- The Washington Times - Sunday, June 8, 2014

The Obama administration’s proposed regulations for power plants would give a big boost to nuclear power as the industry faces an uncertain future with increasing retirements and declining prospects for dozens of aging reactors.

Nuclear power officials were quick to note that the Environmental Protection Agency, which announced the proposed rules last week, could not realistically achieve its goal of a 30 percent cut in carbon dioxide emissions by 2030 without nuclear power, which now provides about a fifth of baseload power needs in the U.S. carbon-free.

“With nuclear energy, it is feasible to meet the administration’s goals. And without it, there is no chance at all,” said Richard Myers, vice president at the Nuclear Energy Institute. “For more than half the states in America, nuclear power plants are their largest source of carbon-free electricity. For many, it is their dominant source of zero-carbon power.”

The White House did not tout nuclear power as a way for states to meet carbon-reduction targets and instead tried to encourage them to adopt energy-efficiency measures and renewable sources such as wind and solar, but EPA administrator Gina McCarthy acknowledged that nuclear power “will be part of the energy mix” needed to achieve the president’s ambitious goal of one-third reduction in greenhouse gases.

“There’s no denying that [nuclear power] is carbon-free,” she said in an exchange with posters on Reddit.com. She added that questions about long-term storage of nuclear waste still have to be resolved.

Other administration officials at the Department of Energy have warned that the “premature” retirement of several nuclear reactors could undercut the EPA targets and keep states from meeting their carbon-reduction goals.

“Any serious effort to reduce carbon emissions must acknowledge the need to maintain and expand the use of nuclear energy,” said Mr. Myers. “We are pleased to see that the proposed rule recognizes nuclear energy’s attributes.”

Standard & Poor’s analyst Jeffrey M. Panger also noted that the nuclear industry is one of the big winners under the regulations, which would take effect in 2016 if the rules survive what is sure to be a vigorous contest in court by the power industry and conservative political groups.

“The obvious beneficiaries will be utilities with low CO2 output,” he said. “Utilities with emissions-free generation, such as hydropower or nuclear, are likely to find their competitiveness enhanced relative to other generators.”

For supporters of nuclear energy, the proposed rules couldn’t come a moment too soon. Some energy analysts were predicting a gradual decline of the industry as cheaper and more versatile natural gas increasingly met the nation’s rising demand for power.

Long gone was the optimistic talk about a nuclear renaissance a decade ago, when the George W. Bush administration encouraged the nuclear industry to prepare to build a couple of dozen reactors.

The Obama administration in 2012 approved the construction of five reactors in Georgia, Tennessee and South Carolina, granting licenses to build nuclear power plants for the first time in more than three decades.

But President Obama has not supported nuclear power as enthusiastically as Mr. Bush, and the administration has blocked attempts to resolve long-term nuclear waste storage issues — one of the key factors holding back the industry’s expansion. Moreover, plans for many new nuclear plants have stalled while the industry grapples with a multitude of regulations issued by the Obama administration in the past five years.

Still leading the world

Although the nuclear industry has not expanded meaningfully for decades, the U.S. continues to have the largest complement of nuclear power plants in the world. The 62 nuclear power plants operating in a majority of states generate nearly twice as much power as the closest competitor, France. But emerging economic giants such as China and India have embraced nuclear power and could surpass the U.S. with the construction of dozens of nuclear plants to meet the nations’ burgeoning demands for power and to hold down the carbon and other toxic emissions associated with coal-fired power.

The formidable number of U.S. nuclear reactors is aging rapidly. Nearly all were built in the 1970s and 1980s.

Power plants must obtain license renewals from the Nuclear Regulatory Commission after 40 years, and many face increasing pressure for retirement or replacement. Four nuclear reactors were retired last year, and a fifth is expected to shut down permanently this year.

While polls suggest the American public broadly accepts nuclear power, some locales and environmentalist groups oppose it.

Carbon-free emissions have helped burnish the nuclear industry’s image in recent years as worries about climate change increase, but the Fukushima disaster in Japan in 2011 led to major movements to ban nuclear power in Japan and Germany.

A cost competitor

Still, the biggest obstacle to nuclear power recently has not been political or safety-related but the stiff competition of natural gas generators, which are less expensive, quicker to build and cheaper to run than a nuclear power plant. Gas is a low-carbon, though not emissions-free, source of power.

Analysts say the significant advantage the proposed carbon regulations give to nuclear over gas and coal should boost nuclear power’s value in the marketplace.

“Many of the people in the utility business view carbon regulations as inevitable,” said Mike McGough, chief commercial officer at NuScale, a power company that is developing a small nuclear reactor design that he hopes will one day will pose serious competition for the gas plants being built today.

“People with a significant portion of carbon generation in their portfolio are looking for ways to hedge that with the benefits of nuclear power,” he told Platts Energy TV.

Many utilities do not want to commit to the long, costly process of building large nuclear reactors, but they would like the option of building smaller, less-expensive nuclear plants in place of gas plants, he said.

Before nuclear power can take off in a big way, however, small modular projects will have to demonstrate that they are technically viable in the next few years and that their prices can compete with natural gas.

Low-range gas prices are $4 to $5 per million British thermal units, he said, but are likely to go up to $6 or $7.

“Our clients want to have small nuclear as an option in case gas prices go up,” he said.

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