Friday, November 20, 2009

Electricity in New Hampshire - Quick take on nuclear power

Seabrook Station Nuclear Power Plant - Seabrook, NH

David Brooks at the Nashua Telegraph and GraniteGeek put up a post today on nuclear power and the issues around extending the license on the Vermont Yankee nuclear plant.  As Dave pointed out earlier, the Seabrook Station nuclear power plant is also applying for a license extension.  Dave says that he's "pro-nuclear, but ready to waffle at a the drop of an isotope."

Well, I'll see Dave's waffle-readiness and raise him one.  I'm decidedly undecided on nuclear, but ask me again in 5-7 years and I may have an opinion.   I suppose my wait-and-see attitude puts me more on the side of the nattering-nabobs-of-negativism for now.  

There are around 50 nuclear power plants under construction worldwide (~24 in China, none in the US).  Included in that mix are three next-generation plant designs that are purported to have much better economics than nuclear designs of years past.   As I indicated in an earlier post on Westinghouse Electric in Newington, the three new designs are the AP1000 from Westinghouse, the ESBWR and ABWR from GE-Hitachi, and the EPR from French owned Areva.

Cutaway View of Westinghouse Electric's new AP1000 reactor design

If these new designs pan out and can 1) keep construction delays to a minimum, 2) stay roughly on budget, and 3) operate reliably for a few years, we'll find ourselves in a new era of nuclear power.  If that happens, there could be a seismic shift in our approach to emissions-free base load power generation.

OTOH, the capital markets are still loudly saying no-thanks to nuclear power.  That's why the nuclear projects underway today are mostly being built by oppressive regimes with excess cash (China can only buy so many US treasuries), and by state-run or regulated monopolies that are able to push nuclear power's project risk onto ratepayers.   By anyone's math, getting nuclear power to be economical is a tough nut to crack.  The cost-of-capital problem for nuclear is insurmountable without ratepayer guarantees, government financing, or a big change in market sentiment. To make matters worse, recently there's been some bad news on the next-gen design front (see here and here).  IMO, it's too early to tell how serious these design issues are and I still have an open mind on the future.  But, it's going to take a while to see how this movie ends.

As far as the old plants go, I'm for milking them for all we safely can.  Seabrook just finished refueling this month and is back online and good to go for another 18 months.  The emergency sirens were tested last Wednesday and since I'm in the evacuation zone, I was able to hear them loud and clear.  

Perhaps I'll be proven wrong, but with nuclear power, I'm less worried about safety and much more worried about economics.  Sure, the safety and disposal challenges are real, but IMO, the economic issues are bigger.  Many people claim Seabrook is providing us with loads of economical electricity.  Unfortunately, that's only true if you ignore the PSNH bankruptcy, the huge losses by investors and ratepayers, and the fire-sale of the plant to FPL/NextEra.  Granted, some of the delays at Seabrook were due to regulatory/licensing issues, but that wasn't the whole story. 

In the end, with Seabrook we made the ultimate investing mistake of buying high and selling low.  I suspect FPL did fine with their investment in Seabrook, but for the rest of us, not so much.  As for this new generation of nuclear power plants - only time will tell. 

So ask me again in 5-7 years and I may have an opinion.


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