Facing the challenges of Building a New Nuclear Fleet

The predictable cash flows for the nuclear revival into the US and global economy will not be trivial. Likewise the draw on investment capital from nuclear construction should be considered. Will the US be able to afford it?

There are about 36 new nuclear reactors publicly announced or under consideration. Figure $3 billion per reactor and we'’re looking at a $100 billion construction program just for the electric plant. We'’ll probably want to add a couple of enrichment plants at $1.5 billion each, another billion for US mining and milling and maybe $5 billion in fuel reprocessing before we over. So make the total about $110 billion.

With construction starting in 2007 and completing in, say 2022, that'’s about $7 billion a year if we levelized the cash flows. Of course, cash flows won't be level --– they will build up. I would guess we'’ll spent $1 billion in 2007, $3 billion in 2008, and maybe $5 billion in 2009. That'’s if our two main constraints --– engineering, technical, and craft manpower and heavy steel forging capacity --– are not bottlenecks.

Private, non-residential construction for 2005 was $275 billion according to the US Census Bureau. Our nuclear program levelized at $7 billion would then be roughly 3% of the sector.

As to overall capital markets, US industry invested about $1 trillion in 2004 in new structures and equipment, again, according to the Census Bureau. Our $7 billion a year is then less than 1% of total annual capital investment.

My conclusion? On a macroeconomic scale, the expected new nuclear fleet can be built without stretching the US financial capability. Of course, narrow and specific factors of production could certainly prove bottlenecks -- as NEI CEO Skip Bowman warned in a speech in Lynchburg, Virginia earlier this year.

Know many nuclear-qualified welders?

POSTSCRIPT: For more about what the nuclear industry is doing to address work force issues, click here. For more information on financing new nuclear plant construction, click here. And if you're interested in a career with a utility, visit Get Into Energy.

Technorati tags: Nuclear Energy, Nuclear Power, Environment, Energy, Politics, Technology, Economics