About 30 years ago, following the Three Mile Island partial nuclear meltdown in Pennsylvania, there were many Americans who wanted to throw out the baby with the bathwater and get rid of nuclear power completely. Using coal and oil to produce electricity was considered safer and more reliable by proponents of such action.
There is still fear today among some people who believe that the nuclear baby, which was never completely abandoned, is a danger to our way of life. That concern, mostly dormant for nearly three decades, has risen once again, and Texas is right in the center of it.
This week, NRG Energy, a New Jersey-based electric power company and partner in the South Texas Project (STP), filed with the Nuclear Regulatory Commission (NRC) a full application to construct two new nuclear reactors at its existing two-unit plant near Bay City. This is the first attempt to build such facilities in the US since the 1979 meltdown incident in Pennsylvania.
The idea of nuclear operations often brings to mind the billions of dollars spent in various states during the 1970s due to cost overruns, construction delays, burdensome federal regulations, and significant public opposition. Such handicaps are not expected now, primarily because of new technology, today’s regulatory climate, and the fact that nuclear plants can produce electricity significantly more economically than gas-fired turbines.
Cost is on the minds of many industrial leaders as well as the typical consumer. In 2005, the average cost of nuclear-produced electricity across the US was 1.72 cents per kilowatt-hour (kWh). Over the same time period, the cost of electricity from coal-fired plants per kWh was 2.21 cents and 7.51 cents from natural gas plants.
The NRC expects to soon see a revival in nuclear electricity production with perhaps as many as 32 construction applications coming its way. The rush by electricity generating companies is due to recent federal tax incentives, along with growing concern about greenhouse gas emissions from coal, oil, and natural gas plants. Of course, the profit potential is also a highly motivational force.
To facilitate the process, the government is providing insurance to protect companies against possible regulatory hurdles that could prevent or delay construction. The first few companies to apply would also receive additional benefits. Moreover, the NRC has streamlined the application process by combining the construction and operating licenses.
The NRG Energy plan calls for the new units to join the power plants near Bay City in 2015. Work on the first unit could begin as early as the end of 2010; total costs for the new project is likely to range from $5.40 billion to $6.75 billion. The reactors would have a capacity of about 2,700 megawatts, approximately equal to that currently being provided by the units at the STP power plant in the Bay City area, which were completed in 1988 and 1989. Our firm analyzed the potential economic impact of this facility to the local area, and it was enormous.
The STP nuclear power plant is one of 33 two-unit plants in the US. There are also 31 single-reactor sites and two plants with three units each scattered across the country, for a total 103 nuclear power facilities. The megawatts of electricity produced by the STP, which has led the nation in production for three consecutive years, powers some two million homes in Austin, Corpus Christi, Houston, San Antonio, and surrounding areas. The proposed new units will approximately double the plant’s electricity-producing capacity.
Texas was picked as the home of the new reactors because of the growing demand for electricity, estimated at a rate of up to 3% (equal to approximately 1,500 megawatts) per year. The Energy Information Agency predicts the overall US requirement will expand by about 42% by 2030.
The Lone Star State also won the nod from NRG Energy because of the amount of space available and the strong transmission system in Texas. Furthermore, the STP had the lowest production cost in 2006 among all US nuclear power plants, about 1.36 cents per kWh. We need a more diverse fuel mix in Texas in order to reduce our dependence on natural gas (about three times the national average) and to lower overall power costs. Realistically, nuclear energy must ultimately be a larger part of the power equation (although it cannot happen fast enough to resolve immediate needs).
The application, of course, is certainly not a sure thing and will likely face opposition from environmental groups because of their concerns related to the safety of nuclear waste storage, among other matters (somewhat ironic given the fact that many of the same groups are decrying emissions from coal and gas-fired plants). Challenges of this kind, of course, have the potential to delay the development of the nuclear reactors and escalate the costs. Hopefully, over time, such fears can be allayed or resolved and thereby enable Texas to play an even more dominant leadership role in the evolving energy sector of the future.