The nuclear power industry's much-touted 'renaissance' has hit a few bumps in the road lately, with plants being shut down recently in Florida and Wisconsin, for instance. Also, as this recent ENR article notes, Duke Energy has abandoned plans for a project in North Carolina.
Additionally, as I noted in a previous post, the state of Florida is poised to increase scrutiny on future nuclear projects, with new requirements for utilities seeking to make use of the state's nuclear cost-recovery law.
It's probably not a coincidence that utilities are experiencing some of these issues at the same time that natural gas, with its lower cost and increasing availability, continues to become more popular. As this Christian Science Monitor article from May 8 states: "Low-cost, low-emission natural gas has already been blamed for shuttering coal plants and weighing on wind and solar financing. Now, it seems, nuclear is also falling victim to the natural gas glut."
Duke Energy currently estimates the cost of building the 2,200-MW Levy County nuclear plant at between $19 billion and $24 billion. (Image courtesy Progress Energy Florida/Duke Energy)
It's in the context of those two factors—Florida's heightened scrutiny of nuclear projects and the economics of natural gas—that the Tampa Bay Times published an intriguing analysis of the costs of Duke Energy's proposed $20-billion nuclear project in Levy County, Fla. Included as the top-of-the-fold item on the front page of the Sunday Times, the print headline read: "Math Guts Nuclear Myth."
In analyzing the costs over 60 years—the estimated lifespan of a nuclear plant—the Times concluded that it would cost more to build, operate and maintain the nuclear plant compared to utilizing a natural-gas facility over that time period. (The analysis assumed two natural gas plants would be needed over that period.)
The Times' Ivan Penn summed up the newspaper's findings: "Natural gas would be cheaper. Cheaper by billions of dollars. Cheaper even over 60 years and under any likely scenario."
Penn added that there was one apparent reason why Duke Energy was continuing to pursue the nuclear option: "What building a new nuclear plant does really well, the analysis showed, is fatten a utility's bottom line. Duke Energy would pocket as much as 10 times the profit from the Levy project as it would from a natural gas facility."
Readers can read the full story, along with an explanation of the Times' analysis, here.
As a result of the newspaper's reporting, Florida Sen. Mike Fasano (R) called for Agriculture Commissioner Adam Putnam (R) — who oversees the state's energy policies — to launch a study into the costs associated with the Levy County project, the Times reported. According to the article, Fasano is asking Putnam to delve into the matter because he doesn't trust the Florida Public Service Commission to conduct a "fair and unbiased cost analysis."
Sen. Fasano, whose district includes Citrus County—home of the Crystal River powerplant facility—is clearly not a big fan of Duke Energy. After all, the utility announced in February that it would shutter the Crystal River nuclear plant. Also, earlier this month the Times reported that the utility told the state that it plans to lay off or transfer 585 Crystal River workers, and that as many as 58 could lose their jobs by June 30.
In 2010, Progress Energy Florida—since merged with Duke Energy—posted this video about the job opportunities at its Crystal River nuclear plant. Duke now plans to lay off or transfer nearly 600 workers from the Crystal River facility.
Fasano is also no fan of the state's nuclear cost-recovery law, which allows utilities to charge customers years in advance for the cost of building new facilities. When the state legislature was reviewing the law this session, for instance, he penned an op-ed calling it "a state-level boondoggle."
Whether or not that assessment of the law is valid, it's clear that the state's nuclear cost-recovery clause is a main reason the Levy County project is being considered. As Sterling Ivey, a Duke Energy spokesman, told ENR: "Without this legislation, we would not be considering building new nuclear generation in Florida."
Whether it's Putnam or the PSC that takes the next look at the proposed Levy County plant, it should be interesting to see whether either judges the project—which Duke officially estimates at between $19 billion and $24 billion—to have "reasonable" costs, as Florida's newly revised cost-recovery law will require.
What do you think? Will the Levy County project end up being built? Or will the economics of natural gas cause the utility and state regulators to reconsider?
