Thirty years ago, in March 1979, a group of badly trained operators in the control room at Three Mile Island’s unit 2 confronted a minor malfunction. The problem, a simple pump shutdown, was quickly made worse by an instrument panel that failed to inform the operators about a stuck valve and by an alarm system that overloaded after the first malfunction. The operators botched an attempt to solve the rapidly escalating problem, allowing a small leak to drain most of the cooling water out of the $700 million reactor. In about two hours, they converted America’s newest nuclear plant, which had begun commercial operation just three months earlier, into a $1 billion liability.
The event at the reactor, near Harrisburg, PA, provoked near-panic, and although government reports said the maximum possible radiation exposure was too small to have much effect on human health, one major casualty was the outlook for the nuclear industry itself. The meltdown did not end the first round of nuclear construction in this country; 50 reactors already under construction were completed after the accident, and orders for new plants had effectively ceased anyway. (The last order for a nuclear plant that was actually built came in 1973.) But for years to come, it remained unthinkable to plan new reactors as part of the nation’s energy portfolio.
Given pressures to reduce carbon dioxide emissions from fossil-fuel power plants, however, construction of nuclear plants could be poised to begin anew. The technology has grown more reliable and more efficient. Reactors now run 90 percent of the hours in a year, compared with less than 60 percent in 1979, effectively cutting the capital cost of a kilowatt-hour by about a third. Meanwhile, other sources of power have started looking a lot worse. Congress seems likely to put some kind of price tag on carbon dioxide emissions, so the price of coal-produced electricity could rise by 30 to 50 percent. The price of natural gas is low right now but has been more volatile than the price of oil in the past few months as surging supplies and lackluster demand play leapfrog. Such volatility makes electric companies reluctant to rely heavily on gas.
All the same, the nuclear industry faces tremendous risks, though their nature has changed since 1979. As the possibility of an accident that panics or injures the neighbors has diminished, the likelihood has grown that even a properly functioning new reactor will be unable to pay for itself. And changes in the utility industry since 1979 mean that this time, the money a company wastes may be its own.
Whether new nuclear plants are a good bet economically depends on three factors, all now in flux. First is the cost of a new reactor. In 2005, a few would-be reactor builders said they could construct a facility generating 1.2 to 1.6 gigawatts for $2,000 per kilowatt of capacity. Now, they put the cost at $4,000 per kilowatt. Neither price includes interest charges accrued during construction, which could be substantial if the job takes more than the five years or so that the builders predict–or if interest rates rise, as they are expected to. The Electric Power Research Institute, a utility consortium based in Palo Alto, CA, recently put the capital cost of a new coal plant at under $3,000 per kilowatt and that of a natural-gas plant at $800 per kilowatt.
The second factor is uncertainty about possible future competitors. If 10 years from now wind or solar plants, or coal plants that capture their carbon emissions, are able to deliver vast amounts of cheap power, the market price of electricity will fall, and plant owners may never see enough revenue to meet their costs.
The third factor is uncertainty about the price of fossil fuels, particularly natural gas. In the last year, the fuel cost for a kilowatt-hour generated from natural gas has varied from about 2.3 cents to about 9 cents. If a federal cap-and-trade system or a tax on carbon dioxide emissions is instituted, that is likely to add 0.5 to 1.5 cents per kilowatt-hour. Add in 2 cents or more to recover the cost of building the plant, and the price of gas-fired power could make nuclear power look very attractive–or really overpriced.