Are the wheels falling off the nuclear renaissance?
There’s a lot of rethinking going on in the utility sector these days. Utilities once intent on building new nuclear plants are now scrapping those plans and focusing instead of refurbishing existing reactors. Last week Canadian nuclear operator Bruce Power announced it was withdrawing two new-build site licensing applications from the Canadian Nuclear Safety Commission. The company said it would concentrate resources instead on refurbishing several reactors at its site northwest of Toronto. Then Russia’s state nuclear company said it would cut back its new-build program by half. Exelon, the biggest nuclear owner and operator in the United States, has said it would halt all new-build efforts for at least three years (and possibly as much as 20) and instead move toward uprating the capacity of its existing 17 reactor units.
The common theme is simple: the economic downturn has reduced electricity demand and with it the need for new reactors. Utilities are also realizing that refurbishing/uprating units is cheaper than build anew. Exelon has said that uprating existing plants costs half as much as building new and carries far less risk. Investors, apparently, don’t like the risk involved with spending billions and billions of dollars on a 1o-year project when electricity demand is dropping, not climbing. As Murray Elston, a vice-president at Bruce Power told me, “We were not prepared for the decrease in electricity demand. I think it’s been a surprise to almost everyone.” And while you can argue that the downturn is a blip and that long term the power will be needed, it comes down to who’s paying the money. “We have to be prudent with our investors’ money and it makes us really refocus ourselves so we can be the best with the site we have.” Bruce Power has already been hit by the downturn because power coming from its existing fleet is often surplus and must be given away to balance the grid. This has affected the company’s cash flow and in some cases has forced it to temporarily shut down reactors to cope with the excess power supply.
China is forging ahead with its new nuke strategy, so the renaissance is taking off somewhere around the world — but not North America. Not yet, anyway. The hope is that renewables and conservation will have a chance to take root and show a meaningful contribution before electricity demand starts to pick up again. Maybe then, even in the face of an improving economy, we’ll realize that we can get by without building new nukes. Or maybe not. At least we’ve got two or three years to show what’s possible.