Nuclear Power Industry Headed in Two Directions

Nuclear Power Industry in the News

On May 8, 2019 the National Public Radio web site posted two articles related to the nuclear power industry. Those articles reported on independent unrelated events. However, when read together, they reveal two contrasting directions of the nuclear power industry.

Three Mile Island

The first article, entitled Three Mile Island Nuclear Plant to Close, Latest Symbol of Struggling Industry, could be considered to be the closing chapter of the Three Mile Island nuclear power accident that occurred 40 years ago.

Three Mile Island Nuclear Generating Plant
Source: npr.org

General Public Utilities (GPU) built the Three Mile Island Nuclear Generating Plant, located close to Harrisburg, Pennsylvania, in the early 1970s. Large base load nuclear power plants, like Three Mile Island, were supposed to be the perfect answer for our electricity hungry economy. Nuclear plants do not emit pollutants. And the electricity produced by those plants was expected to be exceedingly cheap. The Chairman of the Federal Power Commission was supposed to have said that production of electricity from nuclear power was “going to be so inexpensive it would not even have to be metered.”

But nuclear power did not turn out to be inexpensive. In fact, because of design changes found to be required during construction, it turned out to be an extremely expensive source of power. In addition, because of the recession of the 1970s, industrial electric consumption was lower than anticipated. There was, therefore, a question of whether the new plants were even needed. By the late-1970s consumer advocates were urging regulatory agencies to order utilities to discontinue construction of their nuclear power plants and keep the costs out of regulated rates.

The Three Mile Island Accident

The regulators were not initially sympathetic to consumer advocates’ arguments. They did not order the discontinuation of construction. They typically approved rates that included recovery of the nuclear plant costs. However, that all changed on March 28, 1979, when an accident in Three Mile Island’s Unit 2 caused a partial melt-down of the nuclear fuel rods.

After the accident those that opposed nuclear power because of its impact on rates were joined by those that opposed nuclear power because of their concerns with its safety. This time the opposition was effective. Utility orders for 120 nuclear reactors were cancelled as virtually all plans for new plants were abandoned.

Even through new construction was halted, plants that were already in operation lived on. In the United States there are still 60 nuclear power plants with 98 reactors in operation. This includes Unit 1 at Three Mile Island which was not damaged by the 1979 accident. In 2018 these 98 reactors produced about 20% of the nation’s electricity. And most importantly, they produced that electricity without emitting any carbon dioxide or other greenhouse gas.

The Impact of Deregulation

With all of the concern about climate change it would seem to make sense to find a way to retain, if not to expand, nuclear power’s share of the nation’s electric production. However, things have changed since 1979.

When Three Mile Island went into service generation, transmission and distribution facilities were all considered to be part of GPU’s regulated system. Under the regulatory compact GPU could decide what type of generation facilities to build and, for the most part, its regulators would authorize the recovery of costs through regulated rates.

However, since the Federal Energy Regulatory Commission issued its Open Access Orders in 1995, most generation is no longer considered to be part of a utility’s regulated system. Now, most utilities cannot expect to recover all costs of generation through regulated rates. Instead, for entities that own generating facilities, that service is competitive and the costs can only be recovered if the plant successfully competes with other sources of electric production.

The Future for Plants Like Three Mile Island

Three Mile Island Unit 1 is typical of nuclear generating plants located in areas where generation is now a competitive service. It has, in recent years, struggled to remain competitive with electricity produced by renewables and low cost gas produced by fracking. Now these nuclear units are at an age when they need expensive upgrades to continue in operation. The current competitive prices for electricity do not support the cost of those upgrades.

As explained in the NPR article, Exelon, the current owner of Three Mile Island Unit 1, sought subsidies from the Commonwealth of Pennsylvania to keep the plant in operation. However, Pennsylvania did not agree to the subsidies and Exelon announced the closure of Unit 1 effective in September, 2019.

The fate of Three Mile Island Unit 1 likely reflects the fate of most of the other large base load nuclear generating plants. Owners that are unable to recover costs either through regulated rates or government subsidies are retiring the plants.

And there is little likelihood that anyone is going to build new large base load nuclear generating plants. The only such plant currently under construction is Vogtle Units 3 and 4. These plants, if completed, will be owned primarily by Georgia Power Company. Vogtle Units 3 and 4 are turning out to be extremely expensive – current cost projections are expected to exceed $18 billion. Those facilities rely on huge government subsidies and Georgia Power’s continuing ability to recover its generation costs through its regulated rates. In the absence of the subsidies and regulatory rate recovery this type of facility would be very difficult, if not impossible, to finance and construct.

A New Type of Nuclear Power

Although it appears that large scale base load nuclear generation is going to be used less and less, the second article on the NPR web site – entitled This Company Says the Future of Nuclear Energy is Smaller Cheaper and Saferdescribes a different type of nuclear generation that may be ready to take its place. This second article describes the efforts of an Oregon company, named NuScale Power, to build smaller, simpler and less expensive nuclear generating plants. NuScale plans to build these modular plants at its plant and to ship the completed plants to their points of use.

NuScale contends that its plants are safer than traditional nuclear plants because they do not rely upon pumps and generators – which can fail in the event of an emergency – to provide cooling for the reactors. Instead, the reactors are located in a containment vessel in a pool of water which provides passive cooling. The following video depicts the unique operation of the NuScale plant.

NuScale claims that its plants can be used either jointly as a base load facility or as a small scale back-up for the intermittent generation from a wind or solar farm. NuScale further claims that its generation will be less expensive than electric storage, the other electric source commonly considered as a back up to renewables.

NuScale currently has plans to install its first nuclear plant at the Idaho National Laboratory in 2026. Power from the plant will be used to operate the Lab and sold to the Utah Associated Municipal Power Systems for resale its members’ customers.

Author

I. David Rosenstein worked as a consulting engineer and attorney in the electric industry for 40 years. At various times during his career he worked for utility customers, Rural Electric Cooperatives, traditional investor owned regulated utilities and deregulated power generation companies. Each of his posts in this blog describes a different aspect of the past, present or future of the electric industry.