Morningstar Magazine - October/November 2017 - 60

Strategies

EXHIBIT 3

managing lower-level radioactive waste as well as
storing spent nuclear fuel, which can remain
hazardous for well over 10,000 years. While nuclear
power plants have safely stored nuclear waste
on site since their inception, the industry and the
U.S. government have failed to come up with
a viable long-term solution for spent nuclear
fuel. This is critical, given the long decay period
and limited on-site storage space.
Nuclear leaves a relatively small footprint of waste
volume at 4.4 grams per kilowatt-hour, but this
alone does not represent the high level of nuclear
waste management risk. About 11% of nuclear
waste is radioactive, making nuclear the only
generation source with solid waste that has both
radioactive and hazardous components. Coal
produces much higher waste volume, but the EPA
recently ruled coal combustion residual was
nonhazardous despite its heavy metal content,
which includes fly ash, bottom ash, boiler slag, and
flue gas desulfurization gypsum. Upstream and
downstream fossil fuel generation processes also
produce much higher waste volume but none of it
is considered radioactive or hazardous.
For nuclear generators, radioactive waste is
classified as low-, intermediate-, and high-level
risk. Low-level and intermediate-level waste
accounts for approximately 98% of radioactive
waste from a nuclear plant and consists of items
such as protective shoe covers and clothing,
reactor water treatment residue, and tools and
equipment that have become contaminated
with radioactive material. Low-level waste
is typically stored on site until large quantities are
gathered for disposal at one of four low-level
waste facilities in the United States. Low-level
waste poses little public safety hazard.
However, high-level and some intermediate-level
radioactive waste poses a material public safety
risk if mishandled. High-level radioactive
waste is the byproduct of the reaction inside
nuclear reactors and comes in two forms: spent
nuclear fuel and waste materials remaining
after spent fuel is processed. All U.S. nuclear
power plants store recent spent fuel rods in water
storage pools about 40 feet deep. These pools
cool the spent nuclear rods and serve as
an additional shield from radiation. The storage

60

Morningstar October/November 2017

Ahead of Schedule Despite Trump, we think the U.S. power sector will easily meet
Obama's Clean Power Plan goal.
Carbon Dioxide Emissions, Electric Power

Morningstar Estimate (2025)

Million Metric Tons
2,500

2,000
CLEAN POWER PLAN
GOAL (2030)

1,797

1,678
1,643
1,500

1,000
1974

1980

1990

2000

2010

2020

Source: U.S. Energy Information Administration.

container is several feet thick, often with
steel liners. Typically, after five to 10 years the
spent fuel rods are moved to on-site dry
cask storage, where the spent rod is surrounded
by inert gas inside a steel cylinder cask.
Nuclear facilities have safely stored nuclear
waste on site since the late 1970s. However, the
only way for highly radioactive waste to become
harmless is through decay, which can take
hundreds of thousands of years for high-level
wastes. As nuclear waste builds and remains
radioactive, nuclear plants will find it challenging
to continue storing and managing the waste.
Thus, a long-term nuclear waste management
solution is needed. The technology to store nuclear
waste long-term is available and being tested
in Finland. The underground spent nuclear
repository Onkalo is 450 meters deep and set for
completion in 2023.
Progress on a long-term high-level waste storage
facility in the U.S. has been highly politicized
with little progress since the 1982 Nuclear Waste
Policy Act. In 1987, the U.S. government identified
Yucca Mountain, at the southern tip of Nevada,
as the permanent underground storage site.
It was scheduled to open in 1998. After many years
of stalled negotiations, the Obama administration
mothballed the project in 2011. The Trump

administration included $120 million of funding in
its proposed budget, but we remain skeptical
that a long-term storage facility will be completed
anytime soon. If the Trump administration's
budget is passed, Nevada has filed 218
contentions against the Department of Energy's
application for the storage site that must be
remediated. This could cost as much as $2 billion.
Until the U.S. develops a long-term waste storage
solution, we will consider nuclear waste a
negative ESG factor.
Sustainalytics shows that some U.S. utilities are
better prepared than others to manage
environmental risks associated with hazardous
waste treatment and disposal for their entire
generation fleets, including nuclear ( EXHIBIT 4 ).
Sustainalytics scores waste management on three
pillars: hazardous waste management, environmental management system, and environmental
policy. All scores are out of 100 possible
points. Xcel Energy XEL is best positioned with a
score of 83 from Sustainalytics. Xcel Energy's
1,594 MW of nuclear capacity accounts
for only 12% of its generation mix and only 2% of
total U.S. nuclear capacity, limiting its risk
relative to other nuclear operators. However, the
company is well ahead of its peers with
respect to waste management and is well
positioned to manage existing risk.



Table of Contents for the Digital Edition of Morningstar Magazine - October/November 2017

Contents
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Morningstar Magazine - October/November 2017 - 1
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Morningstar Magazine - October/November 2017 - Contents
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