In 1933 US Congress enacted legislation which created the Tennessee Valley Authority (TVA) “in the interest of the national defense and for agricultural and industrial development, and to improve navigation in the Tennessee River and to control the destructive flood water in the Tennessee River and Mississippi River Basins.” Since then, this corporate agency of the US government has expanded its footprint across seven states and into multiple sources of power generation, most notably, nuclear.
The TVA also has the distinction of being the owner of the last nuclear power plant commissioned in the 20th Century -- Watts Bar Unit 1, commissioned in 1996 -- and the first to go into operation post-Fukushima -- Watts Bar Unit 2, which is scheduled to begin full production in June 2016. Despite major cost overruns and one of the most questionable safety records in the American nuclear industry, this TVA facility in rural Tennessee may either represent nuclear power’s last gasp or herald a new the start of the next era for nuclear power in the US.
In addition to Watts Bar 1 and 2, there are at least five plants under construction: two each in Georgia and South Carolina and one in Michigan. Two more have been issued licenses in Texas, and eight others are undergoing license review. Furthermore, there is active lobbying to extend the operating lives of the 100 or so additional plants already in operation.
Maintaining the status quo…but at what risk?
Will these plants represent enough new capacity to meet the country’s increasing demand for non-carbon-emitting energy? Are they safe enough? What are the true costs of extending the life of the existing plants? Are the economics of nuclear power sound enough to justify these multi-billion-dollar projects? In a purely rational marketplace, the answer would likely be no.
According to a report issued by the Nuclear Energy Institute,“if all of today’s nuclear plants retire after 60 years of operation, given the electric load growth expected by the U.S. Energy Information Administration (EIA), electricity production equivalent to approximately 20 new large reactors would be needed by 2030, and 50 new large reactors by 2035, to maintain nuclear energy at 20 percent of U.S. electricity supply.” The report goes on to note that if the lifespans of existing reactors are extended by a mere 20 years, then only the equivalent of 20 new reactors would be necessary by 2035.
Public policy vs. Economics
Given the environmental concerns, the low price of fossil fuels, the cost and complexity of building nuclear plants, and the increasing competition from wind and solar energy sources, the prospect for a major expansion of nuclear energy in the US looks bleak. John Rowe, the former CEO of Exelon, the largest supplier of nuclear power in the U.S believes that public policy concerns rather than market realities are driving the nuclear power industry off a financial cliff. All these negatives are further confirmed in an uncompromising assessment of the future of nuclear power by Brian Palmer, writing for the Natural Resource Defense Council, who likens the vicissitudes of the nuclear industry to the good and bad days exhibited by patients in their death throes.
It is likely that some of the plants that have been issued licenses and even some that are already under construction may never come to fruition. Nevertheless, the Obama Administration has stated a commitment to keeping nuclear power at 20% of total U.S. output. The 2016 Omnibus Appropriations Act sets aside US$986 million for nuclear programs and specifies timetables for current reactor license extensions.
Technological input
Whether these initiatives are enough to keep nuclear power afloat or merely constitute the rearranging of deck chairs on a sinking ship, technological advances may save the day. New, cheaper, modular style reactors that can be built in factories and simply shipped and installed onsite are being planned for as well as reactors that fuel themselves from the spent, dangerous output of conventional reactors. The future for nuclear is cloudy but it remains compelling.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.
