The online version of the WSJ article omits the graphic from the dead-tree version. The graphic shows the spent fuel being stored inside the reactor containment structure. Very tidy. It also shows multiple small reactors on one site. That would allow security and storage problems to be shared costs. I would guess that there are plenty of brownfield sites and abandoned strip mines that could be turned into reactor parks.

I talked to the Governor of Ohio about the idea because it would be a good fit for the counties along the Ohio River which have such sites, plenty of water, a desperate need for an economic base, and a location close to the junction of major interconnects. he was quite receptive as he comes from one of those counties.

It should also be pointed out that Babcox is not an amateur. They build the reactors for the USN’s ships.

Glad to see the Texas project continue but I will need to research the financial status of the players more. While the city of San Antonio had issues at least they had the theoretical capacity to finance a lot of the deal (and Austin, but they are gone too). You remove the immediate problem but then you create another potential issue.

So CPS gets a stake it values at $1 billion for a net investment of $290 million. Plus it get $40 million for goodies for “residential customer assistance program” which I read as vote buying for the city council.

Of course, CPS had right of first refusal for any STP site generation additions, including water rights.

Having Tokyo Electric Power (TEPCO) as a co-owner is very valuable to the project since they experienced operators of ABWRs and have much technical and operational information.

Above I mentioned that “One way of solving the quick problem is to use smaller units manufactured offsite.”

There is a front page article on that precise subject:

“Small Reactors Generate Big Hopes” by Rebecca Smith:

“A new type of nuclear reactor—smaller than a rail car and one tenth the cost of a big plant—is emerging as a contender to reshape the nation’s resurgent nuclear power industry.

Three big utilities, Tennessee Valley Authority, First Energy Corp. and Oglethorpe Power Corp., on Wednesday signed an agreement with McDermott International Inc.’s Babcock & Wilcox subsidiary, committing to get the new reactor approved for commercial use in the U.S.”

“NRG, Texas Utility End Project Dispute” by Cassandra Sweet:

“A nuclear-power venture owned by NRG Energy Inc., Toshiba Corp. and a Texas utility resolved a legal dispute Wednesday that allows one of the first new U.S. nuclear-power projects in decades to proceed. The agreement, between the joint venture, Nuclear Innovation North America, and San Antonio municipal utility CPS Energy, reduces the utility’s stake in the south Texas nuclear power project to 7.6%, from 50%, with the joint venture retaining 92.4%, according to CPS and NRG. The agreement ends a $32 billion lawsuit that CPS filed in December to reduce its participation in the project, and allows development of the plant to proceed, the companies said.

* * *

The agreement also resolves ownership issues that might have held up an application the companies filed for federal loan guarantees, said NRG spokesman Dave Knox. If the companies get the federal loan guarantees, NINA, which is 88%-owned by NRG and 12%-owned by Toshiba, has agreed to pay CPS $80 million and donate $10 million over four years to its residential customer assistance program. CPS said its remaining stake in the project is worth about $1 billion. The agreement requires CPS to help with the project’s loan guarantee application, but excuses the utility from spending more money on the project. The utility has said it has spent about $370 million on the project’s engineering and permitting.

* * *

“The project, estimated to cost between $9 billion and $12 billion, would add two new nuclear power units to an existing nuclear reactor, expanding the facility by 2,700 megawatts, enough power for more than 2 million homes.

* * *

“The two sides agreed before the dispute to each sell a 10% stake in the project, but uncertainty around CPS’s involvement has stymied these efforts. Tokyo Electric Power Co. said last month it’s considering purchasing a stake in the project and remains interested.”

It strikes me that the risk can be mitigated or transferred by long term contracts, such as “take or pay”, between generators and distributors. IIRC, one of the pushes for the separation between generation and distribution was that nuclear was not being well managed by the run-of-mine local integrated utility, and that having nuclear plants run by specialists like Exelon resulted in safer more efficient operation. As it happened that was true, as is evidenced by the increased out put of the limited number of nuclear generators over the past 30 years.

I agree about how deregulation changed the risk/reward issues for builders of new generation. In fact I did an article about it in 2003 here:

http://www.energypulse.net/centers/article/article_display.cfm?a_id=214

Since then a few things have changed but the market structure and its problems remain. For nuclear a very bad consequence was the required rate of return on equity, as you point out. If a regulated utility needed 10% for given market conditions, an independent power producer would need 15%. For a highly capital intensive but low O&M cost technology, this was a competitive disadvantage for nuclear.

