Articles

he emerging renaissance for nuclear power in the United States gathered momentum throughout 2008. Forward movement is evident on many fronts as utilities continue to submit new license applications to the U.S. Nuclear Regulatory Commission (NRC), the reactor technology vendors are proceeding with design and licensing activities and industry solidifies plans for the necessary manufacturing infrastructure to support construction on new nuclear power plants in the United States.

State regulatory agencies are also moving forward with essential regulatory approvals and providing necessary assurance that utilities can recover the costs that they must incur to continue to develop the nuclear option as a source of base load electric power generation. Public support for nuclear power is increasing. And many state officials are offering new support for nuclear power in their state to meet future energy needs and to reduce production of carbon dioxide that contribute to global warming. The issue of deploying new nuclear plants as part of the national energy policy was an item of significant dialogue during the presidential election.

So far in 2007 and 2008, utilities and power producers have submitted 17 license applications to the NRC representing 26 potential new nuclear power plants. Six applications were submitted in September and October 2008 to ensure that the licensees will be able to qualify for potential production tax credits established in the Energy Policy Act of 2005 passed by the United States Congress. The NRC has accepted 10 applications for technical review and is actively working with licensees to verify that the applications meet regulatory requirements. Many other companies are evaluating options for new baseload capacity and considering development of new nuclear power plants. Six other companies have notified the NRC of their intent to prepare license applications for constructing and operating a new nuclear power plant, or to request approval of a site for a nuclear power plant.

Two reactor vendors submitted applications to the NRC to certify reactor designs in December 2007. Areva Nuclear Power filed an application for its U.S. Evolutionary Power Reactor and Mitsubishi Heavy Industries Ltd. submitted an application for its U.S. Advanced Pressurized Water Reactor. Both designs are enhanced pressurized water reactor designs that build on the world's experience in designing, constructing and operating this type of nuclear reactor.

U.S. industry has continued to develop the manufacturing infrastructure that will be needed to support construction of new nuclear power plants.

Meanwhile, US. industry has continued to develop the manufacturing infrastructure that will be needed to support construction of new nuclear power plants. In November 2007, Curtis Wright Electro Mechanical Corp. broke ground on a $62 million manufacturing facility near Pittsburgh, PA, to fabricate reactor coolant pumps for Westinghouse's AP1000 reactors, including four reactors under construction in China. In August 2008, Shaw Group and Westinghouse announced plans to build a plant at the port of Lake Charles in Louisiana to fabricate modules of systems and equipment that will be used in the AP1000. The plant will employ over 1,500 personnel and will begin operations in 2009. In October 2008, Areva and Northrop Grumman Shipbuilding announced plans to build a new manufacturing and engineering facility in Newport News, VA. The companies will invest over $360 million in a place to fabricate large components for the Areva Evolutionary Power Reactor including reactor pressure vessels, steam generators and pressurizers.

State regulatory agencies are also reviewing applications from utilities related to the need for new nuclear power plants and requests to recover costs that the utilities will incur in design, licensing and construction of the plants. The Florida Public Service Commission approved certificates of need for new nuclear power plants to be built by Florida Power and Light Co. (FP&I) at the company's Turkey Point Plant site south of Miami and by Progress Energy at a new plant site in Levy County, FL. The agency also approved recovery of costs that will be expanded by FP&L and Progress Energy through increases in consumer rates to pay for upfront expenses associated with plant design and licensing.

In South Carolina, the Office of Regulatory Staff said it plans to recommend in December that the South Carolina Public Service Commission approve an application by South Carolina Electric and Gas to build two new nuclear power plants at the company's existing V.C. Summer site near Jenkinsville, S.C. Both North Carolina and South Carolina have approved recovery of costs by Duke Power relating

to the potential construction of a new nuclear power plant in South Carolina, Louisiana, Georgia, and Florida have approved recovery of costs for construction of nuclear power plants during the construction period (construction work in progress).

On the financial front, 17 utilities have applied to the Department of Energy for loan guarantees for 21 nuclear power plant units. The total funding requested in all applications submitted under the program established by the Energy Policy Act of 2005 is $122 billion. This far exceeds the $18.5 billion authorized by Congress. The loan guarantee covers up to 80 percent of the costs for construction and commissioning the new nuclear power plants. The strong industry response to the program reflects both the applicants' commitment to move forward with projects and the need for federal government financial support to offset project risks associated with first-of-a-kind construction, along with uncertainties related to escalating materials and labor costs.

A critical prerequisite to beginning actual construction of new nuclear power plants is agreement on the engineering, procurement and construction: (EPC) contract between the licensee and the reactor technology vendor. The EPC agreement establishes commercial terms for construction of the new plant and risk allocation between the licensee and the vendor. Both Southern Nuclear and South Carolina Electric and Gas signed EPC contracts in 2008 with Westinghouse and Shaw Group covering construction of a new AP1000 reactors in Georgia and South Carolina, respectively.

