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The Global Winners of a US Nuclear Power Renaissance

bridges vol. 13, April 2007 / OpEds & Commentaries

by Paul Guinnessy

Paul Guinnessy

The biggest winners in the plans to build new nuclear reactors in the US may not be the domestic nuclear industry, which dwindled in the intervening years when few or no reactors were ordered. Instead European-based Areva, and three Japanese companies, Toshiba, Hitachi, and Mitsubishi, may reap the most benefits.

The industry currently provides 19 percent of the US electricity needs through 103 aging plants. Most of these plants have been upgraded, to keep them operating more efficiently at higher temperatures and to extend their life expectancy from 25 to at least 40 years. But soon some of these plants will have to be decommissioned and, to keep nuclear energy production at the same usage level or higher, new plants will have to be built to replace them. No new US plants have been built since the 1979 Three Mile Island nuclear accident.

Today, the economics of building and running reactors has improved. Old reactors have long paid off their capitalization costs, leaving fuel, waste storage, and security as their three main costs. Moreover, just as in Europe, nuclear is becoming competitive with oil and gas because of the expectation that climate-change carbon taxes or credits will be put on fossil fuels. The US also has a new interest in energy security, in light of events in the Middle East and Russia.

Since the 1980s nuclear power plant builders have been in a race to develop cheaper, more efficient, and safer nuclear reactors. Thirty years ago each nuclear reactor was unique and cost billions of dollars. Many projects were over budget and behind schedule. Today, the plan is to mass manufacture reactors dropping the cost to between $450 million and $1.5 billion. The Bush administration's 2005 energy legislation also offered tax credits worth $3.1 billion, along with liability protection and compensation for any legislative delays, to any utility willing to start building a nuclear plant before the end of 2008. The promise is that if a plant is built and licensed, it will operate.

In 2006, for the first time in years, the Nuclear Regulatory Commission (NRC) certified the design of a new reactor - the 1000 MW Westinghouse Advanced Passive (WAP) reactor. Six US power plant operators, such as NuStart Energy, a consortium of nine nuclear energy companies, Duke Energy, and Progress Energy, applied for combined construction and operating licenses (COL) in preparation for starting construction, from late 2007, of twenty new reactors using either an AP1000, General Electric's Economic Simplified Boiling Water reactor, or Areva's European Pressurized Water reactor.

Last month, a new reactor-type came on the scene when TXU Corp announced a $5 billion contract with Mitsubishi Heavy Industries Ltd to build two heavy-duty 1700 MWatt nuclear reactors. The order was a surprise, as the NRC has not certified Mitsubishi's reactor design. The Mitsubishi reactor is more powerful than the AP1000, and on a cost-for-energy basis, it should be cheaper. In total, 16 new reactor deals should be announced by utilities over the next five years, the majority of which are still expected to use AP1000 reactor designs.

But submitting COL requests to the NRC, isn't the same as actually building a plant. A closer investigation of who is paying the $150 million it costs to go through the certification process shows that the US government and the reactor builders are paying most of the bills.

The builders themselves are either owned by foreign companies, or have foreign companies as partners. A national nuclear industry, as such, no longer exists. A Toshiba-led consortium bought the leading reactor builder, Westinghouse, from British Nuclear Fuels two years ago. Hitachi and General Electric are planning to merge their US reactor division, and the last two major players - Areva and Mitsubishi - compete and cooperate on reactor bids.

In terms of spare parts, the US no longer has the expertise to repair some of its own reactors. Areva, the largest nuclear company in the world sells more than $400 million of spare parts to the US, about 25 percent of the market, a share it expects to increase to above 40 percent.

But the surge in reactor orders may slow because of factors outside the control of the industry. A global shortage of qualified nuclear personnel is increasing salaries and forcing consolidation among companies across the sector. Job advertisements for some nuclear workers have already been placed in Europe and in Asia, to meet US demand.

Two other factors may dampen the heady expectations of the industry: soaring fuel costs and waste. The 440 reactors worldwide consume 80,300 tons of uranium per year, while globally in 2005 the mines produced 46,500 tons of uranium. Delays in a new Canadian mine and reduced output from Australian mines have helped push uranium prices up 900 percent in six years. A second source of fuel, which supplies nearly half of the US market, is Russian weapons grade plutonium and uranium blended down for use in civilian reactors by USEC. In theory, US fuel shortages should start to lessen when a new $2 billion enrichment plant near Piketon, Ohio, opens in 2009.

Fuel is a short-term problem compared to the long-term issue of nuclear waste. Yucca Mountain, a nuclear waste depository built by the Department of Energy in Nevada, is years behind schedule and billions of dollars over budget. The existing reactors have also produced enough waste to completely fill it. New reactors may store waste on-site until a more permanent solution is found. Alternatively, the US may once again consider reprocessing nuclear waste to produce plutonium fuel for reactors, once the risk of weapon proliferation has been solved.

In the end though, the heavy investment by foreign companies such as Toshiba justifies the industry's optimism about new US reactor orders. It is more likely to be when, rather than if, that electrical utilities start spending their own money on reactor construction. And as the industry continues to grow, it will be a classic case study of how global the nuclear industry has become.


The author, Paul Guinnessy, is the online editor for Physics Today magazine.

"New Designs for the Nuclear Renaissance." Physics Today, April 2002, 54.

"Proliferation Is Key Issue in Nuclear Power Resurgence." Physics Today, July 2005, 33.

International Energy Agency

International Atomic Energy Agency

World Nuclear Association

Nuclear Energy Institute List of New US reactors

Canada's Uranium Production & Nuclear Power (March 2007)

"Nuclear Power Revival Could Encounter Hurdles." Wall Street Journal Online,5 December 2006.