Nuclear Energy's Problems

Nuclear energy is not a viable solution for our energy needs for many reasons. The excerpts below from BusinessWeek.com below describe many of the drawbacks.

Opponents of solar and wind energy complain about government subsidies, but nuclear energy will require massive subsidies and government involvement.

Link: Nuclear's Tangled Economics.

McCain laid out his vision for 100 new nuclear plants—45 of them to be built by 2030. They would help meet America's energy needs, and because nukes don't emit greenhouse gases, they would fight global warming as well. McCain also wants to borrow from the French playbook by reprocessing and reusing spent nuclear fuel and by providing government incentives to get all this done.

But McCain may not want to follow the French example too closely. While France's existing 59 atomic plants are relatively trouble-free, its largest nuclear company, Areva, has run into difficulties building next-generation reactors in France and Finland. The Finnish project is two years behind schedule and more than $1.5 billion over budget, while construction of the other plant, in Normandy, was temporarily halted in late May because of quality concerns. And while France has the world's biggest fuel-reprocessing program, it still hasn't found a permanent home for a growing pile of highly radioactive waste that's left over.

Two years ago, the price of a 1,500-megawatt reactor was pegged at $2 billion to $3 billion. Now it's up to $7 billion and rising, as the cost of concrete, steel, and other materials and labor soars. MidAmerican Energy Holdings (BRK), a gas and electric utility owned by Warren Buffett's Berkshire Hathaway (BRK), shelved its own nuke plan earlier this year, saying it no longer made economic sense. "The country badly needs new nuclear plants to deal with the climate issue," says John W. Rowe, chief executive officer of Exelon (EXC), currently the largest nuke operator, and chairman of the Nuclear Energy Institute, the industry's trade group. "But they are very expensive, very high-risk projects."

So risky and expensive, in fact, that building new ones won't happen without hefty government support. NRG Energy (NRG), Dominion (D), Duke Energy (DUK), and six other companies have already leaped to file applications to construct and operate new plants largely because of incentives Congress has put in place. The subsidies include a 1.8 cents tax credit for each kilowatt hour of electricity produced, which could be worth more than $140 million per reactor per year; a $500 million payout for each of the first two plants built (and $250 million each for the next four) if there are delays for reasons outside company control; and a total of $18.5 billion in loan guarantees. The latter is crucial, since it shifts the risk onto the federal government, making it possible to raise capital from skittish banks. "Without the loan guarantees, I think it would be very difficult for the first wave of plants to move forward," says David W. Crane, CEO of NRG.

Only two companies, Japan Steel Works and France's Creusot Forge, a unit of Areva, are capable of forging key reactor parts such as massive pressure vessels. There are also shortages of contractors with nuclear certification and of skilled workers—even a lack of potential sites for new reactors. The proposed plants are all next to existing reactors. Builders of the power plants, utility executives say, are unwilling to commit to fixed prices and fixed schedules. Most companies want to be paid their actual costs, including overruns, plus a reasonable return, says one CEO.

That's why experts say the much-heralded nuclear "renaissance" will be slow to flower. "I'm not quite sure the number McCain put out is obtainable," says Adrian Heymer, senior director for new plant deployment at the Nuclear Energy Institute. "If there are any hiccups in coming in on time or on budget, it will be a struggle to go much beyond the first eight or 10 plants." Exelon's Rowe adds that the industry can't grow until the government solves the waste problem, either by opening a proposed storage site in Nevada, or by setting up surface storage facilities around the country. And in the long run, to cut the amount of waste, he says, "it's very clear that we've got to have a fuel-recycling technology."

The trouble is, separating out plutonium in the spent fuel for reuse is costly and dangerous, argue critics like Princeton University physicist Frank N. von Hippel. And in any case, worries over separated plutonium being diverted to make bombs led the U.S. to ban reprocessing 31 years ago.