From The New Atlantis, Fall 2022 edition:
In 1953, amid spiraling fears of a nuclear world war, President Dwight Eisenhower took to the United Nations General Assembly to outline a new vision for the future of nuclear power:
The United States pledges before you, and therefore before the world, its determination to help solve the fearful atomic dilemma — to devote its entire heart and mind to finding the way by which the miraculous inventiveness of man shall not be dedicated to his death, but consecrated to his life.
The “Atoms for Peace” speech marked the beginning of a public debate over nuclear energy, and its grim entanglement with the potential for nuclear apocalypse.
The decades after Eisenhower’s speech saw the rapid rise of the nuclear industry in the United States, and then its slow decline. In recent years, however, nuclear power has been enjoying a resurgence of public interest, as climate change and energy security have become issues of increasing global concern. But much of the recent discussion about nuclear power is misdirected, with too much focus being placed on public opposition as the reason for nuclear’s decline. A closer look at both the economic and political barriers facing the nuclear industry today shows that public anxiety is not quite the obstacle that nuclear advocates often portray it as. This is not to say that exaggerated fears of another Chernobyl don’t play a role in impeding nuclear development — they do. But the demise of nuclear power in the United States was, and is, chiefly a story of unfavorable economics and poor regulation. So, too, must both of these things change to make possible a revival of nuclear power, if there is to be one.
The Energy of the Future
Eisenhower’s address to the United Nations was only loosely motivated by energy concerns. As Ira Chernus explains in an article for Diplomatic History, the speech was part of a campaign, known as Operation Candor, to strengthen public support for increasing America’s nuclear arms stockpile. But in the years following the speech, Eisenhower did make an effort to support America’s nuclear energy industry. In 1954, he signed an amendment to the Atomic Energy Act to permit commercialization of fuel cycle technologies and international nuclear commerce, which helped drive billions of dollars toward development in the private sector. Three years later, he proposed the establishment of the International Atomic Energy Agency, aimed at promoting the peaceful use of atomic power on the world stage.Those initiatives opened the nuclear floodgates. After the first commercial nuclear plant was connected to the American energy grid in 1957, demand for nuclear generation, research, and expertise spiked across the country. Within a decade, American utilities had placed orders for over fifty nuclear plants; within a few more years, by 1974, a whopping 196 additional orders were added. The Atomic Energy Commission predicted that as many as one thousand nuclear plants would be online by 2000.
Politicians cheered on the nuclear gold rush as the first step toward the promise of cheap, abundant energy. “It appears that the long-promised day of economical nuclear power is close at hand,” President Lyndon B. Johnson announced during a commencement address in 1964. “We now can join knowledge to faith, and science to belief, to realize in our time the ancient hope of a world which is a fit home for all.”
But the events of the following two decades would send the nuclear industry into a tailspin, and the world that Johnson described never materialized.
A Bad Gamble
The dream of nuclear power was that it would provide “electrical energy too cheap to meter,” as the Atomic Energy Commission’s first chairman, Lewis Strauss, famously said in a 1954 speech. But nuclear power turned out to be closer to an economic disaster than a miracle.Like many new energy sources, it struggled to become cost-competitive. This wasn’t a huge concern at the time — the government was happy to prop up the industry with a series of major subsidies. But by the 1960s, the coal lobby had started to pressure Congress, as one representative argued in a legislative hearing, to “remove the sheltering umbrella of Government subsidies from this new competitor in the energy field.” Reactor manufacturers General Electric and Westinghouse began to worry that if the utility companies didn’t start putting nuclear stations online faster, the industry might never get off the ground. And so the manufacturers began to offer so-called “turn-key” contracts to the utilities: The seller would assume all the costs and tasks of building the reactor, testing it, and clearing regulatory hurdles, and, once the reactor was ready to use, just turn “the key” over to the buyer — but at prices far below cost.
The gamble was simple. Manufacturers assumed that as the nuclear industry scaled up, construction and operating costs would drop until the actual startup cost would reflect the artificially low price they were offering to utilities. General Electric and Westinghouse together took on more than a billion dollars of losses over the mid-1960s, offering utilities nuclear power at fixed costs that would be competitive with coal-fired plants.
But expenses never did drop. The manufacturers had far underestimated the costs of constructing the reactors and of getting the power plants up and running, while dramatically overestimating how much electricity the plants could generate. After just four years of offering turn-key contracts, manufacturers began to realize that the strategy would never be profitable and abruptly ended the practice.
Nonetheless, General Electric and Westinghouse kept their losses under wraps, and indeed may not have been aware themselves for several years of how much their turn-key contracts would end up costing them. And utilities, believing that the prices had accurately reflected the total cost of plant construction, went on to purchase the conventional contracts that had taken the turn-keys’ place. These new contracts were “cost-plus,” meaning that utilities now had to pay for all the hidden expenses that had once fallen to manufacturers. It wouldn’t be until the early 1970s that utilities started realizing their mistake.
Once it came out that new plant construction was exceeding predicted cost by over 100 percent, demand plummeted. From 1970 to 1974, while utilities were still finding out about these high costs, Westinghouse and General Electric received a combined 115 orders for nuclear reactors; from 1975 to 1978, they received only thirteen. Within just a few years, the dream of cheap nuclear power had gone up in smoke.
Knockout.....
....MUCH MORE
