Nuclear plants are the lowest cost means of producing electricity, at 1.68 cents per kilowatt hour, based on 2004 data (latest available) The last nuclear plant to come on line was in June 1996 (Watts Bar reactor, under the Tenessee Valley Authority) There are 103 operating nuclear reactors in the US Bush administration wants to encourage nuclear power, and is using tax breaks and investment incentives to do so Applications to build several plants are expected in 2006. Short term, this is a positive for engineering firms that will handle the contracts to build plants. When new nuclear plants come on line in several years, this will create incremental demand for uranium, bolstering the long term case for uranium producers
Investment incentives include:
Streamlined licensing process Government guarantees for certain debt payments caused by unforeseen delays Production tax credit of $18 per megawatt hour, which could translate into $5-6 billion of economic benefit per plant. Since the construction cost of a new plant will be about $1.8 billion, returns could be 30% to 36% from tax benefit alone.
I will refrain from "glowing future" jokes... Excerpts from the Barron's article:
[The nuclear energy lobby] believes 2006 will be the best year for the industry in at least a decade. They expect several companies to begin applying for new nuclear generating plants, a process that takes about two years. Once the approvals are in hand, the building can begin, which takes another four to five years.
The applicants will be helped by the Bush administration, which wants a U.S. that is less dependent on foreign energy. An animated Andrew Card, Bush's chief of staff, told a packed house at a U.S. Chamber of Commerce luncheon in Washington, D.C., Wednesday that the U.S. needs more nuclear power and that Bush would be talking about it throughout the year. In June, Bush visited a nuclear plant in Maryland to promote the industry, which received huge tax breaks and investment incentives in last year's energy bill.
The last of the 103 operating nuclear reactors built in the U.S. was the Tennessee Valley Authority's Watts Bar reactor, opened in June 1996, when regular gasoline sold for less that $1.30 a gallon at most U.S. filling stations. The nuclear plants are in 31 states. With fuel prices considerably higher, the nuclear alternative looks more attractive than a decade ago, when memories of the Three Mile Island fiasco were fresher. According to the Nuclear Energy Institute, the industry's policy and lobbying arm, nuclear plants are the least costly way to produce electricity, at 1.68 cents per kilowatt hour, based on year 2004 data, the latest available. Recent rises in the price of fossil fuels doubtless have magnified nuclear power's cost advantage.
Vermont -- the Green Mountain State -- turns out to be the poster state for the industry, getting 73.7% of its electric power from nuclear energy. It's followed by South Carolina (54.5%), Connecticut (54.4%), New Jersey (51.9%), New Hampshire(43%) and New York (29%). Politically, six of those are Democrat blue states, while just one, South Carolina, is Republican red...
The industry is optimistic about new plants, because last year's energy bill contains sweeteners that are certain to tempt once-timid investment dollars into the nuclear game. The licensing process has been streamlined, and the government will guarantee certain debt payments caused by unforeseen delays.
Plus, there's a production tax credit of $18 per megawatt hour. According to the Nuclear Energy Institute, that translates into $5 billion to $6 billion of economic benefit. Since the construction cost of a new plant will be about $1.8 billion, tops, returns could be 30% to 36% from tax benefit alone. Another cause for optimism: Bush this year will appoint a new chairman to the Nuclear Regulatory Commission to serve a five-year term, assuring continuity at the top. The term of the current chairman, Republican Nils Diaz, who was appointed by President Bill Clinton, expires this year, and Bush is now vetting candidates.
Two possible snags: First, Senate Democrat Harry Reid of Nevada, the minority leader, opposes plans to turn a salt mine in his state into a nuclear-waste dump, citing safety concerns. He's complained in the past about "the greedy nuclear-power industry." If he and allies choose to stall the nomination process -- not a certainty but possible -- then Bush would have to resort to a "recess appointment" to get a new NRC chairman in place. Second, the industry faces strong opposition from groups like Greenpeace, which would almost surely fight a legal battle aimed at stopping construction of any nuclear plants.