Record high natural gas prices have raised concerns that the United States has placed too big a bet on gas and revived interest in nuclear power to help meet an explosive growth in electricity demand, industry experts said.
Despite doubts about its safety and security, the experts said, the nuclear option is back on the table as the nation struggles with declining gas supplies and looks for ways to meet a projected 50 percent rise in power demand by 2025.
"It was hard to compete with natural gas at $2 (per mmBtu), but at $6 there's a renewed interest in nuclear power," said Dan Keuter, vice president at Entergy Corp.'s Entergy Nuclear, the No. 2 U.S. nuclear plant operator.
Drawn by what seemed like an abundance of domestic natural gas reserves, cheap construction costs and a friendly environmental image, power providers went on a building spree in the late 1990s and added some 200,000 megawatts of new electricity generation, almost all of it fired with gas.
But, with many promising gas drilling prospects in North America off limits due to environmental concerns, the result has been shrinking supplies and prices hovering above $6 per mmBtu -- after a record average of $5.45 last year.
"As a policy, it was always a risky alternative to move that much toward gas, but nothing else looked very attractive," said Don Murry at Oklahoma consultants C.H. Guernsey & Co.
Entergy, while not committing to building a nuclear plant, is one of 10 companies in a consortium known as NuStart Energy Development that has presented a proposal to the federal government to share the estimated $800 million cost of developing a new nuclear reactor.
NUCLEAR PROS AND CONS
There have been no new nuclear power plants built in the United States in the past 25 years. The 103 plants currently in operation supply about 20 percent of the nation's power.
Coal is still the biggest power provider at more than 50 percent, with gas third at about 17 percent.
The edge for nuclear is that fuel costs are cheap and stable, and power is produced with no greenhouse gas emissions, an important factor as clean air laws get stricter and put upward pressure on fossil fuel operating costs.
A new standard-design nuclear plant can probably be built for about $1,200 per kilowatt and produce power at about 4.2 cents per KWh.
While capital costs for a combined cycle gas-fired plant are much cheaper, at about $550 to $600 per kilowatt, $6 gas means electricity will cost about 5.7 cents per KWh, up sharply from the 3.5 cents to 4.5 cents per KWh when gas prices were $3 to $4 several years ago.
But the nuclear option does not come without problems.
There are still regulatory hurdles that drag out the permitting process, environmental concerns about radioactive waste disposal and public doubts about safety and security that make nuclear a difficult choice.
"It's a good idea to provide diversity in power supply, but safety will always remain a paramount concern," said Michael Schaal at Virginia-based consultants Energy Ventures Analysis.
The specter of the Three Mile Island accident in Pennsylvania 25 years ago still rouses strong concerns about safety, despite nuclear power's improved operating record.
Opponents worry that current security measures cannot prevent a terrorist attack on a nuclear plant, but industry advocates counter that millions have been spent to beef up security and new reactor designs will employ some "passive" safety systems that do not require power to safely shut down a reactor during an emergency.
While no one expects a new nuclear plant to come on line any time soon, certainly not much before 2015, industry experts expect nuclear power to remain an important part of the energy mix, which will also include more coal use and renewable fuels like solar and wind power.
"By 2015 we'll need a lot of new plants. We may be able to build a few nuclear units, but we're not going to be able to build a lot. Coal may be the most likely alternative to gas," said Jone-Lin Wang, director of North American power at Cambridge Energy Research Associates.