The US Nuclear Power Industry’s Dim Future
By Matthew Philips
Five years ago the nuclear energy industry looked set for its first run of serious growth since the late 1970s, when the Three Mile Island disaster put the brakes on reactor expansion in the U.S. In 2008, Congress authorized $18 billion in federal loan guarantees for plant construction. Utilities submitted 24 applications by the end of that year, anticipating that lawmakers would eventually put a price on carbon with a cap-and-trade bill that would make coal-fired plants less profitable. In 2007 and 2008, the price of the nuclear industry’s two biggest competing sources of power, coal and natural gas, skyrocketed as part of a global rally in commodity prices.
That optimism has given way to despair. Four reactors have closed so far in 2013—a record for the industry. Because of the shale energy boom, natural gas prices crashed, followed by coal. Electricity demand fell during the recession and has yet to regain its 2007 peak. Bolstered by billions of dollars in green energy subsidies in the 2009 stimulus package, renewables, especially wind, have come on faster than many anticipated. Cap and trade never happened. And Japan’s Fukushima disaster in 2011 reminded the world just how dangerous nuclear power can be.
The industry hasn’t done itself any favors. A radioactive steam leak and a botched repair job have led to the permanent closure of three reactors in the last several months, two in California operated by Southern California Edison (EIX), and another in Florida run by Duke Energy (DUK). Faced with growing political opposition, billions of dollars of estimated repair costs, and cheaper alternatives, utility executives in both cases decided to pull the plug rather than fix the plants.
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