Power company NRG Energy is bracing itself for the possible situation that Tokyo Electric Power Company (TEPCO) could pull out of an investment in NRG’s planned expansion of its South Texas nuclear plant, in the wake of TEPCO’s nuclear disaster in Japan. NRG Energy CEO David Crane told me in an interview on Friday that NRG hasn’t yet asked TEPCO if it will have to pull out of the project or not, given “they are fully occupied right now,” but once the incident in Japan has been resolved, TEPCO might logically tell NRG that it has to focus 100 percent of its financial resources on rebuilding its own power infrastructure, acknowledged Crane. (Crane will be speaking at our Green:Net 2011 event on April 21, in San Francisco).
If TEPCO pulls out of its planned investment (at least $155 million for a 10-percent share) in the nuclear project, NRG Energy will have to be prepared to bring in other investors, said Crane. But raising money for nuclear projects in the middle of a nuclear crisis will be no easy task, said Crane.
NRG Energy has already pulled back on the detailed design work needed to expand its South Texas nuclear plant, though it will still continue to pursue the Department of Energy loan guarantee for the project as well as the license for the project. The detailed design work for the nuclear project “is by far the most expensive,” of these three parts, said Crane, so the company will conserve its spending until it knows more on whether the Nuclear Regulatory Commission (NRC) will make any changes to safety regulation.
CPS Energy, which had been in discussions to purchase the nuclear power from NRG’s expanded plants, has suspended its talks to buy the power. CPS also owns over 7 percent in the expansion project.
The NRC has declared it will review all nuclear projects built and under construction in the U.S. to see if there could be any lessons learned from the Japanese nuclear incident. Nuclear industry executives fear the NRC review process will be very lengthy and will paralyze any new nuclear projects in the pipeline, which was what happened in the aftermath of the nuclear incident at Three Mile Island in 1979.
Crane says NRG supports the regulatory review process, but hopes the NRC will do a quick review — taking perhaps three months — of all the plants in the U.S. to see which ones it needs to look at more closely, and then can give all the other ones a swift “clean bill of health.” If the review process went on for years, that could be fatal to the project, said Crane, who added, “It’s the uncertainty that is damaging to us. Our project is not in seismic area, it is not on the ocean, it is not a Mark 1 design (the GE model used in the Japanese plants under fire now) and the technology is not 45 years old,” pointed out Crane.
Overall, Crane reiterated the nuclear situation in Japan is still ongoing, and experts are likely weeks from being able to give more complete information for how long the crisis would last and what the American reaction would be. “Be patient,” said Crane.
The U.S. hasn’t built any new nuclear reactors in decades, thanks to fears after Chernobyl and Three Mile Island. The short-term costs of nuclear construction after the Japanese nuclear disaster is expected to soar in the short term, and development of new nuclear technologies from some startups could be stalled as well. Nuclear technology has also crept along because of the low price of natural gas.
Image courtesy of TravOC.