Nuclear Power Primed for Comeback

Designed for a variety of "innovative new energy technologies," the loan guarantee program was initially limited to $2 billion, less than the cost of a single reactor. The nuclear industry has been lobbying Congress to expand it to $50 billion or more. A Senate appropriations bill would remove the ceiling altogether.

The guarantees and subsidies may be too small for would-be nuclear plant builders, but they're too big for many budget experts.

"I don't take the position that there should be no nuclear power, but I believe that the price of the energy they produce should be reflective of their actual cost structure and they should not be shifting their risk of cost overruns and poor performance to us, the taxpayers," said Doug Koplow, a Cambridge, Mass., researcher whose Earth Track consultancy monitors government energy subsidies.

Many environmental groups, torn between concern about climate and long-standing antipathy toward nuclear power, are seizing on the cost issue. "We're not an anti-nuclear group," says Jeremy Symons, executive director of the global warming program at the National Wildlife Federation. "But it doesn't make sense for the government to be investing in nuclear when the money could be put into renewables and energy efficiency."

A study by a Keystone Center group -- which included academics, investment bankers and nuclear industry experts -- said that when capital costs are included, the price of nuclear power is 8 to 11 cents a kilowatt hour, about the same as natural gas. If Congress adopts a carbon tax or pricing scheme to curb greenhouse gases, it could give nuclear an edge.

Even with government incentives, many utility executives are cautious about building new nuclear plants. James K. Asselstine, a former managing director and utility analyst at Lehman Brothers and a former member of the U.S. Nuclear Regulatory Commission, said that while companies must apply for licenses by the end of 2008 to qualify for federal subsidies, they can decide later whether to proceed after learning more about climate-related legislation, construction costs, competing technologies and electricity demand. "There are a lot of moving pieces," he said.

James E. Rogers, chief executive of Duke Energy, said a new nuclear power plant would cost as much as a quarter of his company's value on the stock market. In his first top executive stint, at PSI Energy, he spent much of his time cleaning up the financial fallout from an abandoned nuclear project that cost that company $2.7 billion. That's why he says that in this wave of new plants, Duke Energy won't be "the first person on the beach."

"Having started my career fixing a company that was almost knocked out of the game because of its investment in nuclear and the change in public opinion . . . I'm very optimistic about the role nuclear can play in the future, but I'm cautiously optimistic," Rogers said.

For President Bush, getting new nuclear plants built has been a priority since his first months in office. "America should also expand a clean and unlimited source of energy: nuclear power," Bush said in May 2001. In a Gallup poll in March 2007, 53 percent of Americans surveyed favored the use of nuclear energy, little changed from the 57 percent who favored it when Gallup first asked the question in 1994.

There are 104 nuclear plants operating in 31 states now, and they provide about 20 percent of the nation's electricity. France, in contrast, relies on nuclear energy for 80 percent of its electricity. But no new U.S. plant has been completed since 1996. (The Tennessee Valley Authority this year reopened one it had closed in 1985.)

With plant construction frozen, U.S. nuclear facilities have boosted output by becoming more efficient. Utilization rates that once lagged around 70 percent now routinely exceed 90 percent. But proponents of nuclear power say that with electricity use rising, the country needs to build 30 or so more plants by 2025 for nuclear to provide the same share of the country's power.

Scientists studying climate change have tossed around even more ambitious figures. To solve one-seventh of the global greenhouse gas problem, Princeton University professors Robert Socolow and Stephen Pacala estimate that the world would need to triple current nuclear capacity. The U.S. share of that expansion (including replacement of aging plants) would require building about five nuclear reactors a year for 50 years.