Years after Missouri's largest utility set out to pursue a license for a second reactor in the state, hundreds of pages of data submitted to the federal regulators continue to idly collect dust.
The Nuclear Regulatory Commission's review of Ameren Missouri's submission is one of seven construction and operating license applications that have been formally withdrawn or suspended amid the Fukushima Daiichi disaster in Japan, the Great Recession and a shale gas revolution that's upended energy markets.
As much as any state, Missouri epitomizes the challenge facing the U.S. nuclear industry in its efforts to jump-start development of new reactors. There's already a nuclear plant operating in the state, and there's strong political support for an expansion of nuclear capacity. Missouri will eventually need to replace aging coal plants that power most homes in the state. And there's a university system with two research reactors to help train a new generation of workers.
For all the check marks in one column of the nuclear development ledger, though, there's a big X on the other: how to finance what would be the most expensive capital project in the state's history in an era of cheap gas, increasing energy efficiency and renewable energy penetration, and flat-lining demand growth.
While there are five reactors under construction in the Southeast, and that region more than any other holds potential for future development, the future of nuclear power in states like Missouri is murky at best, even with steps taken by the Obama administration to clamp down on greenhouse emissions greenhouse from the power sector.
Julien Dumoulin-Smith, a utility analyst at UBS, told a recent industry conference that he's skeptical of new nuclear capacity being added anytime soon.
"The capital is abundant out there," he said. "But at the same time, you've got to align the capital with the risk profile. If you're not providing a very meaningful long-term revenue certainty coupled with a real underlying commitment by regulators at all levels that this will not be a stranded asset, the fact is it's not going to happen."
Dumoulin-Smith said market and regulatory constructs today encourage high variable-cost, low capital-cost solutions like natural gas or demand response. Nuclear energy is at the other end of the spectrum.
It's a point that the nuclear industry doesn't argue.
"That's the world that we live in today," said Paul Genoa, the Nuclear Energy Institute's senior director of policy development. "My job is to change that world because it's not sustainable."
EPA rules give a small boost
U.S. EPA's proposed rule to limit carbon emissions from existing power plants is a positive for the nuclear industry, as evidenced by the bump that nuclear generators got on Wall Street immediately after the proposal was announced June 2.
But while the proposed rule seems to throw a lifeline to some existing nuclear plants that are struggling to make a profit, the rule alone doesn't do much to stimulate new development.
Missouri, in fact, can meet the carbon intensity targets laid out in EPA's proposed rule almost a decade ahead of schedule simply by continuing down the path it's already on, according to an analysis by the Natural Resources Defense Council. Missouri's renewable portfolio standard requires that 15 percent of generation from investor-owned utilities come from wind, solar and other renewable fuels by 2021, and energy efficiency programs.
While significant coal plant retirement could also leave a need for new baseload generation in years to come, a point that St. Louis-based Ameren raised years ago in its long-range integrated resource plans submitted to state regulators, it's unclear how best to plug the void. In its 2011 integrated resource plan, Ameren outlined a scenario where it could replace one of its big four coal-fired baseload plants with energy efficiency and demand response.
In another scenario, the company would use a combination of natural gas and nuclear.
The possible need for new baseload generation years in the future and the potential for regulation of greenhouse gases is what propelled Ameren to seek a license for a second nuclear plant adjacent to its 1,190-megawatt Callaway nuclear plant in central Missouri.
To be sure, Ameren has never committed to building another reactor. The utility, which serves 1.2 million customers, has steadfastly maintained that it was pursuing a license to maintain the option. But utility executives have also been clear that they are bullish on nuclear power and its attributes.
The journey that started in 2007 has been nothing short of an odyssey -- a winding journey that began with a partnership with Areva and EDF to license a 1,600 MW nuclear project. Efforts were suspended when the company failed twice to get legislation passed that would allow construction work in progress (CWIP) financing.
CWIP financing is currently prohibited in the state -- a throwback to massive cost overruns involved with construction of the original Callaway nuclear plant in the 1970s.
Ameren recalibrated its nuclear strategy two years ago and partnered with nuclear industry giant Westinghouse when the Department of Energy made available $452 million in grant funding to help commercialize a new generation of small modular reactors.
With slowing electricity demand growth following the recession, the challenge of financing a large new reactor -- the cost of which would rival the utility's market capitalization -- made the SMR opportunity seem like a perfect fit.
Missouri Gov. Jay Nixon (D) personally championed efforts to win SMR funding as a possible pathway to establishing a new manufacturing industry in the state and kicked off the campaign with a news conference on the lawn of the governor's mansion.
But those efforts came to a screeching halt in December when DOE denied the Westinghouse application in favor of a proposal by NuScale.
With that, Ameren was shut off from both pathways that have been used to develop new nuclear generation in the U.S. -- CWIP financing and DOE funding.
Utility officials declined an interview to discuss the potential for nuclear development, instead reissuing a statement from months earlier.
"Ameren Missouri is considering alternatives as we continue to focus on maintaining all generation options for a cleaner energy portfolio to meet Missouri's energy needs in the future," the statement said.
Those alternatives are expected to become clearer this fall when the company submits its triennial long-range plan for generation to state regulators.
The state, too, will also spend the next year developing a comprehensive energy plan -- a process that's expected to include an evaluation of the electricity sector.
Nixon, in a news conference after signing an executive order last week to start the process of developing a state plan, believes small reactors can still be part of the state's energy mix in years to come.
"If that industry moves forward, I think we could still be a centerpiece," Nixon said last week.
The obstacles in the way of a nuclear expansion in Missouri are common elsewhere and well-known to the industry.
But officials with NEI say the country faces real challenges even maintaining nuclear power's 20 percent share of electric generation.
In a presentation last week at the Midcontinent Independent System Operator's annual stakeholder meeting, NEI Vice President of Policy Development Richard Myers painted a sobering picture of the need for generating capacity 20 years from now given the age of the existing nuclear fleet. If all existing nuclear plants retired when they reach 60 years old -- and not all of them will, he believes -- the U.S. will require 55 gigawatts of new nuclear capacity just to maintain current market share.
To get to 25 percent would require 86 GW. And doing that kind of large-scale build-out in a 15-year period, he said, would be "delusional."
The NEI concedes it would currently be difficult for a company to build new nuclear generation in restructured states, where the market dictates the price of electricity.
But it's more easily accomplished in traditional rate-regulated states in the Southeast and Midwest.
And in the Midwest, Missouri is one of the more promising markets, he said.
"In Missouri, it looks like building a handful of small reactors over time is a good solution," Genoa said. The state "could very easily take a page from the playbook of Georgia and South Carolina if it's the right choice for them."
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