• 7 hours OPEC, Russia Said To Announce Oil Pact Extension On Nov 30
  • 10 hours Wintershall And LetterOne In Talks For $12B Oil, Gas Merger
  • 12 hours India Exempts State Oil Firms Mergers From Competition Approval
  • 14 hours Turkey Targets $5B Investment In Wind Energy By End-2017
  • 16 hours Weatherford Looks To Sell Assets To Ease Some Of $8B Debt
  • 17 hours OPEC Set To Move Fast On Cut Extension Decision
  • 19 hours Nigeria Makes First Step Away From Oil
  • 1 day Russia Approves Profit-Based Oil Tax For 2019
  • 1 day French Strike Disrupts Exxon And Total’s Oil Product Shipments
  • 2 days Kurdistan’s Oil Exports Still Below Pre-Conflict Levels
  • 2 days Oil Production Cuts Taking A Toll On Russia’s Economy
  • 2 days Aramco In Talks With Chinese Petrochemical Producers
  • 2 days Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 2 days Maduro Names Chavez’ Cousin As Citgo Boss
  • 2 days Bidding Action Heats Up In UK’s Continental Shelf
  • 2 days Keystone Pipeline Restart Still Unknown
  • 2 days UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 3 days Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 3 days Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 3 days German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 3 days Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 3 days Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 4 days Oil Prices Rise After API Reports Major Crude Draw
  • 4 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 4 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 4 days Statoil Looks To Lighter Oil To Boost Profitability
  • 4 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 4 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 4 days Whitefish Energy Suspends Work In Puerto Rico
  • 4 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 4 days Thanksgiving Gas Prices At 3-Year High
  • 4 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 5 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 5 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 5 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 5 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 5 days ConocoPhillips Sets Price Ceiling For New Projects
  • 7 days Shell Oil Trading Head Steps Down After 29 Years
  • 7 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 8 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
Alt Text

Is Infinite Clean Energy Near?

The dream of creating a…

Alt Text

New Tech Is Transforming Japan’s Energy Sector

The tech that built bitcoin…

Alt Text

Russia’s Nuclear Sector Is Surging

With a long-standing nuclear tradition,…

Gloria Gonzalez

Gloria Gonzalez

Gloria is a writer for Environmental Finance.Environmental Finance is the leading global publication covering the ever-increasing impact of environmental issues on the lending, insurance, investment…

More Info

Low Natural Gas Prices Make Nuclear Power a Losing Investment

Low Natural Gas Prices Make Nuclear Power a Losing Investment

Low natural gas prices have thwarted investment in nuclear generators in the US and federal loan guarantees will not help nuclear power reach parity, experts said.

Even before the accident at the Fukushima nuclear plant in Japan, nuclear power was seen as a losing investment, with cost estimates continuing to rise while the price of other energy sources fell, said Peter Bradford, former member of the US Nuclear Regulatory Commission and adjunct professor at Vermont Law School.

“Wall Street rating agencies were uniformly sceptical,” he said.

Last year, utility Constellation Energy abandoned plans to add another nuclear generator to its Calvert Cliffs facility in Maryland. Exelon, which plans to merge with Constellation, withdrew plans for a nuclear expansion in Texas after reviewing its low-carbon options and finding nuclear to be more expensive than its other choices.

“Industry spokespeople will use Fukushima to obscure the fact that new nuclear has been priced out of the market in the US for many years,” Bradford said. “Under these circumstances, adding additional exposure to American taxpayers in the form of nuclear loan guarantees now being proposed in Congress can’t be justified.”

Likely influenced by the nuclear accident, a March survey by the Civil Society Institute found that 73% of US residents do not want loan guarantees for nuclear plants.

“While I know the Senate is very much pro-nuclear, I’m not certain the kind of subsidies that nuclear power needs are going to last very long,” said S. David Freeman, former head of the Tennessee Valley Authority and the Sacramento Municipal Utility District.

Nuclear more expensive than coal, gas – Jeffries

The cost of building a nuclear plant varies from $4,500 per kW, as estimated by NRG for its cancelled project in Texas, to $6,350/kW estimated by Southern Company for its Vogtle project in Georgia, said Paul Fremont, managing director of equity research at investment banking group Jefferies. Nuclear represents the highest cost option to construct compared to traditional technologies such as coal, at an estimated cost of $2,000-$3,000/kW, and gas combined cycle units at $950/kW.

The best economic alternative is to build gas-fired generators based on forward prices ranging from $4.40 per thousand cubic feet (Mcf) in 2011 to $6.00/Mcf in 2015, according to a Jefferies analysis. Absent US government subsidies, gas prices would need to be $8.50/Mcf or higher to earn reasonable (10%) returns on a new nuclear plant. But even with government support such as loan guarantees and production tax credits, gas prices would need to be $6.66/Mcf to earn a 10% return.

“Based on where gas prices are today, it’s unlikely that you will see new investment in nuclear beyond projects that are currently on the drawing board,” Fremont said.

The Vogtle project is the only one out of the few nuclear projects in the US pipeline that seems to be moving forward and it is being built with agreements with state regulators that will allow Southern Company the opportunity to recover the cost of its investment, plus a return on investment, in the price of electricity, he noted.

“It takes close to a monopoly police state and subsidy for a nuclear plant to even be considered,” Freeman said.

More wind and solar facilities have been built in the US in the last three years than coal, while no nuclear plants have been built for 30 years, and state-level renewable portfolio standards will require 73GW of extra renewable capacity between now and 2020, he noted.

“The renewable resources are getting cheaper every year and the revolution is underway in 29 states that have enacted mandates,” Freeman said. “Anyone counting on a renaissance in nuclear power is betting on yesterday rather than tomorrow.”

By. Gloria Gonzalez

Source: Environmental-Finance




Back to homepage


Leave a comment
  • Anonymous on June 15 2011 said:
    Natural gas is ok, and I'm all for it. But much of our NG comes from hydraulic fracturing, or fracking. What will happen if Mother Nature creates a showstopper issue? Will the same people who for years have proclaimed that ANYTHING is between nucler power, and who proclaim this more passionately than ever given the Fukushima disaster, demand an end to hydraulic fracturing?
  • Anonymous on June 15 2011 said:
    What I would like to do is say that this article is nonsense, but actually it provides some important information. What it tells me is that where economic theory is concerned, most people are even more ignorant than they are when dealing with the nuclear fuel cycle.Of course, the main problem is that it doesn't pay to tell the truth any longer. Angela Merkel has a degree in physics, and so in theory she should understand that nuclear cannot be replaced with wind and solar, but she chooses not to understand. It is more difficult to comprehend why gas cannot replace nuclear for Germany, but she might get the message if she looked like Marlene Dietrich or Romy Schneide. However her future is politics and not Hollywood, and so she has to play dumb.
  • Anonymous on June 15 2011 said:
    Actually I meant "better than", not "between"**Alex puts on a dunce cap and stands in the corner**

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News