New nuclear reactors just aren't economical, says the CEO of the largest nuclear operator in the United States. Exelon's CEO John Rowe says that the economics of cheap gas makes a nuclear renaissance unforeseeable for the next few years – and had done so before the quake prompted regulators to politicians to review their policies.
"At the present time, new reactors are not economical anyway. Natural gas-fired generation is now the economic way to produce low carbon electricity, and that will be true for about a decade," said Rowe in an interview with Bloomberg.
The commercial production of deep gas or "shale gas" has had dramatic effects on the energy markets over the past two to three years – causing the market price to plummet, and divorcing the wholesale gas price from the market price of crude oil for the first time. Gas has historically been tied to the price of crude – but not any more. The price of crude keeps rising, and the price of gas keeps falling. Gas hit $4 per 1,000m3 – the only commodity to fall in price last year. This fact, and the local nature of deep shale reserves, has enormous geo-political repercussions that our politicians and policy-makers haven't fully grasped yet. Shale gas threatens the ability of Gazprom to command high prices for its exports in Europe, for example.
But it is mostly the low price that makes gas alternatives – conventional, renewable, and nuclear – look like dead ducks. As one expert witness told the Commons Select Committee, quite nicely, shale gas is the only part of the energy industry that doesn't come to the taxpayer begging for handouts.
Energy experts and the scientific community have looked on in despair as the Western media fill their bulletins from Japan by projecting the journalists' apocalypse fantasies onto the Japanese tragedy. Rather than making the case for replacing the ancient reactors with much safer modern designs, Fukushima is presented as a moral tale of nature's retribution on man's folly – essentially a pre-scientific, pagan view of the world.
But Rowe agrees that the attention will prompt a rethink.
"It will cause Americans to face a fresh look [sic]," he said. "The American people will have a lot of time to watch their government and the utility industry learn from this terrible event, and respond with proper gravity and learning."
Once the crisis has been dealt with, Japan probably will return to nuclear energy, and quite soon. It has a world lead in small safe reactor designs, as Robert Cringely writes here. And it has little choice. ®