Scrutiny on global nuclear industry intensifies

The crisis in Japan means higher costs, cancelled projects and laser-like regulatory scrutiny for the global nuclear industry, signalling the likely end to its decade-long growth spurt.
The unfolding disaster at Tokyo Electric Power Co's Fukushima complex is not yet a week old, and regulators around the world are already making policy changes sure to increase costs and limit financing for projects touted as one of the best ways to cut carbon emissions. US Secretary of State Hillary Clinton flagged her concern about industry risk on Wednesday, days after senators had asked for a review. The United States relies on nuclear energy for 20 percent of its power, and until now the Obama administration's energy policy has been nuclear-friendly.
"What's happening in Japan raised questions about the costs and the risks associated with nuclear power, but we have to answer those," Clinton told MSNBC. Authorities in China, the industry's biggest growth market, ordered a safety crackdown on Wednesday that threatens a burgeoning national expansion program. Japan's crisis will give more power to Chinese nuclear safety officials, said Mark Hibbs, an expert on nuclear policy in China and other countries at the Carnegie Endowment for International Peace.
Germany went a step further, shutting down seven older reactors this week in response to the incident in Japan. Such actions promise to trigger a ripple effect around the world, throwing up hurdles for power generation companies on the brink of huge expansion.
On the drawing board are plans to more than double the number of nuclear power plants world-wide. There are 477 proposed or planned plants, compared with the 441 already in operation. China, Russia and India account for the bulk of the growth, according to data from the World Nuclear Association.
A pullback to review safety, let alone impose new regulations, will affect companies such as Shaw Group, which builds reactors, uranium producers that supply fuel and those that design the piping and instrumentation. Other big players in nuclear construction and equipment are privately owned Bectel Corp, General Electric, Babcock & Wilcox and Areva SA. Already the capital costs to build a plant are high - more than $4,000 a kilowatt for a nuclear plant. That's nearly twice as much as a conventional coal-fired plant at $2,200 a kw and more than four times as much as a gas-fired plant, according to a Brattle Group study. New regulations could put some nuclear plants in jeopardy.
"Here in the United States, the problem is likely to be non-maintenance capital expenditures - safety-driven retrofits to reactors or fuel-storage sites that make it uneconomical to continue operating when other alternatives provide cheaper power or greater investor returns," said Kevin Book, managing director for research at Washington-based ClearView Energy Partners.
Once built, nuclear power was traditionally cheaper than natural gas and coal - markets that historically have been extremely volatile. But even that advantage has eroded. The development of massive shale gas fields in North America, believed to hold a century's worth of the fuel, have depressed natural gas prices, a situation that is not expected to change for years. Nuclear power averaged 6.6 cents a kilowatt-hour versus 6.5 cents for natural gas and 6.2 cents a kilowatt-hour for coal, according to 2009 study from the Massachusetts Institute of Technology.
US Energy Secretary Steven Chu told Congress on Wednesday federal regulators will check to see if safety measures need to be boosted at current and proposed US reactors.
Companies that will likely draw scrutiny from regulators and more opposition from the public include Entergy Corp, which owns Indian Point located north of New York City, and Southern Co, which is still working to obtain a construction license for its Vogtle expansion in Georgia, Barclays said. Pacific Gas and Electric and Edison International - companies that have plants in earthquake-prone California - should expect stiffer treatment from the Nuclear Regulatory Commission as well as more attention from groups that oppose nuclear power.
Russian President Dmitry Medvedev, speaking at a briefing with Turkish Prime Minister Tayyip Erdogan said on Wednesday that nuclear energy is safe provided power stations are built in the right place and are designed and managed properly. French President Nicholas Sarkozy also said on Wednesday that he did not expect the crisis in Japan to undermine the case for new nuclear projects. France relies heavily on power generated by nuclear.