A cascade of insurmountable obstacles now stand in the path of development of the widely trumpeted new generation of nuclear power generating plants in the US despite generous federal loan guarantees offered by Obama’s Department of Energy.

Natural gas prices have fallen to a fraction of their peak as new extraction technology has more than doubled proven reserves. In many locations natural gas is less costly than coal, and new electrical power produced with gas runs about half the projected cost of new nuclear power even after factoring in multiple levels of government subsidy for nuclear power, including assumption of liability and waste disposal. Financiers are well aware of the historic cost over-runs for nuclear power plants which often double or triple original estimates.

Demand for electricity has been declining, due to both reduced economic activity as well as improved efficiency and conservation. Private investment capital is not attracted to making a bet on these factors reversing even in the intermediate term. The prospects are so bad that the only way that these facilities will be built is if the entire financial as well as environmental risk is borne by the public, even a 20% equity stake on the part of investors is deemed too risky. The Washington Post on Saturday reported the withdrawal of private , for profit, involvement in Maryland:

Constellation Energy has shelved its proposal to build a new reactor at its Calvert Cliffs nuclear power plant, Obama administration officials said Friday, even though the administration had decided to award the project a $7.5 billion loan guarantee.

There is one nuclear project currently slated to go forward, in Georgia, the difference being that regulators there allow rate payers to be billed for the cost of construction before the plant is in operation which allows the risks of cost over-runs to be carried by the public. So Georgians face risks on multiple levels; default, uncompetitive power prices and catastrophic environmental calamity.

The Baltimore Sun points out that the real trouble for the nuclear ‘renaissance’ lies with Congress’ failure to pass cap and trade legislation which would have made nuclear power competitive with carbon based fuels. The chances of this type of legislation passing evaporated with the exposure of the Climategate emails almost a year ago, which along with the Himalayan Glaciergate fiasco reduced the chances of an international agreement on carbon emissions to nil.

While some nuclear projects have been underway for years and represent significant stranded investment, utilities and financiers are now cutting losses and calling it quits. The Baltimore Sun goes so far as to describe the recent abandonment of the Calvert Cliffs plant in Maryland as “a huge setback for, if not the end of, the American nuclear renaissance.”

Submitted by Aletho News on Tue, 2010-10-12 17:06

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