The plant cost taxpayers $2.6 billion, but instead of churning out nuclear fuel, it may now become an archive or one of the world's largest greenhouses.

Eight years after breaking ground here for a uranium-enrichment plant, the Energy Department announced two weeks ago that it had decided not to complete the half-finished facility. In addition to the loss of the government's investment, more than 2,000 jobs will vanish in already-depressed areas of Ohio and Tennessee.

As Energy Secretary John S. Herrington put it last week, "There comes a time to make tough business decisions and this is one of those times."

Among recent financial disasters in the nuclear industry, the Portsmouth plant ranks high. By comparison, the government spent only half as much on the controversial Clinch River breeder reactor in Tennessee before the project was killed by Congress in 1983.

The story of the Portsmouth plant -- whose technology is still far enough ahead of the field that it is classified -- began at a time of markedly different economic and market conditions.

Worldwide demand for enriched uranium -- for electricity generation, submarine propulsion and weapons -- was rising so rapidly in the mid-1970s that the United States could no longer guarantee deliveries, even though the three production sites -- aging plants at Oak Ridge, Tenn., Paducah, Ky., and another facility in Portsmouth -- were operating around the clock at full capacity.

Not only was the new plant supposed to help meet the demand, its uranium would be priced so low that the United States could dominate the market. Revenues to the Treasury were expected to grow from about $1 billion in 1976 to between $4 billion and $5 billion by 1985.

But none of the forecasts panned out.

Instead, worldwide demand for enriched uranium to generate electricity is only one-sixth of what was predicted. And at this time, uranium is not being enriched for use in weapons.

The Europeans entered the market, cut prices, and captured 36 percent of sales. At the same time, the old-tech plants that once appeared to be on the verge of obsolescence began enriching uranium at a price 25 percent lower than before.

"Back in the '70s, we were dedicated to high tech at the same time that we thought the market for enriched uranium was endless," John R. Longenecker, DOE's deputy assistant secretary for uranium enrichment, said in an interview. "We were wrong. Oh, were we wrong."

Herrington's decision to halt construction of the Portsmouth plant and close the Oak Ridge plant, the department's oldest, was anything but popular. The decision will eliminate 450 jobs in Portsmouth and 500 in Oak Ridge. By next February, a total of 1,130 jobs will also be lost at Garrett Corp. in Sandusky, Ohio, 400 at Goodyear Aerospace Corp. in Akron and 530 at Boeing Co. in Oak Ridge when their contracts to make centrifuges for the Portsmouth plant expire.

Goodyear Aerospace officials had scheduled a meeting with the Ohio congressional delegation last week to discuss a strategy for trying to reverse the DOE decision. But after meeting with Herrington the day before, Goodyear President Robert E. Clark called off the session.

"We are working with the Department of Energy towards an orderly closeout of our production," Clark said, "even though we are deeply shocked at the prospect of the impact on our 400 employes."

The DOE decision will, however, be the subject of hearings today by the House Science and Technology subcommittee on energy research and production, whose chairman, Rep. Marilyn Lloyd (D-Tenn.), represents the Oak Ridge area.

"The market for uranium has gone to pieces," said Rep. John F. Seiberling (D-Ohio), whose district includes Goodyear's Akron plant. "But what bothers me is that you'd think the Department of Energy would close out their least-efficient plants first and keep going with their most efficient plant, which I always understood was the gas centrifuge plant being built at Portsmouth."

The DOE insists that is no longer the case. When construction began in 1977 on the Portsmouth plant, the cost of running plants like the one at Oak Ridge, which enrich uranium through diffusion, a sort of endless filtration process, was 30 percent more than the estimated cost of running the new centrifuge plant.

"The gas diffusion plants were developed with the idea that they were already obsolete 30 years ago and would be eliminated by gas centrifuge," Energy's Longenecker said. "That became a mindset and nobody ever bothered to try to bring diffusion costs down until we actually announced we were going ahead with centrifuge. All of a sudden, people began finding ways of cutting costs on diffusion."

At least 80 percent of the cost of enriching uranium by gaseous diffusion goes for electricity, which DOE predicted in 1979 would increase at least 3 percent every year until the turn of the century. Instead, electric rates peaked in 1982 and have since declined steadily.

Managers of the diffusion plants found other ways to cut costs. They used to run the plants continuously at top speed, figuring that they would lose efficiency if the plant slowed down. But engineers eventually discovered they could vary power levels without sacrificing efficiency.

At the same time, plant managers began buying electric power at prices lower than the Tennessee Valley Authority was charging. At the gaseous diffusion plant in Portsmouth, for instance, they negotiated a contract with Ohio Valley Electric to buy off-peak power at half the price they would have paid for electricity from the TVA.

Even as gaseous diffusion costs came down, a new enrichment technology more promising than the centrifuge was being developed at California's Lawrence Livermore Laboratory, whose main job is developing nuclear weapons.

The process uses heat to vaporize raw uranium, then shines laser light at a precise frequency into a chamber housing the vapor. The laser gives atoms of the U-235 uranium isotope a negative charge, and then postively charged plates in the chamber attract the U-235 atoms, leaving the rest behind.

Though not yet proved, the classified laser technology has made dramatic strides. "We went from an open field at Livermore to a laser facility that operated at half-scale in a single year," Longenecker said. "We pushed two tons of uranium through that facility and ran those lasers for thousands of hours. We want the best technology there is for the future, and we fully believe that is the laser technology."

And that leaves the gas centrifuge out in the cold, even though it may now be the best technology of its kind in the world. The 3,000 centrifuges that DOE contracted for here will probably have to be mothballed, because they have no other use but to enrich uranium.

The three huge buildings that were to house the centrifuges may be another matter. Even now, DOE brainstormers are trying to come up with alternative uses for them.

One suggestion was to use the buildings as a federal prison, since they were designed for maximum security. That idea stayed alive only until someone wondered what would happen if the prisoners broke out and captured the neighboring gaseous diffusion plant, where all the nation's weapons-grade uranium is produced.

Another idea is to turn the buildings into giant warehouses where the government's rising tide of classified documents could be stored.

Still another is to convert them into greenhouses, an idea plant manager William F. Manning explored the other day in a speech to the Pike County Chamber of Commerce in nearby Waverly.

"We might be able to grow things in there under fluorescent lights or cut skylights in the roofs or maybe even grow mushrooms," Manning said, but without much conviction.

People still ask Manning if there's a way to reverse the DOE's decision.

"Being a nuke, I'm biased," Manning told the Chamber of Commerce. "I believe nuclear power will make a comeback because there just aren't any other decent alternatives. Sooner or later, we're going to have to build new nuclear power plants and that's going to mean more enrichment capacity."

But later, Manning told a visiting reporter he saw no hope for a centrifuge plant in Portsmouth. "This project is dead," he said. "It's dead, it's over, it's kaput."