POWER April 2016 - 82

NUCLEAR POWER
The Global Nuclear Power Industry
Faces Localized Outlooks
Recent developments in nuclear power reveal a common theme: Uncertainty
and unpredictability prevail. Many different nuclear industries are developing
within and among the nations of the world, all with differing
prospects.
Kennedy Maize
S
hamelessly adapting the great British
novelist Charles Dickens, for the
global nuclear industry, it is the best of
times, it is the worst of times; it is the age of
wisdom, it is the age of foolishness; it is the
epoch of belief, it is the epoch of incredulity;
it is the season of light, it is the season
of darkness; it is the spring of hope, it is the
winter of despair.
Globally, the nuclear power business often
seems befuddling, head-scratching, mindnumbing.
It's up, it's down, it's all around.
Atomic energy today is not a tale of one or
two more or less coherent industries, but
of multiple sellers and multiple buyers and
multiple sources of finance in various countries,
with markets ranging from freely competitive
to private monopolies to state-owned
and often state-run enterprises. All these are
sometimes intertwined.
Business Model Matters for the
U.S. Nuclear Industry
Let's start with the U.S., the largest nuclear
energy producer in the world, and a tale of
two markets (although the federal government's
Tennessee Valley Authority has a
third position). Some U.S. nuclear power
plants compete in wholesale markets, now
serving about half of the U.S. population.
These nuclear plants bid their power into
auctions against coal, gas, and renewables
for the privilege to supply power and be paid
for the work.
That market isn't working well for the
nukes. Witness Entergy (see " Entergy Sheds
Uneconomic Merchant Nuclear Plants to
Focus on Regulated Business " in this issue
or online at powermag.com), which made a
major foray into merchant nuclear plants in
the 1990s, only to see the economics undercut
by low-cost gas and subsidized renewables,
mostly wind. As the annual Platts
nuclear energy conference in Washington
was under way in February, New Orleans-
based Entergy Corp. reported it had gone
from $971 million in profits for 2014 to a
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POWER | April 2016
stunning loss of $177 million in 2015.
Entergy's red ink bloodbath was due to its
inability to sell power from nuclear plants in
competitive markets in New York and New
England. The company announced in late
2015 that it would close the Pilgrim nuclear
plant in Massachusetts and the FitzPatrick
plant in upstate New York. Entergy will close
Pilgrim in mid-2019 and FitzPatrick in mid2017.
Entergy shut down its Vermont Yankee
plant at the end of 2014.
Discussing the company's decision to shutter
two more nuclear plants, Entergy CEO
Leo Denault said, " Closing Pilgrim and FitzPatrick
was not the path we wanted to take.
After pursuing many alternatives, they ultimately
were the only options remaining for
us. " In contrast, Entergy's five nuclear units
in regulated monopoly markets in the middle
south are doing quite well financially.
A flip side is Southern Company, eschewing
competitive markets, hewing to stateregulated
cost-of-service rates for its nuclear
units. Southern utility Georgia Power is building
two new, 1,100-MW Westinghouse pressurized
water reactors at its existing Vogtle
two-unit station (Figure 1). Although the
construction project is running over budget
and behind schedule, the company is convinced
it will turn out to be a good deal for
itself and its customers.
Stan Wise, chairman of the Georgia Public
Service Commission (PSC), told the Platts
meeting that the new Vogtle units will be a
win for the state's consumers, avoiding rate
shocks that accompanied nuclear units in the
1980s. He praised the independent Vogtle
construction monitor for a keen eye on the
progress and costs of the project. The day
after Wise appeared at the Platts meeting,
Georgia's PSC approved recovery of an additional
$148 million in costs the company
submitted, to which the construction monitor
had given a thumbs-up.
According to Georgia Power, " The projected
overall peak rate impact of the Vogtle
nuclear expansion is significantly less than
when the project was certified due to financial
and other benefits that we have proactively
pursued, and the fuel savings of nuclear. "
1. Nuclear on the rise. This January 2016 aerial view shows the construction site for
Plant Vogtle Units 3 and 4, with Units 1 and 2 in the background. Courtesy: Georgia Power Co.

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POWER April 2016

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