected wind and gas turbine revenues. Their leadership may be making resource decisions that acknowledge one new nuclear plant could prevent the construction of several gas large turbines and hundreds of wind turbines.

Toshiba and Westinghouse Sign Contracts for New Reactors in the USA

A few projects appear to be moving full speed ahead. This past week newspapers began to report that Toshiba had signed a contract to supply NRG Energy with two 1400 MW Advanced Boiling Water Reactors (ABWRs). The deal, reportedly worth about $8.8 Billion, is for two new units at the South Texas Project where there are already two Westinghouse Pressurized Water Reactors (PWRs). If this comes to pass, it will be the first time a Japanese nuclear reactor company has built a reactor outside of Japan. Interestingly enough, while Toshiba builds boiling water reactors in Japan, they also own the AP-1000 pressurized water reactor technology because of their 2006 purchase of Westinghouse.

Early this month Progress Energy signed a deal with Westinghouse for two new Advanced Passive 1000 (AP-1000) reactors for their Levy project in Florida. That contract is for $7.65 Billion. On a side note, last week Toshiba announced they have formed a partnership with Indian heavy equipment manufacturer Larsen & Toubro to build components for AP-1000 reactors they plan to sell in India. The Indian government has stated they need to build 60,000 MW of new electricity generation by 2030, and a large share is expected to be nuclear.

The AP-1000 design seems to betting the most “takers”; Progress Energy, Southern Company, Duke, South Carolina Electric & Gas, and TVA have all filed applications with the NRC for a total of 12 AP-1000 reactors. Other companies including FPL have stated their intent to do the same. Areva’s Evolutionary Pressurized Reactor (or US-EPR) is in second place with four units on the drawing board for Constellation Energy, PPL, AmerenUE, and Unistar. Areva is the international business company for EDF, the French Electric company that operates their 59 nuclear reactors.

French Utility EDF Buys 50% of Constellation Energy’s Five Nuclear Plants

Those of you inside the nuclear industry have certainly been watching the fascinating high stakes financial dealing that has been going on between Constellation Energy, Warren Buffett’s MidAmerican Energy Holdings, and EDF. If anyone was questioning the value of existing nuclear plants in the USA, after they hear this story any doubts they had will be a thing of the past. Last fall, about the time the world’s financial markets took their downturn, it became apparent that Constellation Energy was in trouble. Their cash reserves were depleted, and their stock price had reached an unreasonably low level when compared to their assets and balance sheet. In September Warren Buffett came to the rescue with a $4.7 Billion cash offer to buy the company. Areva, the international business arm of the EDF, recognized an opportunity and in December they countered Warren Buffett’s offer. The EDF offer was $4.5 Billion for a 49.9 percent share in Constellation’s nuclear units. The Constellation Energy board of directors accepted EDF’s offer.

Constellation has five nuclear units located on three sites; two Calvert Cliffs units in Maryland, two Nine Mile units in New York, and the Ginna unit, also in New York. EDF’s deal included $1 Billion in cash which shored up Constellation’s balance sheet and provided much needed operating cash. EDF and Areva have been eager to get their foot in the door of the lucrative US nuclear market, and this deal provides that opportunity.

So, even with the current chaos in the world’s financial markets, EDF’s deal means the full market value of Constellation’s nuclear units is $9 Billion. I think EDF got a pretty good deal; it would cost upwards of $20 Billion to build 5,400 MW of new capacity, and several of those plants are big money makers because they are located in deregulated electricity markets where nuclear is the cheapest form of generation and the cost of expensive natural gas prices sets daily market prices.

Entergy is Waiting for the Right Time to Execute Nuclear Spin-off

The turmoil in the financial markets have definitely had an impact on some utility plans for expansion and growth. Entergy, for example, announced they are delaying the proposed spin-off of their six deregulated nuclear plants. They’ve made it clear the deal is still on, and they are waiting for the right time to make it happen. Here’s an interesting comparison: the plants Entergy plans to spin off into a new company called Enexus will have more capacity and more revenue opportunity than the Constellation units that the market tells us are worth at least $9 Billion. This indicates to me that once the spin off happens Enexus should have a market value of between $10 Billion and $12 Billion. It will be interesting to see how the Enexus stock performs as the only 100% nuclear generator in an American deregulated electricity market.

Exelon Attempts Hostile Take-over of NRG Energy

The final example of the value investors are seeing in existing nuclear plants is a deal that is still in the works. In October, Exelon made an unsolicited bid to purchase NRG energy for $ 6.2 Billion. When the NRG board of directors refused the deal, Exelon began an attempt at a hostile takeover. Exelon offered NRG shareholders a stock exchange deal of just under ½ a share of Exelon for each share of NRG. As of this week they claim to have received contracts for 46% of NRG. The offer will continue until late February.

My belief is that Exelon understands the huge value that emissions free generation will have in Texas under any kind of carbon cap and trade program. Texans has the highest per capita electricity consumption in the USA, and the highest per capita CO2 emissions. This is because they use mostly coal and natural gas to generate electricity. In a carbon constrained economy, emission free electricity will be very valuable (and very profitable). Exelon already has plans to expand into Texas, and they see the NRG acquisition as a way to accelerate the process.

Despite the financial turmoil and the tightening of the world’s credit markets, the future remains bright for the nuclear industry. Realization is growing across the country and particularly in the investment community, that nuclear energy is the only cost effective source of base load carbon-free electricity. Nuclear generation is the only source of electricity that can be expanded quickly enough and to the scale needed to meet CO2 reduction goals.

Wind and solar power need to be a part of the energy mix, in that we need to continue research and development to help them someday become competitively priced and scalable. Until then building new nuclear plants is the only realistic option. Conservation has a role to play, too. Unfortunately, I question how much conservation the USA can achieve without a massive relocation of population from rural areas to large cities and huge government spending to pay for retrofitting old homes, businesses, and factories. Perhaps that is something the new administration has in mind.

John Wheeler

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