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Aggregating Energy Since 2006

Slow Start to Nuclear

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Despite the Federal government sending a message to the private sector to push forward with building new nuclear power plants, the response has been tepid. A longish NY Times article looks at the business outlook on nuclear power plants. I found there to be a couple interesting tidbits. One is that the reasons companies decide not to build a new nuclear power plant are generally not the same as the reasons opponents are worried about:

Opponents often cite the risk of accidents and the problem of nuclear waste, but the companies that do not want to build say that those are not factors in their decisions…the risk that really matters to utility executives is financial. Among the companies that would actually build these plants, executives focus more on uncertain factors like the future price of power, the cost of producing competing fuels, and the cost of cleaning up coal plants to meet standards for the pollutants that Washington does regulate — sulfur dioxide, nitrogen oxides and soot.

One energy company executive stated it clearly that their role is to maximize their shareholders profits. Even if nuclear power plants may eventually be more cost effective than coal plants they carry a much higher level of uncertainty and risk. An example is that typically when they build a new power plant they begin the process by selling the future power for a certain length of time (hedging). They then use these contracts to ease the worries of investors and bankers in order to get the outside financing necessary for the high capital outlay. Since nuclear power plants take on the order of 10 years to bring into production it is difficult to sell power 10 years from now for a 10 year timeframe.