The Nuclear Renaissance: Still Dead

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The Japan nuclear disaster has inspired a lot of speculation about the implications for the American nuclear renaissance. The short answer is that the implications are not very good, especially since, as some of us have been pointing out for quite some time, the American nuclear renaissance is a myth. The math just doesn’t add up, because new nuclear plants are preposterously expensive to build. Despite extraordinary bipartisan support and generous cradle-to-grave subsidies for new nukes, private financiers wouldn’t touch them even before Fukushima Daiichi went blooey.

There was a particularly amusing example of this yesterday, as NRG Energy abandoned its plan to build two gigantic reactors in Texas, writing off $331 million the utility had already wasted on the project. NRG blamed uncertainties created by the Japanese disaster, which was true in an unintentionally hilarious way. This project had already fallen apart once, when the local utility that had partnered with NRG withdrew after cost estimates skyrocketed. NRG did manage to attract a new investor, but that investor and its balance sheet look considerably less attractive these days, because the investor, Tokyo Electric Power, owns Fukushima.

But that’s just a new variation on a consistent theme. The 2005 energy bill authorized massive federal loan guarantees for new nuclear projects, but the Bush administration, which adored nuclear power, managed to make zero loans. The Obama administration, which also adores nuclear power, has reached one agreement to guarantee a Georgia project, but zero dollars have actually exchanged hands, and two of the other three projects in line for guarantees have now collapsed. And what happened in Japan isn’t going to make Wall Street any less skittish.

To the Washington establishment, which also adores nuclear power, this is yet another sign of America’s inability to solve intractable problems. Nukes are carbon-free, and most bigfoot Beltway pundits see opposition to new nukes as the province of hippie-dippie lefty purists who cling to airy-fairy dreams about green energy. But they haven’t run the numbers. Reducing power consumption through energy efficiency is far cheaper and far faster (not to mention safety or waste issues) than increasing power generation through new nukes. And in recent years, renewable power has attracted hundreds of billions of dollars in private capital, while new nukes have depended almost exclusively on the largesse of socialist governments.

The first round of U.S. nuclear construction was collapsing under the weight of its own economic insanity even before the Three Mile Island accident killed it off. We’ll see if Fukushima has the same effect on Round Two. The nuclear lobby is a lot more powerful now, and no-nukes activism has mostly petered out. But it’s still thriving in the capital markets and even the boardrooms of nuclear utilities, so unless we want to pay for the renaissance ourselves, we’re not going to have one.

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