WASHINGTON, Feb. 23 (UPI) -- The first application in three decades to build a new nuclear reactor could be submitted to U.S. nuclear regulators this year, but the economics of constructing the multibillion dollar reactors are not secured yet.
"From what we've seen in numbers from companies, the numbers appear to work," Caren Byrd, executive director of Morgan Stanley's global power and utility group, said this week at a National Association of Regulatory Utility Commissioners' meeting in Washington.
Byrd was a panelist at a NARUC electricity committee session titled "Myth or Reality: Is new nuclear generation a cost-effective method for meeting anticipated future load?"
"In all honesty, they still need to be convinced," Byrd said of investors wary of actually forking over dollars for new but never built plants.
No nuclear reactors have been licensed in the United States since 1978 or come online since 1996, though the Nuclear Regulatory Commission expects to receive this year the first batch of more than 30 new applications.
Christopher Paine, senior analyst at the Natural Resources Defense Council and deputy director of its nuclear program, said nuclear reactors (like coal or any resource intensive sources) are unviable after factoring in the total lifecycle costs of building and operating -- economical, environmental and societal.
At present, 103 nuclear reactors operate at 65 plants in 31 states, delivering about 20 percent of U.S. electricity demand. The Energy Information Administration, the data arm of the Energy Department, estimates U.S. electricity demand will grow 1.4 percent a year through 2030.
Nuclear is "not on the immediate investment horizon," Byrd said. A new nuclear reactor would cost between $3 billion and $4 billion, a large price tag for nuclear companies with relatively low market value compared to oil and natural-gas companies.
Natural gas became the go-to energy source in the 1990s, spurred by the cheap supply. While the price has spiked and stayed volatile, natural gas plants can be built quicker than nuclear plants, keeping it the new build of choice.
"I wish there was an easy answer to this," Byrd said, adding investors view nuclear power as an efficient source of power generation that "have performed well in the market" compared to non-nuclear energy companies, though they still remember the big losses in the proposed but never realized nuclear boom of the 1980s and 1990s.
But, Byrd said, plenty of factors are playing right for new nuclear: there is a need for new generating capacity, oil and gas costs are high and volatile and those, plus coal, are being targeted for their emissions. Plus federal energy legislation in the 1990s streamlined the Nuclear Regulatory Commission application process and in 2005 created incentives for new nuclear reactors to be built.
New designs for nuclear plants may make them easier for the NRC to approve and cheaper to build and operate as well. And while there is no solution to the national problem of storing the waste the plants produce, Byrd said what is also important is sustaining positive public opinion of new nuclear plants.
A UPI/Zogby Interactive of 6,909 U.S. adults Jan. 16-18 found the vast majority think nuclear power is safe, more plants should be built and would support one in their community. The survey had a 1.2 percent margin of error.
"Investors are saying 'it looks good on paper but it's still untested," Byrd said, a sentiment shared by senior EIA economist James Hewlett.
"Until a couple of them get built...it's still an open question," he said at the NARUC session. He said capital costs will need to be brought down to between $1,500 and $1,600 a kilowatt, no small feat compared to the $3,000 per kw the "better" plants in operation today were built. New technology -- including a reduction of on-site labor costs by increased prefabrication -- is supposed to help that. "Whether they can actually get these costs down to these levels remains to be seen," Hewlett said.
Production tax credits and loan guarantees, highly touted yet somewhat unclear incentives of the 2005 Energy Policy Act, would reduce costs by 10 percent each, Hewlett said.
"They're important," he said in a follow-up interview with UPI, "that affects the economics."
There's a growing buzz in Congress to regulate the polluting emissions of industries like coal and other fossil plants, either with an outright tax or cap and trade system. That would increase the costs of coal plants, nuclear's chief base load generation competitor.
Both Byrd and the NRDC's Paine said the price of building a plant isn't a constant either. It takes at least eight years to license and build a reactor, and the longer the time span the less stable the costs for labor and materials.
Paine urges a wider view of costs, beyond just the price to build the plant and the rates consumers pay for the electricity it generations, including mining and processing uranium and disposing of the spent fuel and building, operating and decommissioning the plant.
"If you did price things properly, based on their net societal costs, not just the costs of generating or burning the fuel...and with all the environmental externalities in place including the costs to the atmosphere, global warming effects, the public health effects," nuclear power would be seen as having an incalculable price, Paine said.
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