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US nuclear-power “a mint” at 1.7c/kWh, margins 200pc,k

Posted by gmarkets on 10 September, 2007

Last year, the average nuclear reactor in America was in use 90 per cent of the time, and, better still, utilities have found ways to improve the non-nuclear parts of the power station, such as the steam turbines, reported The Economist (8/9/2007, p.73). Big profits for some: These so-called “uprates” have increased America’s nuclear capacity by almost 50,000MW since 1977, the equivalent of about five new nuclear reactors, according to the Nuclear Energy Institute, an industry group. At the same time, the NRC has agreed to extend the working life of about half of America’s nuclear plants for an extra 20 years. All this has turned nuclear-power plants into virtual mints – as long as the bill for construction has been paid down or written off. In most of America, the wholesale power price was closely linked to the price of natural gas, since gas-fired plants tend to provide the extra power required at times of peak demand. So the price of power has risen along with that of gas over the past few years, whereas the operating cost of nuclear plants have remained relatively stable.

1.7c/kWh: According to the Energy Information Administration, a government agency, the average wholesale power price in 2005 was 5 cents per kilowatt-hour (kWh); the Nuclear Energy Institute, an industry group, reckoned that the average operating cost of America’s nuclear plants was 1.7 cents per kWh that year. So their margins were almost 200 per cent. No wonder that utilities were rushing to the NRC with their plans for new reactors. But to get any of them off the ground they must not only persuade the NRC of the safety of their designs, but also convince potential creditors that there would be no repeat of the financial meltdowns of the 1970s and 1980s.

Problems for coal-fired gen: They pointed to three reasons for optimism: changing conditions in the energy business, a streamlining of the NRC’s process for obtaining permits and an overhaul of construction techniques. Until recently, coal-fired plants seemed to be safer investments. But nowadays, most utilites expected – and in some cases were calling for – Congress to limit emissions of greenhouse gases in the near future to temper climate change. Coal-fired plants, which had working life of 40 years or more, spewed out globe-warming pollution, whereas nuclear ones produced almost no greenhouse gases at all. So coal was now subject to a massive “regulatory risk” of its own.

The Economist, 8/9/2007, p. 73

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