Nuclear Situation in Japan

[JimD]

Dwayne,

I've been to your plant several times. You have a lot of red clay showing waiting for your COL so you can pour concrete in it. Hopefully you will be pouring it by late summer. You are still the lead application in the U. S. although the Chinese plant should be done 2-3 years sooner. When your new plants start, you will not be dependant on diesels for them, but you still will be on 1 and 2.

The utilities pay but regulated utilities can recover the 1 mill per kilowatt hour from their customers. Deregulated utilities have to take it out of profits. Exelon is deregulated, Texas is for generation, the northeastern Entergy units are deregulated. The southeast is regulated. Regulation also reduces risk of recovery of the cost of construction. Once the public service commission approves cost recovery, the utility is only at risk if they go over budget. A deregulated utility could spend billions and in the end not recover it if natural gas goes cheap again.

Jim

[jackellis]

A deregulated utility could spend billions and in the end not recover it if natural gas goes cheap again.

Not "if". Gas has gone cheap again and may stay that way for a long time.

A new, high efficiency gas-fired plant has to be paid around 2.5 cents per kWh for capital, operations and maintenance, plus another 3 cents for fuel at current prices for natural gas. Call it 5.5 cents total.

The owner of a nuclear plants has to be paid something around 1.5 cents per kWh for every $1,000 of capital cost (fuel, operating and maintenance costs are extra). On that basis, nuclear isn't going to be cost competitive until plants can be built for under $4,000/kW. Today the lowest estimate I've seen is $7,000.

All this could change pretty quickly if drilling for gas underneath drinking water aquifers causes widespread contamination, or if carbon is priced high enough via some sort of cap-and-trade scheme or a tax. Or if the nuclear industry can figure out how to build reactors much more cheaply.

[LCHIEN]

...
All this could change pretty quickly if drilling for gas underneath drinking water aquifers causes widespread contamination, or if carbon is priced high enough via some sort of cap-and-trade scheme or a tax. Or if the nuclear industry can figure out how to build reactors much more cheaply.

I think the construction price of Nuclear just went way, way up.

I'm sure there will be a wave of new rules requiring more design margins for catastrophe and additional layers of redundancy and more inspections. Not to mention there has probably never been a plant that came in on time and under budget, quite the contrary it seems like most take 1.5X the time and 1.8X the cost estimates.

And forget insurance. They will be uninsurable, governments will have to underwrite the insurance risk which may be no different from last month except the perceived liabilities just went thru the roof.

[JimD]

The current best estimate of the cost of the best of the new nuclear plant designs is about $3500/kW. You probably can't build a European style plant with 2 of 4 safety logic (EPR) for this but we think we can build the new generation naturally or passively safe plants for this. The first unit is pretty far along (in China) and is doing well for the first plant.

A lot of the reason for huge cost over runs was the histroical "used and useful" rule in utility regulation combined with construction delays largely driven by politics. Used and useful is a regulatory rule that says for a utility to charge it's rate payers for an asset it must be both used and useful. So a plant must be complete and operable. So if the construction period drags out to 10 or more years, there is an awful lot of interest to be paid. It is no coincidence that the regulators in South Carolina and Georgia have OK'd limited cost recovery during construction for the first new nuclear units to begin moving dirt in the U. S.. This will reduce electricity costs by reducing interest expense. The plants they are planning to construct will also be built different with a lot of construction occuring off site and modules brought in and set. A little like building a modular home. The reliance on natural circulation and evaporation for emergency heat removal also allows a significant simplification of the plant eliminating a lot of cost. My point is just that there are real plant differences to back up the reduced cost estimate and there is also a key regulatory difference for at least the first couple of plants. We will seen in the next few years if we are right.

Nuclear insurance has always been backed by the government. In the U. S. it is the Price Anderson act. The utilties insure up to a point, then they back each other up to a higher point, and if the losses exceed that amount the government steps in. The goal of all the regulation and additional cost in construction and operation is avoiding ever trying to apply this system.

We'll have to see what the lessons learned are but the NRC has announced they intend to stay on schedule. They cannot introduce a bunch of new requirements on new plants and do that. I feel relatively certain there will be changes but I also expect them to be primarily for the older BWR plants with the secondary containment that is subject to extreme damage in a beyond design basis transient. Those style plants will not be built anymore but there are several dozen contributing usefully to electricity supply in this country and we need them to be as safe as possible. I think there will be a few things for everybody but most changes will occur in BWRs. U. S. plants already have operating instructions for beyond design basis accidents that were either not in place or were not followed in Japan (probably were not in place).

Jim