NEI Lays Out the State of Nuclear Power (With Reactor Construction Photos)

Last year offered a mix of good and bad for the U.S. nuclear power industry. Four new reactors rapidly took shape in the South and performance remained high among the operating fleet, while some single-unit plants struggled to compete with low natural gas prices.  

In a presentation for financial analysts, the Nuclear Energy Institute recently laid out the trends facing the industry in 2014.

Performance

U.S. reactors' 2013 capacity factor increased 4.5 percentage points over the previous year to 90.9 percent. That includes two units at San Onofre that did not operate at all, as well as the Fort Calhoun plant that was shut down for most of the year. Excluding those units, the capacity factor was 92.1 percent in 2013, which saw 51 refueling outages.

Price

The NEI also broke down generating costs for 2012. Across the U.S. reactor fleet, excluding Kewaunee and the units offline for major repairs, costs averaged $44.17 per megawatt hour. Multi-unit plants enjoyed a significant advantage, with costs averaging $39.44 per MWh, compared to $50.54 at single-unit plants. Average costs have grown steadily and outpaced inflation in the last decade. They increased from 39.69 per MWh in 2010 and 41.85 in 2011. Nonetheless, the NEI was quick to point out that among capital costs, more than half of the expense in 2012 went to power uprates and license renewals that add value to the plants.

Competition

Three reactors closed last year at San Onofre and Crystal River because of costly mechanical problems. But a fourth reactor at Kewaunee was closed solely for market reasons, as will the Vermont Yankee at the end of this year. According to the Energy Information Administration, natural gas prices reached a monthly low for 2013 in August at $4.03 per thousand cubic feet. Last year's prices were well above 2012's low of $2.81 but still made natural gas generation a cheaper alternative to some single-unit nuclear plants. By NEI's estimates, a new combined-cycle gas plant can generate power at $50.10 per MWh when gas costs $4.

NEI CEO Marvin Fertel, though, argued that recent years' power pricing in unregulated markets did not factor in the long-term benefits of grid stability or the smaller carbon footprint nuclear plants offer.

“The decisions to close Kewaunee and Vermont Yankee were perfectly rational business decisions for the companies operating the plants in those markets. But from society’s point of view, these were not rational decisions,” Fertel said in prepared remarks.

“There was nothing wrong with these plants. There is something wrong with the design and operation of the markets in which they are operating. They do not value base load capacity that can be dispatched when needed, do not provide value for fuel and technology diversity, and do not recognize the other attributes of a nuclear power plant.”

Investment

Elsewhere in the industry, though, things are looking up. Leaders from Southern Co. and South Carolina Electric & Gas also joined the event to summarize the progress they've made on new Westinghouse AP1000 reactors at Plant Vogtle and V.C. Summer in 2013. The following graphics illustrate some of that work:

(Plant Vogtle)

Vogtle construction slides. Source: NEI

Vogtle construction slides. Source: NEI

(V.C. Summer)

V.C. Summer construction slides. Source: NEI

V.C. Summer construction slides. Source: NEI

V.C. Summer construction slides. Source: NEI

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  • Anonymous
    Anonymous

    Sir:

    Total foolishness to shut down two reactors  at San Onofre here in San Diego..

    Want to see my analysis of  this industry?    {email redacted}

  • Anonymous
    Anonymous

    Is the nuclear industry buckling under the higher cost and the competition of alternate sources?

  • Anonymous
    Anonymous

    California will live to regret shuttering San Onofre...sometimes Green is just plain dumb.

  • From Anonymous: "Is the nuclear industry buckling under the higher cost and the competition of alternate sources?"

    The short answer is "no."  Even with the recent closures, nuclear plants still provide nearly a fifth of the country's power. Utilities are still making major investments in equipment and uprates at reactors across the country with the intent to extend the life of the existing fleet for another 20-plus years. That said, there are markets in the Midwest where it just doesn't make sense to keep a single-unit plant online when gas has been dipping below $3 and regulations surrounding the use of wind generation distort the market for electricity and put nuclear at a disadvantage. That will be the reality in some parts of the country for the foreseeable future, and some plant owners have warned of additional closures if conditions do not change. Even so, those plants represent a fraction of the generating capacity from nuclear in the country, and another 5,000 megawatts will come online at Vogtle, Summer and Watts Bar in the next few years. Will nuclear's share of the pie grow beyond that? I'll leave projections of the future to the analysts. Gas is a volatile commodity and won't stay cheap forever. Renewables are progressing rapidly but still have a third the capacity factor of nuclear and few ways to store excess generation. What we do know is that the majority of existing U.S. reactors are preparing to continue operating for many years to come.

    Thanks for reading,

    Peter

    Nuclear Street News Team