NEW YORK (Reuters) - For the first time in more than 30 years, the construction of new nuclear power plants is under way in the United States despite the ongoing nuclear crisis at Fukushima in Japan.
U.S. regulators are expected to approve of four new reactors later this year, but analysts at Standard & Poor’s said in a call Wednesday the road ahead for other new nuclear plants in the country could prove difficult.
The accident at Tokyo Electric Power Co’s (TEPCO) Fukushima plant in March will boost regulatory and operating costs for existing and new U.S. reactors, S&P said, but that alone will not prevent the construction of some new reactors.
The dominant factor stalling the nuclear renaissance in the United States has been the continuing low cost of natural gas and the high cost of building a new reactor, not any new Fukushima related costs, the S&P analysts said.
“Nuclear generation must make economic sense. Even with (federal) nuclear loan guarantees, gas has to be north of $6 (per million British thermal units) for new nuclear generation in the U.S. to make sense and gas clearly has not been cooperating over the past two years,” said Standard & Poor’s credit analyst Aneesh Prabhu.
Prabhu noted that gas prices did get a boost from the Fukushima accident but were still not expected to top $6 until the middle of the decade.
A 1,000-megawatt new reactor would cost about $5 billion.
Construction of new reactors in the United States has stalled since the Three Mile Island accident in 1979.
But two new projects, from Southern Co’s Georgia Power unit and SCANA Corp’s South Carolina Electric & Gas Co unit, are on track to receive the combined construction permit and operating licenses (COL) from the U.S. Nuclear Regulatory Commission (NRC), possibly before the end of 2011.
Both companies want to add two Westinghouse 1,154-MW AP1000 reactors at existing nuclear sites: Southern’s Vogtle plant in Georgia and SCANA’s Summer plant in South Carolina.
Westinghouse is majority owned by Japan’s Toshiba Corp and U.S. construction firm Shaw Group Inc.
S&P divided those looking to build new reactors into regulated and unregulated merchant generators.
Regulated utilities, like those run by Southern and SCANA, can recover the cost of building new reactors from ratepayers.
Merchant generators, like NRG Energy, which along with partners stopped work last month on two proposed reactors in Texas, meanwhile must recover costs through the market.
“When you talk about merchant generation...you cannot fail to talk about the commodity environment because apart from the Fukushima event, it also has to make economic sense,” Prabhu said, noting gas costs were too low for new nuclear to make sense for a merchant generator.
With regulated utilities, S&P credit analyst Dimitri Nikas said, “Their credit quality will depend on their ability to keep projects on schedule, manage current political, local and regulatory environments, and continue to collect financing and construction costs from ratepayers while the plants are built.”
Nikas was not optimistic other regulated utilities would venture down the path to build new nuclear reactors in the near future.
Unlike the Southern and SCANA projects, which are already under construction, Nikas said, “For plants that are only now under consideration, we believe local opposition combined with still low natural gas prices will make those utilities pursue other forms of generation.”
The Tennessee Valley Authority, however, as a federal power generator that is not subject to market forces, plans to build new reactors in the U.S. Southeast over the next several years.
Reporting by Scott DiSavino; Editing by Cynthia Osterman