Excellent Explanation of Why America Needs New Nuclear Power Plants and Why The First New Ones in More Than 30 Years Need a Boost
Yesterday, President Obama visited a technical training center in Lanham, MD to announce the Department of Energy’s decision to guarantee a loan of $8.3 Billion to Southern Company to build two new Westinghouse AP1000 nuclear reactor power plants at its Vogtle site in Georgia. If one visited that site today, it would appear that the announcement of breaking ground on the first new nuclear plant in the US in more than 30 years is a bit late – the site preparation steps have been underway for months already.
That minor detail aside, the President’s speech describing the importance of the decision to build new nuclear plants in America was excellent. I was especially impressed by the way that he did not shy away from the controversial aspects of the decision, talking about how many people ASSUME that Environmentalists do not like nuclear energy. He also mentioned how many people on the political right expect that nuclear energy should be able to compete without any government assistance and without the imposition of costs for fossil fuel waste disposal services.
Please feel free to comment. It is my firm belief that this announcement will be recalled by future historians as being as important as the trip that Richard Nixon, a Republican who had decades worth of history as an anti-communist politician, made to China in 1972. Many people were surprised by that decision, but it made it a lot easier for businesses to consider the benefits of trading with the world’s most populous and industrious nations.
The decision by a conservative Republican president to engage with the country that was known as the time as “Communist China” and bring it into the community of nations has changed the path of the world economy and international relations. The decision by a liberal Democratic president to accept the reality that nuclear energy is a clean source of reliable energy where Americans can compete for international sales is a decision that will help us to remember how to build prosperity based on making things that can be sold to people in other countries rather than simply constructing homes, office buildings and strip malls, gambling with derivatives and accumulating an increasing level of debt.
For more coverage on the President’s speech, go to Dan Yurman’s post on Idaho Samizdat titled Obama announces nuclear loan guarantee for Southern. He has been updating it and posting additional links to a large number of mainstream media outlets covering the story.
I would only add that Nixon was a moderate Republican, at best. His “wage and price freeze” would be considered the antithesis of free-market economic principles. I believe he also stated along the lines of “We are all Keynesians now”.
I applaud President Obama’s announcement and recognition of nuclear power and energy as critical to our nation’s long-term health, in many respects. The Energy Act of 2005, which took a couple of years to hammer out and build bipartisan support, was shephereded by GW Bush and , I think it’s fair to say, provided at least some of the platform for Obama’s announcement.
Seems to me, wise foreign and economic policy would look at China and India as potentially the largest block of future consumers and would be cultivated with that goal in mind.
Thanks for posting the link and the analysis. I am surprised and pleased to see President Obama making this announcement, and hope it leads to future expansion of US nuclear energy building and use. My surprise is, as you comment, along the lines of “Nixon to China”–a politician going against the assumed type.
Have a look at this quasi smoking gun piece put out by the US steel workers union with respect to new build in the US (resulting from loan guarantees):
Utterly shameless, and predictable…….
One reason I don’t like unions is that they’ve often been the most shameless with respect to distorting the truth (or outright lying) just to suit their selfish, economic aims. Think Australian coal unions. I’ve also heard that unions in the US have openly stated that they will intervene to drag out the permitting process for solar farms in the Mohave Desert (over environmental issues like habitat preservation, etc..), unless the companies “play ball” and hire only union labor at prevailing wage. They hardly try at all to even make it look like it’s really over environmental issues. Blackmail plain and simple, and they have no problem doing it right out in the open.
Using components from China may be the only hope for nuclear being economic here, especially if they’re the only ones who significantly develop their supply chain (since they’re building over 50 reactors). On the other hand, I’m aware of the fact that the labor/US jobs angle (and union support) is one of the only reasons why nuclear is getting sufficient political support to move forward right now, especially with the Democrats.
A tough conundrum.
Jim – what is wrong with paying the prevailing wage? The companies investing in building new nuclear power plants need to understand the huge importance of quality workmanship and attention to detail. Without good workers, none of the concrete, steel, copper, or paperwork that gets purchased will ever produce any electricity. An incompetent, disgruntled or over stressed worker can cause immense cost to a project that is as tightly regulated and attacked as a new nuclear power plant.
I am quite supportive of the notion that we should supply parts from domestic factories if that is possible. Do you think that the AP1000’s in China are full of American made parts? The reality is that the Chinese would not even be able to build the plants if we had not provided all of the designs, but part of the deal that Westinghouse made was that they would provide training and technology to enable locally built plants. As a matter of fact, the Chinese have already announced that the newest plants would not be AP1000’s, but CAP1000s.
That really upsets me because a large portion of the cost of designing and certifying the AP1000 was paid by US DOE grant money.
