Nuclear Power: An Economic Imperative

With energy in the news as much as it is, you can imagine how busy things are here at CARE. There are new projects to work on and new people to meet everyday. We were thrilled when the following piece on nuclear power came our way. Additionally, it introduced us to a new expert: Bernard L. Weinstein, a professor at North Texas University. We contacted him and he gave us permission to share his insights with you. While the emphasis of his posting is on the state of Texas, we believe the universal application is obvious. As America moves forward, nuclear power becomes an economic imperative.

Nuclear Plants Offer Powerful Energy Alternative
With consumers paying more than $4 a gallon for gasoline, the media and the politicians have been fixated on ways to expand the nation's supply of fossil fuels and other energy sources.

Should we open the outer- continental shelf and the Arctic National Wildlife Refuge for exploration and drilling? Does it now make economic sense to extract oil from shale and tar sands? Should Congress extend or increase the tax breaks for ethanol, solar and wind energy? What are the prospects for clean coal technology?

Absent from the debate has been much serious discussion about the potential contribution of nuclear power plants to the nation's energy needs.

Though opponents of nuclear energy don't harp as much on the safety issue as they once did, they still claim nuclear plants are too expensive to build and operate.

However, $140-a-barrel oil has radically changed the economics of nuclear power. On a nominal basis, it may still appear noncompetitive because of the "cheaper" price of coal.

But the price of coal doesn't reflect the high cost that carbon emissions pose to the environment. Rising natural gas prices are also making nuclear a more competitive power source.

Texas currently relies on natural gas for 72 percent of its electric generating capacity, compared with a national average of 46 percent. Coal accounts for 19 percent of Texas' capacity, while the state's four nuclear plants produce only 6 percent – even though they are among the top-performing in the world, boasting average capacity factors of 92 to 95 percent.

Pursuing the nuclear alternative has become an economic imperative. With natural gas prices up 70 percent this year, power costs in Texas are now among the highest in the nation, a situation that doesn't bode well for the state's energy-intensive industries.

For example, to offset higher energy costs, Dow Chemical has raised prices twice in the past month. Other manufacturers, large and small, are getting hammered by high and rising electricity costs.

And five retail electric providers in Texas have failed this year because of the huge increases in the cost of purchased power from the state's gas-fired generating plants.

Texas, with its trillion-dollar economy, is projected to continue growing at a faster clip than any other large state for the foreseeable future. The Electric Reliability Council of Texas estimates we'll need more than 100,000 megawatts of new power within 10 to 15 years just to keep up with demand.

Because new coal plants are more or less off the table, and because wind and solar energy aren't substitutes for base-load power plants, nuclear is the sensible option for helping to meet the growing power needs.

NRG Energy, based in Princeton, N.J., has filed an application to build a reactor adjacent to its existing plant in Bay City. Exelon, Luminant and Amarillo Power are also evaluating the prospect of new nuclear plants. If all these plans materialize, Texas could have more reactors than any other state a decade from now.

To remain competitive, Texas must offer an attractive economic environment and cost structure on all fronts – including electric power.

Adding more nuclear plants to the fuel mix will diversify Texas' energy sources, ensure reliability and help hold down electric power costs. And because nuclear plants don't pollute or emit greenhouse gases, the Texas environment will benefit, as well.


Bernard L. Weinstein is director of the Center for Economic Development and Research and a professor of applied economics at the University of North Texas. His e-mail address is budw@scs.unt.edu.