Last updateFri, 18 Sep 2020 7pm

Nuclear Slowdown Result of Natural Gas Costs, Not Events in Japan

HerronNatural gas prices will have more of an effect on the fate of the U.S. nuclear renaissance than the Fukushima Daiichi nuclear disaster, according to a recent article for Industrial Info Resources by John Egan. Egan based his article on what a panel of experts had to say at a recent Web conference.

As one of those experts put it: “I don’t believe the nuclear renaissance is dead, but with natural gas costing $4 to $4.50 per million British thermal units, it is difficult to justify investing in a new-build nuclear plant.” Those remarks were made by John Herron (pictured), the president, chief executive and chief nuclear officer at Entergy Nuclear, a unit of Entergy Corporation, New Orleans, LA. Other speakers at the May 19 Web conference were Bill Borchardt, executive director of operations for the U.S. Nuclear Regulatory Commission (NRC), and Jim Hunter, utility director for the International Brotherhood of Electrical Workers (IBEW).

Entergy’s Herron explained that, coming from the power shareholder and lender viewpoint, the low-cost natural gas that is hitting the market right now means it’s hard to justify spending money on new plants. His company, for example, recently withdrew applications for construction and operating licenses (COLs) for two new-build reactors.

Still, he said one area that is seeing some growth is upgrading plants to higher power levels. Entergy Nuclear is close to finishing a 15% uprate project at Unit 1 of its Grand Gulf Nuclear Power Station, a project that has an investment value of $80 million and the capacity to add 178 megawatts of new electric generation.

“Uprates are a cost-effective way for us to increase our electric generation,” Herron explained, which will be important because nuclear will help meet a growing need for power. “Having clean, carbon-free power is a must in our business. Utilities need a portfolio of generation to meet customer needs,” he said. The nation has to ask itself: “‘Do we want to be energy independent?’ and ‘Do we want to lower greenhouse gas emissions?’ If the answer is yes, then we need a clear national energy policy that supports a diverse portfolio of generation, and nuclear needs to be part of that,” Herron concluded.

NRC’s Borchardt pointed out that new-builds in nuclear were slowing down before the Fukushima Daiichi nuclear plant woes in March. He reported that NRC had received 18 COLs for 28 new reactors before the accident and that six of those applications were suspended before the disaster began.

“Operators told us they were withdrawing their applications because of the business environment—meaning natural gas prices,” Borchardt told the web conference audience. He said, however, that the remaining 12 applications were moving forward, and that the agency is working to certify new reactor designs, including small modular reactors.

NRC is also studying whether a disaster similar to the Fukushima Daiichi incident could occur with a U.S. reactor. A short-term study ordered by President Obama is seeking input from nuclear operators, equipment manufacturers, and specialized engineers and technicians from the nuclear field. A second, longer-term study will look at broader lessons learned from the incident. This longer-term assessment will ask for input from a broad range of participants including the public and stakeholder groups.

The third web conference speaker, IBEW’s Hunter, agreed with remarks by Herron that an important topic in the industry today is whether issues surrounding hydrofracturing (fracking) will increase regulation of shale-gas, which would increase the cost of natural gas, thereby making nuclear more competitive.

As Herron explained, environmental issues surrounding fracking “are one of the most important topics discussed at meetings of executive management and the board,” Herron said. He said the U.S. Environmental Protection Agency (EPA) is expected to regulate how fracking can impact water supply. That reality, together with increased exporting possibilities for liquefied natural gas (LNG), could very well drive up gas costs.

All three speakers stressed that nuclear remains a safe industry and pointed out that what happened in Japan is not likely to happen in the U.S. because of different types of equipment installed at U.S. nuclear generators. Meanwhile, the nuclear industry here is already noting lessons learned from other aspects of the disaster such as what happens when power is lost on site.

“The industry has a long history of incorporating lessons learned into its operations,” NRC's Borchardt said. “We learn from all of our experiences as part of our commitment to continuous improvement. We have found nothing that undermines our confidence in the continued safe operation of U.S. nuclear generators.”

IBEW’s Hunter also predicted that whatever lessons are learned from the more recent disaster, the safety-related changes made on this side of the ocean are likely to be easier to implement and less costly than what happened after the Three Mile Island incident in 1979. Hunter and Herron also both pointed out that the public needs to be better educated about how safe nuclear power is and how nuclear (and other forms of power) can provide better power self-sufficiency.

“For years, we have done a lousy job educating the American public about nuclear power, wind energy and transmission,” Herron said. Although there are no forms of power that don’t require some risks and tradeoffs, nuclear power technology is safe, he said. Meanwhile: “If the U.S. wants increased energy security, costs are an important part of that,” he pointed out.

Hunter added that today: “You can’t permit a new coal-fired power plant. Wind power is great, but the wind doesn’t always blow. And anyway, you need transmission lines, and you can’t get those built either. We have got to do a better job drawing a line around what we do and what happened in Japan. We need a big sales job to let the public know that nuclear is a safe and necessary technology.”

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