There is a lack of information here by most parties. In fact, many of the components WILL be built in the US, especially the turbine-generator set. Secondly, steam generators and pumps, etc.
Companies *should* use union labor and pay prevailing wages, or it’s a race to the bottom. If the point (in large part) is to provide jobs, those jobs shouldn’t be slave-labor ones, they should be well paying ones where the workers have protections. As it happens it is unlikely that the plants built in the Mohave will be done without a site agreement with the California Building Trades.
There is a huge difference between no new American nuclear reactors started in 30 years and one (or more accurately two) nuclear reactors being started in this span of time.
There are an infinite number of irrational numbers that exist between the number zero and the number one.
There is an infinite amount of irrational misinformation and unjustified free floating fear about nuclear energy between no reactors started in 30 years and one (or perhaps two) reactors started in that span of time.
The President shows himself to be an energy pragmatist instead of an ideologue (to the benefit of the nation and its future).
Rod – My main point was not about the merits of prevailing wage (or use of union labor). It was specifically about intellectual dishonesty. About making moralistic (e.g., environmental/safety) arguments, when one’s true (hidden) motive is economic self-interest. Scaremongering being particularly egredgious. You have written extensively about this, with respect to fossil fuel interests quietly spreading FUD on nuclear. Given this, I actually thought you would appreciate this other example. Are you saying that it’s not OK for the fossil industry to use such tactics, but it’s OK for labor to do so? If people think that we should use union labor, and pay prevailing wage, then by all means they should argue their point of view, but they need to do it in an honest, straighforward manner.
As for my own thoughts about union labor and prevailing wage, I’m conflicted. I know that labor’s support has been crucial. It may even be the tipping factor behind the administration’s decision to vocally support nuclear. At the same time, I know that the economic issue is far and away the number one issue that decides whether nuclear will be successful in the future. I am deathly afraid of the first round of plants coming in over budget, and nuclear being finally judged as being too expensive (with the anti nukes dancing with glee, for being “proven right”).
I’ll end this thought by asking a question. Do nuclear’s competitors have to pay prevailing wage, or is this a case where, because of its lack of popularilty, nuclear has been forced to agree to more onerous terms than its competitors, in order to be given permission to proceed? If this is so, once again, nuclear may be destined to be written off as uncompetitive. Dave suggests that at least some renewable projects (e.g., solar) may have to us union labor, but this true for all projects? How about gas plants (nuclear’s main competitor)? Not plant construction, mind you. We have over 100 GW of unused gas capacity lying around, I think. More like the gas (fuel) production industry. Is it unionized?
As for the Chinese plants, I’m aware that most of the design work is being done in the US. I’m taking part in some of that work right now. On site construction is Chinese labor, of course. As for components (i.e., the supply chain), a lot will come from other countries at first (e.g., Japan, US), but I’m sure China will soon take over. Over the longer term, I would predict that Chine would develop the largest supply chain, due to it’s enormous, growing future demand, the nature of its government (i.e., lack of the “sovereign risk” you recently wrote about) and the fact that they don’t have the same issues with financing. Given all this, building a component factory in China is a lot easier to justify and easier to finance. I fully concur with your view that small reactors can be very competitive if we have volume production (i.e., a reactor “assembly line”). Sadly, however, whereas I can see such a facility being built, the US (and the West in general) is not the most likely place………
Whereas where the reactors are built, and whether union labor is used, may be more important for some, they are secondary issues for me. For me, the only important thing is that as much nuclear be used as possible, in place of fossil fuels. Hence, I want to do whatever minimizes cost, period.
Jim – I did not focus on the scare mongering tactics. Perhaps that is because I used to be a manufacturer and competed head on against the Chinese in a very cost sensitive business – plastic products (boat parts, toys, medical supplies, cooking utensils). I saw a lot more truth in what the union statement said than scare mongering. Though the Chinese can make excellent quality goods – if properly motivated and inspected (I love my Apple products) – they also have a long history of some pretty greedy tactics like direct copying, inferior materials, almost slave labor, etc. I understand why US workers – union or not – have a real problem with businesses building factories in China with American developed tools and technology.
With regard to paying adequate wages and cooperating with unions, I strongly believe that such action will reduce the overall cost and risk of building new nuclear power plants. As one of my first bosses used to say – “If you do not have time to do it right the first time, what makes you think you have time to do it twice.”
Fairly compensated workers who are not totally stressed out in trying to pay bills and support their families tend to take the time to do things right. They tend to take pride in their work, go the extra mile to work together for success, and develop some loyalty to the company and its mission. The difference between decent pay and lousy pay is just not enough to take the risk of disgruntled workers, work stoppages, or sloppy completion. Besides, nuclear needs all the friends it can find.
I wonder what percentage of the cost of a reactor installation is labor. At first glance what I see is finance charges and more finance charges.
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