North America's 'Nuclear Renaissance' Grinds to Halt as Plant Development Projects Stalled, Cancelled

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Researched by Industrial Info Resources (Sugar Land, Texas)--Since January 2011, nuclear power plant owners and developers in North America have cancelled or placed on hold approximately $705 billion of capital construction or nuclear plant upgrades, additions and improvement projects, including $1.15 billion of plant uprate projects, according to Industrial Info's database.

As a result, the forthcoming and hoped-for nuclear renaissance has halted. Other nuclear reactors are being forced to close as well, due to unfavorable economics or mechanical issues. One example is the San Onofre Nuclear Generating Station, which closed following defects with the installation and operation of new steam generators. The San Onofre station is owned by Southern California Edison (SCE) (Rosemead, California), a subsidiary of Edison International (NYSE:EIX).

Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana) recently announced that the company will close the Vermont Yankee Nuclear Power Plant in Vernon, Vermont, by the end of 2014 due to sustained low power prices, a high-cost structure, and wholesale electricity market design flaws in the ISO New England Incorporated market area. This was announced less than a year after Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) said that it would close and decommission the Kewaunee nuclear power plant in Carlton, Wisconsin, after the company failed to find a buyer for the 556-megawatt facility. This also was attributed to the low wholesale electricity prices in the region.

Due to low power prices, restructured electricity markets in certain areas of the U.S. have failed to compensate nuclear power plant owners enough to keep their facilities open. The electricity markets also have not invested in new additions or major plant improvements that could not be passed on to the utility's customers before these major capital projects were completed--as was the case prior to deregulation, when state utility regulators compensated the companies for their investments.

The U.S. Nuclear Regulatory Commission (NRC) (Washington, D.C.) is on track to finish a new resolution on stored nuclear waste at each nuclear power plant. The ruling would allow the agency to lift its suspension on issuing new reactor licenses, contributing to the aforementioned nuclear capital projects being placed on hold or cancelled.

In Congress, the debate on proposed legislation to find a permanent repository for the nuclear waste continues, as legislators and the NRC debate whether to resume consideration of the proposed Yucca Mountain Nuclear Waste Repository license application.

Of the 24 applications filed in 2008 for nuclear power plants, only four have resulted in new construction. But the costs of construction have escalated so much that the remaining project licenses, which are still being processed by the NRC, most likely will remain on the shelf if approved. The economics of nuclear power will remain elusive, given the length of time it takes to license, engineer and construct a plant; the price of shale gas in the U.S. remaining near $4 to $5 for the foreseeable future; and demand for electricity growth remaining flat.

New, lower-cost, natural gas-fired power plants under construction in North America, as well as additional renewable wind and solar power projects, will increase the pressure on nuclear power plant capital projects in the near term. These developments will be followed closely by Industrial Info.

For more information, see August 5, 2013, article - Duke Cancels Levy Nuclear Project after Delaying Harris Nuclear Project, and July 9, 2013, article - U.S. Nuclear Renaissance Now Further Away and More Expensive.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.