General Electric-Hitachi, Areva Nuclear and Mitsubishi Heavy Industries Ltd. are working closely with their prospective clients to finalize EPC contracts.

Public support for the nuclear renaissance is increasing in the United States. A new poll conducted by Bisconti Research Inc. found a record high 74 percent of Americans favor nuclear energy, with 24 percent opposed. The favorability mark is 11 percentage points higher, and the unfavorable level nine percentage points lower, than results of a similar survey completed in April 2008. The survey found 69 percent of Americans believe that the United States should definitively build more nuclear power plants in the future -- a 10-percentage point gain from the April survey results.

State and local leaders are also showing new support for expanding nuclear power. Wisconsin Governor Jim Doyle recently indicated he would support changes to his state's moratorium on new nuclear power plant deployment to allow utilities in the state to consider new nuclear power plants. In Kentucky, a State Senator introduced legislation to amend the state's current moratorium on new nuclear power plants. The Governor of Utah also expressed a willingness to consider siting a new nuclear power plant based on plans by a local company to bring a potential new nuclear power plant to the state. Plans are being studied for new nuclear power plants in Idaho and Colorado where no commercial nuclear power plants are currently operating.

Outside the United States, many countries have initiated efforts to deploy new nuclear power plants. Over 25 countries either are constructing or have announced plans to develop new nuclear power plants. In October, the United States Congress approved a new treaty allowing U.S. companies to sell nuclear technology to India for the first time in over 20 years. Italy, which ended its nuclear power program more than 20 years ago, has initiated efforts to deploy new nuclear power plants. Even countries like Sweden and Germany that have committed to a phase-out of existing nuclear power plants are reassessing their policies in light of continuing concerns over greenhouse gases and high prices for imported energy.

A number of challenges must still be overcome before new nuclear power plants will be on line in the United States. The Nuclear Regulatory Commission and the current licensees must work through the rest of the licensing process to issue the Combined Operating Licenses required to start major construction activities. This includes moving through the public hearing process before the NRC's Atomic Safety and Licensing Boards. The NRC must also complete their reviews of proposed nuclear power plant designs and issue the necessary design certifications.

A significant infusion of new engineers, technicians, operators and highly skilled construction craft labor into the nuclear power industry will be required to complete the final plant designs, procure all of the required equipment, complete the construction, implement the comprehensive testing and commissioning programs and eventually operate the plants.

...69 percent of Americans believe that the United States should definitively build more nuclear power plants in the future -- a 10-percentage-point gain from April...

In addition to the need for personnel to support new nuclear plants, the Nuclear Energy Institute estimates that about half of the nuclear industry's workforce supporting the existing operating nuclear power plants in the United States will be eligible for retirement in the next 10 years. Replacing these highly experienced resources will also fuel demand for additional personnel. The industry will have to attract more students into engineering and science curricula at colleges and universities. Similarly, it will have to develop additional highly skilled welders, pipe fitters, electricians and other construction trades.

While the United States has made progress in improving its manufacturing infrastructure to support new nuclear power plants, additional efforts will be required. Supply chains for key plant components still need to be developed. Few manufacturers in the United States have maintained the Quality Assurance Programs necessary to produce safety related components for nuclear power plants. Companies will either have to reestablish such programs or components will have to be procured from overseas.

Finally, financing new nuclear power plant faces substantial hurdles. The Department of Energy's loan guarantee program at its present funding level will provide less than one-fifth of the resources that potential nuclear power plant developers are requesting. The turmoil in the financial markets has had a significant negative impact on the balance sheets of the largest utilities in the United States, which affects the cost of financing. The significant structural problems affecting major credit markets will also affect the ability to obtain debt financing as well as the cost of such financing.

Even with these and other challenges facing new nuclear, the underlying conditions that make new nuclear a critical part of America's energy future are still present. There is a clear need for new baseload capacity in the United States in the next 10 to 15 years due to basic economic growth and the need to replace existing aging power plants. Concerns over the impact of carbon emissions on global warming continue to increase and nuclear power remains the most viable technology for producing significant quantities of electricity without producing additional greenhouse gases. The outstanding operating record of America's current nuclear fleet reinforces the economic benefits of future nuclear power plants.

Author: Bob Evans is Vice President of New Plant Services for Enercon Services Inc. He has 30 years of experience in commercial nuclear power including seven years of work on licensing and strategic planning for new nuclear power plants. He has provided consulting support to over 12 companies on potential deployment of new nuclear power plants including development of project plans and license applications for submittal to the NRC. Mr. Evans holds a Bachelor of Science in Nuclear Engineering from the University of Missouri at Rolla.