May 02, 2013
It’s the Revenge of Jane Fonda.
Nuclear power, the darling of Cold War-era technocrats,
is in trouble.
Here are the stats. In 2001, nukes’ portion of U.S. net electricity generation was
20.6 percent. But the first year of the new century saw the industry’s
high-water mark. Since then, its share has ebbed:
Nuclear’s not merely decreasing as a percentage of generation,
it’s falling in absolute terms. Atomic plants sent a record 807 billion
kilowatthours of juice to the grid in 2010. The figure declined to 790 billion
kilowatthours in 2011, and dropped again in 2012, to 769 billion kilowatthours.
Aren’t reactors being built -- the first in decades? Yes, but
the long-touted “renaissance” is underachieving. In 2007, The Wall Street Journal reported that the Nuclear Regulatory Commission expected
a “flood of applications over the next 15 months, which could cover as many as
29 new reactors at 20 sites.” Six years later, reality has obliterated the rosy
scenario. The Nuclear
Energy Institute reports that currently, just five reactors are under
construction at three sites.
Assuming the facilities come on line -- not a sure thing, given
cost overruns and Fukushima-driven regulatory ratcheting --- they could serve
as replacements, not enhancements. Last year, in a decision its CEO said was
“based purely on economics,” Dominion announced the
closure of the 556-megawatt Kewaunee Power
Station. Curiously, it won approval of a license extension in 2011. Sharon Squassoni, a nuclear
analyst with the Center for Strategic and International Studies, believes that
the company’s decision is a harbinger: “The fact that Dominion, with a $30
billion market capitalization, prefers to pay $281 million in decommissioning
fees and other closing costs rather than operate the plant for another 20 years
signals a generally grim economic outlook for nuclear energy in the United States.”
Nukes have slammed into headwinds that may be insuperable. The
first, as Kewaunee demonstrates, is cost. While the electricity market is
hardly “deregulated,” the federal government and many states have loosened
controls and permitted competition. Increasingly, power providers are
accountable to the desires of price-conscious customers, not the whims of
“public service commissions.” With no guarantee that the huge upfront expense
of a nuclear reactor will be “passed on” to ratepayers, why take the risk?
Second, the fracking revolution has given generators a viable
alternative. Natural gas is cheap, it can be accessed in every part of the
country, its price isn’t set by a volatile international market, and not even Yoko
Ono and Susan Sarandon can stop it. It’s stolen an enormous amount of
market share from coal, and nuclear could be next.
Finally, there’s the carnage wrought by the Great Recession-Great
Stagnation. Economic woes have decimated power consumption. Amazingly, U.S.
demand for electrons in 2012 was below the figure for 2005. Forecasters don’t see many reasons for an imminent
turnaround. The population is rapidly aging, the birthrate is
shockingly low, and the manufacturing and extractive sectors, threatened by
globalization’s pressures, relentlessly pursue energy efficiency.
responded in predictable fashion to nukes’ plight. The industry, a critic once fumed,
is “wholly and completely a product of government design, promotion and
subsidy.” So Uncle Sucker isn’t abandoning its creation. Loan guarantees are
already enabling the aforementioned construction, and the U.S. Department of
Energy’s Small Modular Reactor Licensing Technical Support program is awarding
hundreds of millions of dollars in grants. The bureaucracy gushes
that “smaller size reduces both capital costs and construction times and also
makes these reactors ideal for small electric grids and for locations that
cannot support large reactors,” adding that the systems “have the potential to
be licensed by the Nuclear Regulatory Commission and achieve commercial
operation around 2025.”
Nuclear science is unquestionably sound. As the Idaho
National Laboratory put it, “one uranium fuel pellet -- roughly the size of
the tip of an adult’s little finger -- contains the same amount of energy as
17,000 cubic feet of natural gas, 1,780 pounds of coal or 149 gallons of oil.”
But while physics is important, it’s not in charge of the electricity
market. Economic conditions, safety and environmental regulations, lobbying,
public perception, political posturing, and the cost of alternatives also matter.
That’s why more corporate welfare isn’t likely to change nuclear’s fortunes.
Anti-nuke loons have brayed about their bête noir’s “inevitable” decline for decades. This time, the end
might truly be nigh. Let’s not hand taxpayers the hospice bill.
D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.
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