This was supposed to be a time for a nuclear revival in the U.S. The U.S. Department of Energy has a loan guarantee program with tens of billions of dollars that were earmarked to bring costs down for billions of dollars in debt to build new reactors. But the construction boom as stalled out before it ever got started. Now, the boom in nuclear construction appears all but dead.
Nuclear plant expansions and newbuilds have barely gotten off the drawing board, older plants are closing, and the worst part is that ratepayers across the country are going to foot most of the bill for the nuclear industry's demise.
Promising pojects that never got off the ground
Duke Energy's gave up on a $24 billion nuclear project in Levy County, Florida in early August because of delays and doubts it could recover costs.
NRG Energy gave up on expanding its South Texas Project in 2011, costing the company $481 million in a writedown. The project was to add two reactors to two existing reactors but cost overruns and low natural gas costs made it les economical than originally planned.
Electricite de France just reached a deal to potentially sell its nuclear operations to Exelon after the Calvert Cliffs Nuclear Power Plant expansion stalled and costs skyrocketed. The reactors that are currently operating are even running into trouble with one reactor shut down after a control rod dropped into the reactor . Oops!
There were also expansion projects in Prairie Island in Minnesota , LaSalle in Illinois, and Limerick in Pennsylvania that never got off the ground because of low cost natural gas and wind generation.
These new projects were the foundation of an industry revival but natural gas, wind, and solar have gotten in the way.
The old guard of nuclear is fading
It's also important to note that existing capacity is also being shut down, a sign that even older plants can't operate safely or cost efficiently. Entergy decided to shut down the Vermont Yankee nuclear power plant last month, a decision that was cheered by local residents who have argued for years that the plant is unsafe. But in the end it was costs that caused Vermont Yankee to be shut down, with Entergy CEO Leo Denault saying "The plant was no longer financially viable."
Edison International's San Onofre Nuclear Plant in California was shut down for a year due to a radioactive leak before the company decided to shut it down altogether . A Kewaunee nuclear power plant in Wisconsin was shut down earlier this year and will be decommissioned by Dominion, the first time a non-regulated power provider will shut down such a project. Duke also announced the closure of its Crystal River nuclear plant earlier this year .
Since the last new nuclear plant built in the U.S. broke ground in 1977 it's easy to see that more closures will be coming. Nuclear plants aren't expected to last forever and slowly the aging fleet will shut down like the plants above have.
New reactors are costing a fortune
One project that is going forward is Southern Company's Vogtle 3 & 4 expansion. The project got a conditional $8.33 billion loan guarantee from the Department of Energy in 2010 but since then has been a disaster of delays and cost overruns.
Georgia Power, Southern Company's subsidiary, is building the project and originally was budgeted for $14 billion. But it has run into delays and lawsuits as designs have changed and last month asked for another $737 million in overrun budget that could be passed on to ratepayers.
The great thing about building nuclear power in many states is that you can pass project costs on to ratepayers years before a power plant generates any power. If the plant is never finished it's no skin off the utility's back and ratepayers have hundreds of million of costs that went nowhere. That's exactly what Georgia Power is doing to its customers and with Wall Street downgrading Southern Company's debt and stock, the loan guarantee's final agreement at an impasse, and realistic expectations now for a $20 billion budget I doubt the project will ever be completed.
What if it is completed? A standard 10% return on capital of $20 billion would yield costs of $0.104 per kW-hr before buying fuel or paying a penny to operate the plant. Just capital costs alone are not competitive with natural gas or even large-scale solar plants at today's costs. Nuclear power has proven to be uneconomical today in energy. That's why it will continue to die here in the U.S.
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The article Nuclear Power is on Life Support in U.S. originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Exelon and Southern Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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