Marianne Lavelle writes Beyond the Barrel on the Money and Business section of the US News and World Report web site. She posted a blog on February 21, 2008 titled Nuclear Industry Eyes a Smaller Renaissance that reported on the NEI’s recent brief of Wall Street investors.
Her report included an after meeting chat with John Rowe, CEO of Exelon who answered a few questions about the biggest hurdles facing the industry. After making a few general statements about the difficult challenges and the desire for people to somehow get electricity without making investments or accepting any kind of plant in their backyard, Mr. Rowe became more specific:
Now, when you go down from 50,000 feet to 10,000 feet, I think the single biggest challenge is whether the federal loan program will be fully funded in the next administration.
Why should the federal government take on this risk?
It’s very simple. We need this low-carbon energy source, and there are no companies in the industry big enough to take on all this risk themselves. We can’t do it as a pure business venture for the first group without the ice being broken. The federal government subsidizes solar. It subsidizes wind. This is a place where the nuclear industry needs this help, if it’s going to meet what I believe to be a public imperative. But it isn’t that we’re entitled to it as businesses. This is not a claim of economic right. This is a claim of what’s good public policy.
At the risk of putting myself in opposition to some powerful leaders in the nuclear industry, I have a different point of view and said so in a comment on the blog:
Smaller plants might help
A common discussion topic in the Nuclear Renaissance story is the idea that the projects are so large that no single US utility has the capital base required to make the required investment without some kind of government loan guarantee. (Mr. Rowe of Exelon made just that argument above.) It is also well known that the US has not constructed a new nuclear power plant from the ground up in more than 30 years. There is probably a learning curve effect that will make the first plants take longer and cost more than later plants.
It seems logical to wonder, then, why no one – including the vendor – has mentioned that there is an already certified design for a smaller reactor – the Westinghouse AP-600. Presumably, this plant could be built at a substantial discount to the larger units being proposed. In addition to the AP-600, there are a number of other designs at various stages of completion that might lead to an entry level design, one that could allow the industry to develop its expertise in smaller chunks, reducing the risk and increasing the learning opportunities.
It might even make sense to do a Shippingport all over again. The US actually HAS built some reasonably large reactors in the very recent past – they are on ships with names like USS George Washington, and USS George H. W. Bush. In the mid 1950s, Congress and the President saw a need to jump start the commercial nuclear power industry and put a successful team led by ADM Rickover onto the project.
Within 4 years, Shippingport was up and running as a commercial plant even though nothing similar had ever been built. With some modifications that eliminate the warship specific features, a modern carrier reactor plant could be built on land in far less time than one of the currently proposed commercial designs.
As Mr. Rowe stated – there is a need to break the ice. Perhaps there is a better way to do than than to provide tens of billions in loan guarantees for projects that do have substantial risk of non-completion. One nice thing about this concept is that the plant vendors experienced in these designs are wholly owned American companies.
Despite the best (mis)information efforts of the N(M)IRS, many of us have figured out that Michael Mariotte is dead wrong about the benefits of nuclear power compared to its competition. Lack of greenhouse gas emissions is just one of a long list of winning features that include reliable operation, low operating costs, high technology jobs, reduced water pollution, reductions in NOX, SOX, CO, and fly ash, reductions in strip mining, reductions in coal train demand and reduced dependence on imported natural gas and oil.
I support a team effort to jump start the US construction capability. However I have a hard time as a patriotic libertarian in cheering multibillion dollar potential costs for American taxpayers for projects that should be immensely profitable for companies like Hitachi, Areva, Mitsubishi, and Toshiba. I hope that does not sound to jingoistic, but we are talking about a business deal here that includes some silent partners who might want a say in where their taxes go.
I am not even very comfortable with guarantees for companies like Exelon, GE, Bechtel, NRG and Constellation. They are far better off than most of their taxpayer partners and have a lot more control over the projects for which they are seeking the guarantees.