The phrase "nuclear renaissance" has become a cliche as the power industry ruminates on the potential for a nuclear future. While projects are early in their planning stages, their sheer number could indeed signal a new nuclear era -- and an era of retrenchment for the share of natural gas in power generation.
"When you start putting on large nuclear plants, it has a very sizeable dent in gas demand," Anthony Damiano, Wood Mackenzie research manager for North American power, told NGI. According to Wood Mackenzie's analysis, with nuclear and enough renewable power coming on-line, a reduction in gas demand for power generation is in the offing long term.
As for nuclear, what happens in 2008 and the next year or two could very well shape America's nuclear power generation business -- and the power industry at large -- for decades to come. With greenhouse gas (GHG) regulations looming and development incentives on offer, those with the wherewithal to develop new nukes are forming a long line for licenses to do just that.
Last year numerous companies spoke up about their intentions to file applications for new nuclear power plants with the Nuclear Regulatory Commission (NRC). While 2007 saw four applications for a total of seven new nuclear units, the real onslaught of applications is coming this year. According to the NRC, the commission expects to receive 15 applications this year for 22 new nuclear units. So far, for 2009 another two applications are expected for three units. For now though, any company with hopes of submitting an application this year needs to have been working on it in earnest.
"In terms of 2008, it is very reasonable to say that the dance card is full. We have an expectation of about 15 applications coming in, and that is the limit to what the [NRC] staff resources will be able to deal with," said NRC spokesman Scott Burnell.
The NRC's new reactor office used to be part of the office of nuclear reactor regulation at the commission. In mid-2006 it was split off to its own unit and staffing has gone from "a handful of people" to close to 400 currently, Burnell said. "The bottom line is the agency has been hiring to staff up the new office and it continues to do so. And we continue to work with Congress to make sure the budget process will provide us with the resources that we need to properly review the applications that we're expecting."
Not everyone has expressed the same confidence in the NRC's capabilities to handle the deluge of highly complicated paperwork coming its way. As recently as October, the General Accountability Office looked at the NRC's preparations and found them lacking. But the industry is keeping an open mind, at least as evidenced by its public comments.
"We know they've been making some very serious efforts to staff up over there [at the NRC], and we look at that favorably," said Nuclear Energy Institute (NEI) spokesman Steve Kerekes. "We certainly look positively on the steps that they've been taking."
For the latest round of plant applications, the NRC is operating under a new license review process that allows power companies to obtain a construction permit and an operating license through a single combined license (COL) based on one of a number of standard reactor designs. NRC expects the new process to enhance the efficiency and predictability of its reviews.
What happens at the NRC this year will go a long way to determining the efficiency of the process, Damiano said. "2008 will be the year; it will be the tell. It's one thing for them to say they have enough people, but are they experienced enough, and how up to speed are they?"
In fact, those are questions the NRC has been asking itself. Like many senior executives in the industry, NRC Chairman Dale E. Klein laments an ongoing brain-drain. "At the NRC, in one two-week pay period early this year, nearly 1,000 years of regulatory experience walked out of the agency due to retirements," Klein said in a speech in November. "I have also heard it reported that 75% of the workforce at the Energy Department's National Labs will be eligible for retirement by 2010. On the industry side, I know that NEI has said that roughly 35% of current utility personnel will be eligible for retirement within five years."
There are 104 nuclear reactors operating in the United States, and they contribute about 20% of the nation's electricity. "In the U.S., electricity demand is expected to increase by 50% in the next 30 years," Klein said in his November speech. "If nuclear power were to maintain its current share of the electricity supply in this country, the industry would need to add 50 new nuclear power plants, with an average output of 1,000 MW each."
That would mean going from about 104 reactors to more than 150, observed Klein. "It is interesting to note that this would generally be consistent with the original projections that were made in the 1970s, during the first construction boom, when the industry's plans were for about 160 plants."
Last year saw what some in the industry consider a watershed event, the restart of the Tennessee Valley Authority's Browns Ferry Unit 1 in Alabama. The unit, which suspended operations in 1985, contributes about 1,155 MW.
Driving what so many have termed the "nuclear renaissance" is growing national and international concern over global warming caused by the release of GHG emissions, to a great extent from coal-fired power generation. But it is provisions in the Energy Policy Act of 2005 (EPAct) that have broken the ice among the would-be builders of new nuclear units.
The clean-energy loan guarantee program authorized by EPAct provides government backing of capital-intensive energy projects, including nuclear, for fiscal years 2008 and 2009. "The availability of loan guarantees to facilitate debt financing on reasonable terms for the first wave of these [new nuclear plant] applications will help reduce uncertainties surrounding these capital-intensive projects and ultimately will lower the cost of electricity produced by these new power plants to the consumer," said NEI CEO Frank L. Bowman.
First-movers in the nuclear renaissance stand to benefit as well from a production tax credit -- 1.8 cents/kWh for eight years for up to 6,000 MW. How the benefit will be apportioned among new nuclear units remains to be seen, said Kerekes. "There's been some talk of apportioning that so you might be able to have some more companies avail themselves of those," he said.
That's not to say that without loan guarantees and the production tax credit there would not ever be new activity on the nuclear front. GHG legislation is coming, by 2012 in the view of most people, said Damiano. "If nuclear was a short-term [development] cycle, people would do nothing until they knew what the legislation was."
As it is, the first applicants for new plants will wait 30-42 months for word back from the NRC, said Kerekes, drawing the time to potential approval of a project out to 2010-2011. How the first applications are handled by the NRC will determine a lot.
"Once companies have a clearer sense of what needs to go into an application and how it's going to get interpreted by the regulatory folks, and we'll find out whether applications can move through in a timely fashion with some predictability," he said. "Once we've gotten that first handful of new plants through, the folks can make their decisions."
Besides wading through all the applications for new reactors, the NRC must continue to handle relicensing applications. "It's our belief that just about everybody [of the 104 existing reactors] is going to pursue license renewal," said Kerekes. Since March 2000, 48 reactors have received license extensions, and applications for 14 extensions are pending before the NRC. License extension applications are expected from another 22 reactors between now and 2013, Kerekes said.
Over the last decade or so, the industry has managed to squeeze more megawatts out of its existing reactors. For instance, earlier this month Exelon Nuclear said its 17 generating units reached their highest production ever. The fleet also achieved an average capacity factor of 94.5%, an all-time record for the company, Exelon said. The industry average capacity factor in 2006 was 89.9%.
The existing nuclear industry still has room for "a few thousand megawatts more" from uprates of existing reactors, Kerekes said. "A lot of that activity has taken place already. We're not finished with it, but we're well on the way."
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