I would also share the news about the first announced load guarantee (disclaimer – my employer will supply the reactors)

http://www.marketwatch.com/story/nei-congratulates-energy-dept-southern-co-on-issuance-of-conditional-loan-guarantee-2010-02-16?reflink=MW_news_stmp

While this is nice to see, it points out a danger. It turns every potential nuclear power plant builder into a sweet-lipped suckup to any politician with some pull on who gets the guarantees and when. That’s what’s scary about Exelon – it has deep connections with Obama personally, through Bill Ayers and through Chicago politics. While they do a good job technically, within the industry they are known for being hardasses commercially.

As to the NRG balance sheet strength, that was a major point in their proxy battle. They made the claim to their shareholders that NRG’s credit rating and debit/equity ratios were superior to Exelon’s and that swapping NRG stock for Exelon stock would dilute the NRG stockholders interest to the advantage of the Exelon stockholder. Apparently, the NRG stockholders agreed and the hostile takeover failed.

Rather than speak in general terms I am going to link to a lot of the analyst presentations in a future post and then people can investigate these items on their own.

It is a lot easier nowadays to get financial and business information because these companies have to keep their investors informed so they put up cost estimates, regulatory impact, and everything else.

- In general the fact that Exelon wouldn’t over pay for NRG doesn’t mean that NRG has a stronger balance sheet. Likely Exelon will wait their time and see how cap and trade and other items play out and make an offer later if NRG falters. But Exelon won’t overpay and dilute their existing shareholders. Of course this could all change if management at either company turns over because there likely are a lot of synergies if you take out the management “noise”
- The entire point of this thread, and all my threads, is that the idea that the nation will be awash in nuclear power plants being built is completely nuts. The guys from the government probably think so, because everyone is filing permits and documents for their share of guarantees, SHOULD THEY DECIDE TO GO FORWARD, but as NRG’s experience is showing, it is no cake walk to get even ONE of these built. Utilities probably view these permits as an “option” to build.
- I do hope that the US makes some headway and builds even 1-2 of these next generation nukes. God bless anyone on the front lines to make this happen
- But there isn’t money nor financing to do more than a couple of them, and NRG’s presentation to analysts shows how this can be a big negative overhang on a stock. It isn’t so much the debt, which can be raised, but the EQUITY component that is difficult – if you raise $7B in debt and put up $2B in equity capital (a lot for utilities in the US), even a 25% cost over run essentially wipes out your equity investment and enrages shareholders
- The real issue is the broken regulatory and financial model that the US runs for power generation. We decoupled the generation side from transmission and distribution. The distribution guys need power, and the power guys have the risk. But the power guys make big $ off their existing assets if there is scarcity, since they are competing against themselves. The reason that Georgia can build something is that they retained their “vertically” integrated model. Georgia always had a unique regulatory structure. As you are finding in Texas the way they “de regulated” (in quotes because just regulated differently) is also making generators skittish about big investments. Ultimately why should they care if the distribution side is strangled?

I was also watching C-Span one day and there was a hearing about energy production and the person representing the nuclear power industry said that there are going to be 13 new plants starting construction in 2011.

The loan guarantees do not guarantee against technical risk. They only cover subsequent GOVERNMENT actions. In the last batch, investors lost billions due to capricous government actions either to delay or prevent startup. Once the NRC issues a “combined operating license” (COL) per 10CFR52, the guarantee is to kick in so that no county government or state agency (or feds) can block construction and completion. When a number is given on the amount of loan guarantees, that is NOT the money that has to be spent. It is merely the exposure of default. Each applicant for a guarantee has to pay an upfront fee like an insurance premium to the government based on the expected risk of default. Basically, the federal government is acting as an insurance company, collecting premiums and covering specific risks.

THAT’S ALL WE NEED! Get government and politics out of the way and we can build and run new nuclear power plants in the country.

As to South Texas Project units 3 and 4, I think there is some skulldrudgery going on with the San Antonio City Council – encouraged by either anti-nuclear folks or Exelon. The latter tried to buy NRG on the cheap but was rebuffed after proposing a competing plant (Victoria) near STP site. The court issue now is how much extortion money San Antonio can extract to cut back on their investment so far. During the hostile takeover attempt, it was clear that NRG had a stronger balance sheet than did Exelon, the nation’s largest operator of nukes. As San Antonio withdraws, Tokyo Electric Power Company (TEPCO) is eager to step in with a minority ownership stake. Note that TEPCO already owns and operates a pair of ABWRs in Japan.

