UMKC SDI 2008
NUCLEAR POWER Winfrey/Dietrich
1. STATUS QUO SOLVES LOAN GUARANTEES EXIST NOWCBO 08
Current energy policy
, especially as established and expanded under the Energy Policy Act of 2005 (EPAct),
provides incentives for building additional
capacity to generate electricity using innovative fossil-fueltechnologies and an advanced generation of
nuclear reactor designs
that are intended to decrease costs andimprove safety.2 Among
the provisions of EPAct that specifically apply to newly built nuclearpower plants are funding for research and development; investment incentives, such asloan guarantees and insurance against regulatory delays; and production incentives,including a tax credit. Since the enactment of EPAct, about a dozen utilities haveannounced their intention to license about 30 nuclear plants.2. PLAN DOESN’T ENSURE PLANTS WILL BE BUILTDaks 07
for up to 80 percent of the cost of a nuclear plant."We believe this
will encourage banks to extend loans for projects
like the Texas generators," saysCrane, who adds that NRG expects to tap its own resources for about 20 percent-or $1.2 billion-of the estimatedcost, with banks and capital markets making up the difference. The 2005 Energy Act also provides tax breaks for operators of new nuclear plants based on the energy they produce, and requires the federal government to indemnifyoperators in the event of an accident.
While such provisions may add up to a sweet deal for newentrants into nuclear power, they don't guarantee that any proposed projects will actuallyget built
. For one thing,
there's plenty of opposition to nuclear power
from organizations likeCommon Cause that question the safety of such plants
there is still no federal repository forfederal waste
3. SHORTAGES IN URANIUM PREVENT SOLVENCYHarding 07
is a very peculiar commodity
. Today, world consumption -- let me state itdifferently --
world production of uranium is about 60 percent of consumption
It doesn't happen inturkey, butter, milk or many other commodities. And the reason for that is that you need to procure uranium quite a long ways in advance, and beginning sort of in the mid- to late 1970s, people had ordered a lot of reactors in the U.S., Western Europe and Russia, secured long- termcontracts -- meaning seven to 10 years for uranium -- at a high price, and they cancelled the plan. So all that secondary supply came into themarket, depressing the price. It was followed by privatization of centrifuge -- of enrichment in the United States. We also bought lots of surplusenriched uranium from Russia. And most recently, we are blending down or diluting surplus weapons uranium into U.S. fuel.
we'rerunning the global nuclear industry on a secondary supply that pops pretty quick
. And it'shad the unfortunate impact that existing contracts have fixed prices for uranium; the same is generally true on theenrichment side.
You need to procure the product about four years in advance of burning it.
We're at a price of $135 a pound, pretty much a historical peak.
Utilities for the most part run out of their existing supply by 2012, 2013
They've got to get back into this market. And it's hard to tell what the long- term pricewill be. This is not -- it's not a physical shortage of uranium, it's a shortage of milling capacity and also enrichment capacity. The enrichmentissue was somewhat complicated, because when you go to a higher uranium price, you want to decrease the tails assay at the enrichment plant.