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Nuclear renaissance
Proposals for Texas reflect how U.S. again is
turning to this energy sourceFriday, March 16, 2007
By Tom Fowler
The number of nuclear-powered generators in Texas could triple in the next decade with several new projects in the works.
Expansions at the state's two existing plants — Comanche Peak south of Dallas and the South Texas Project near Bay City — took steps this past week when TXU Energy said it will likely buy two reactors from Mitsubishi for the Dallas-area expansion, and NRG Energy said it will work with a Tokyo utility as an adviser for two reactors at Bay City.
Illinois-based Exelon Energy has also said it is considering sites in South and East Texas for a new two-unit plant, while a private firm in Amarillo hopes to build two new nuclear units.
About 14 percent of the state's power, or 4,800 megawatts, came from nuclear-powered units in 2006, according to state power grid operators. The proposed project could add 10,600 megawatts of nuclear power to the grid as early as 2015. One megawatt can power up to 800 homes.
"Texas is considered very hospitable toward nuclear," said Craig Nesbit, a spokesman for Exelon. "It's shaping up to be one of the key states for the next generation of nuclear power plants."
Nuclear power plant development in the U.S. came to a halt shortly after the 1979 accident at the Three Mile Island plant in Pennsylvania. The last new plant to start up was the Watts Bar facility in Tennessee, which began operating in May 1996 although it received its construction permit in 1973.
Nuclear plant construction has continued unabated outside the U.S., however, particularly in Japan and France. Today it accounts for about 16 percent of the world's electricity output and 19 percent of the U.S. output, according to Platts.
A renaissance for nuclear projects in the U.S. is under way, however, fueled by a less-costly permitting process initiated in the 1990s, a new batch of incentives included in a 2005 federal energy bill, growing opposition to greenhouse-gas producing power plants and the higher cost of natural gas-fired power.
Today, the Nuclear Regulatory Commission is anticipating up to 32 applications for permits to build and operate reactors nationwide.
Texas an enticing market
Texas has been the target for many new projects because of its growing power needs, air pollution problems that have fueled opposition to new coal plants, and the state's competitive wholesale electric market, observers say.Jim Curtiss, a former commissioner at the NRC who now heads the energy practice at the Winston & Strawn law firm, said the 32 pending permit applications before the commission aren't the same thing as commitments to build, however.
Combined, the firms have spent an estimated $2 billion preparing their applications so far, he said, but it can cost up to $3 billion to build a single plant.
"They may all go through the application process and get approval from the NRC, but whether they do build them will depend on what power demand is like and what the other alternatives are at the time," Curtiss said.
Permit relaxations
The permitting process has been eased significantly since the height of nuclear power construction in the U.S. in the 1970s.Rather than having to essentially make all of its financial commitments to the projects before even beginning the permitting process, a company can now address many of the health, safety and environmental issues before buying reactors or signing other long-term commitments.
In addition to generation tax credits, the Department of Energy has pledged to pay plant developers up to $500 million if projects are delayed because of regulatory issues, split development costs during some portions of the permitting process, and provide loan guarantees.
In Texas, legislators have proposed a bill to have power customers cover the cost of mandatory plant decommissioning funds if the operator can't.
No sure thing
Despite the sweeteners and a recent agreement from environmental groups to support a private equity buyout of TXU if the company backed off from a number of planned Texas coal plants, the new nuclear plants in Texas aren't a slam dunk.The Natural Resources Defense Council was one of the groups supporting the planned buyout of TXU, but the group isn't giving the company carte blanche, said Tim Greeff, campaign manager for the NRDC's Climate Center.
"If you can figure out how to solve the waste problem for nuclear power and let it work without the massive subsidies it has received over the years, we'd be all for it," Greeff said. "But we'd like to see TXU make strides on conservation programs and renewable energy first before looking at nuclear."
To take advantage of the federal incentives, companies need to have their applications for operating and construction permits to the NRC by the end of 2008.
The new review process, including public hearings, is designed to take 2 1/2 to 3 1/2 years, Curtiss said. Construction for plants, based on the experience of more recent construction in France and Japan, can take from four to five years.
That means in an optimistic scenario, a plant that submits its application later this year for a license could be operating by 2014.
Just the beginning?
The four announced projects in Texas may only be the tip of the iceberg.TXU has indicated it may build more than just two new reactors and may place them at sites previously planned for the coal plants.
And according to the state's main power grid operator, the Electric Reliability Council of Texas, power companies have expressed interest in hooking up as much as 25,000 megawatts of nuclear-generated power to the grid. That's some 14,000 megawatts more than have been announced.
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