The technical and commercial base for nuclear power has intensely globalized over the last few decades. Multinational companies have entered joint ventures to share design and procurement expertise and for financing. The stickler remains local politics.

As to lack of investment, I would note that Florida Power and Light has already sunk $750 million into its Levy County nuclear project, according to its Florida Public Service Commission filings. NRG and San Antonio have almost that much sunk too.

As to Secretary Chu and the Department of Energy, the White House put in their own guy to run the loan guarantee programs, both nuclear and “clean.” So Chu is NOT calling the shots within his own department – the word comes down from Obama. Remember that when you hear him whining to Congress.

Imagine trying to build a house when anyone in the state and possibly the entire nation could file suit and stop construction at random intervals or even terminate the project completely. Now, imagine going to the bank to get a mortgage for the house when you can’t tell the bank how long it will take to complete the project, whether the final house will look anything like the initial plans or if the house will ever be finished at all.

While you are correct in asserting that fuel rods can be usefully reprocessed, materials other than fuel rods that are exposed to radiation are made radioactive and must be stored on-site or placed in a remote storage location. To my knowledge, the only off-site storage is the Shippingsport, PA reactor components which are now stored at the Hanford reservation in Washington state. This is also the place where the reactors of all retired nuclear subs reactor sections are buried.

When I was out at Hanford many years ago, I was listening to discussions about how we could copy France’s methods for waste storage particularly glassification of liquid waste. Does anyone know of the status of such efforts?

Adressing the finance issues:

If Japan and France can finance reactors, can we copy their methods of financing them with suitable modifications for US financial markets?

One way of solving the quick problem is to use smaller units manufactured offsite. E.G. Babcox and Wilcox, proposes self contained reactors producing 100 — 250 MWe. The site would be prepared, the reactor could then manufactured in a factory and brought in by train or barge. Once at the site the reactor could be hooked up to the system and started up quickly.

This approach would limit some of the tremendous construction period interest that has burdened nuclear power.

Of course you still need to deal with my first comment.

Jimmy Carter, among the many disastrous decisions he made during his reign of error, decided that the US should not reprocess. He was afraid that somebody would divert the materials into bomb manufacture. So he forked the effort to build a reprocessing facility in upstate New York.

Incidentally, proliferation is also a non-issue as well.

I don’t have a benchmark for the new nuclear reactor costs. There are 5 designs and it depends on which one is chosen. I will try to research this at some point. If you read that PDF I linked to in the post from 2007 department of energy research there is a lot of relevant info.

As far as “separate from regulatory cost”, from my perspective the whole issue is moot. We simply aren’t building ANY new nuclear or coal plants anywhere in the US, except for a few stragglers, far less than what is coming off line due to age. Thus there isn’t much point in comparing costs. In the future there are really a few options:

1) how long can you keep the old nuclear plants running? Ideally you’d want to run them forever, because once you shut them down you not only lose the low incremental (busbar) cost power, you have to pay to decom them and remember due to lack of storage at Yucca you just created a permanent nuclear site that has to be maintained

2) how long can you keep the coal plants running economically? The EPA keeps attacking coal plants with more and more burdens for scrubbers and other control equipment. At some point you just stop throwing money at them and to hell with the grid and reliability

3) what does it cost to build a new gas peaking plant? Just build those. Sure you are hostage to the price of gas but it seems to be going lower and you can actually site one of those plants (although this will be a bit harder after the New England explosion)

4) or more likely, do nothing except a smattering of near-useless politically correct wind and solar projects. If the grid falls over, who cares, it did in California and that still wasn’t enough to wake them up for the need for new generation

5) continue to dream about new transmission – even if you managed (by a miracle) to get something built, it better be right next to existing transmission lines (ever wonder why the 2 nuclear projects under way, the NRG project in Texas and the proposed Southern company project are at the same sites with existing nuclear reactors, built 20-25 years ago), or you can’t use it anyways

Basically the cost of NEW plants is irrelevant because, except for a few “trophy” projects, nothing is happening. The regulatory cost is infinite because of a broken regulatory method and also insane legal costs and unknown barriers from NIMBY’s, you can’t do anything.

No one is doing anything significant. We aren’t even going to get to a “net zero” replacement level on the 102 nuclear plants, much less the coal plants which will fall away faster.

Would you have an estimate for the fraction of $8-10B per plant that is extenal regulatory cost, and what fraction is land, materials, and labor to actually build a nuclear plant? Say, some French design that has already been built?

Also, what is the operating cost/megawatt for nuclear and coal, again if possible, separated from regulatory costs?