Productive stimulus: Fast-track nuclear power

So unemployment is rising in the US and the pace of economic growth has turned negative.  Congress and Mr. Obama's first thoughts turn to Keynesian economics which prescribe an increase in governmental spending to "prime the pump."  While the wisdom and efficacy of this course is still subject to debate, even after 80 years, it looks like there will be no stopping a huge federal stimulus package from Congress.   What is open to debate is what form and direction should the stimulus take.  Some argue for direct payments to consumers while other argue for governmental "investment" in useful infrastructure.

In US history, there are a couple of bright spots where government infrastructure investments have been unqualified successes. The classic case is New York State's Eire Canal, completed in 1825.  Eisenhower's push for the Interstate Highway System during the 1950s is another textbook example.  Both of these are transportation improvements that made movement of people and goods within the country both quicker and cheaper.  They greatly increased economic productivity.

Another example of successful economic investment by government was in the initial development of commercial nuclear power. Even during World War II's Manhattan Project, scientists and engineers were eager to moonlight on the anticipated peaceful use of atomic energy and with peace, the newly formed Atomic Energy Commission got busy with a series of innovative reactor designs to make commercial electricity.  The first nuclear "juice" was produced by 1951, lighting a string of four light bulbs.   The eventual sorting-out of the unworkable and the impractical was largely complete by the early 1960s, primarily funded by the federal government.  Eventual amendments to the Atomic Energy Act allowed privately held industrial companies and electric utilities to begin implementation of real nuclear power plants able to pay for themselves through the production and sale of electricity.

The first Arab Oil Crisis of 1972 was a tremendous stimulus to nuclear power.  In 1970, 35% of US electricity was fueled by oil, increasingly imported and rapidly increasing in price and decreasing in security of supply.  The first wave of commercial nuclear plants, along with construction of additional coal-burning plants, subsequently reduced our use of oil in electrical generation to about 2% today.  These operating plants are doing well financially; Warren Buffett recently tried to buy several but lost out in bidding to a French company.

The US is poised for a second wave of new nuke construction.  The principal regulator, the Nuclear Regulatory Commission, has been requested to schedule reviews for over 30 new reactors.  The first new application showed up September, 2007, for two units in Texas with 24 others already in the hopper.  Orders for long-lead hardware have been placed but actual site construction must await the myriad of government permits required.

Yet, it remains uncertain how many of these proposed plants will be built.  The technical and commercial risks are well in hand since the basic technology is merely an evolution on the tried-and-true.  Most of the proposed reactors are to be built on sites that already have operating reactors on them so environmental surprises should be rare.  What concerns investors are the legal and political risks.  The most notorious past example was when county officials in a single Long Island county effectively wiped out $6 billion of private investment by refusing to participate in an evacuation drill for the Shoreham nuke in the 1980s.  The company went bankrupt and sold the whole utility to the state of New York for $1.

In 2005, Congress proposed to mitigate those external risks that nuclear investors face by offering an insurance pool against frivolous lawsuits, changing rules, and local political intransigence.  Writing these regulations for the pool grants has seemed to take forever and in any case is too little and almost too late. Designed for a few "bleeding edge" pioneers, the tentative few have become a mad rush, swamping the original allocation of insurance funds.

But our political leaders are now casting about for a quick economic stimulus for the economy.  They want a way to create jobs NOW, hopefully doing something productive.  One risk is that, like the last stimulus package, Congress will give in to the temptation to play Santa Claus in February, mailing out checks to everyone.  Exactly how that's supposed to help the economy remains unclear.

Instead, I propose that Congress bankroll immediate construction of a dozen new nuclear reactors at existing nuke sites.  This meets the common concern that infrastructure projects be "shovel-ready."  Starting with existing nuclear power plant sites minimizes risk of undiscovered environmental issues. Local political acceptance is usually well resolved after years of "good neighbor" operation, not to mention the millions of dollars annually that flows into the local economy and government treasuries.

While fabrication of long-lead components may eventually constrain the startup schedule, we could start the massive work of digging the foundations and laying the concrete and reinforcing steel that is so much of nuclear construction.  With a bit of tweaking of current regulations on "limited work authorizations", those plants that have turned in applications to the NRC of acceptable quality could start "turning dirt" within a couple months.  Congress could mandate the early construction rule changes and guarantee the job-creating funds committed.  Actual startup of the reactors would still require detailed inspections and tests by the NRC, but that is, at best, a few years off.  Since current requirements effectively prohibit construction until after the application is approved, this proposal would shave off years of delay in the operation of an expanded nuclear fleet.  Plus, it would put price pressure on any proposed new coal plants and surely reduce coal's future market share, if that be the new Administration's policy goal.

So what's the worst that could happen should a project run into difficulties down the road?  The government would have paid some guys to dig a hole.  Then they would have to pay some more guys to fill it in.  This plan just defaults to regular government work.  

Joseph Somsel is a nuclear engineer involved in the design, licensing, and construction of nuclear power plants.
So unemployment is rising in the US and the pace of economic growth has turned negative.  Congress and Mr. Obama's first thoughts turn to Keynesian economics which prescribe an increase in governmental spending to "prime the pump."  While the wisdom and efficacy of this course is still subject to debate, even after 80 years, it looks like there will be no stopping a huge federal stimulus package from Congress.   What is open to debate is what form and direction should the stimulus take.  Some argue for direct payments to consumers while other argue for governmental "investment" in useful infrastructure.

In US history, there are a couple of bright spots where government infrastructure investments have been unqualified successes. The classic case is New York State's Eire Canal, completed in 1825.  Eisenhower's push for the Interstate Highway System during the 1950s is another textbook example.  Both of these are transportation improvements that made movement of people and goods within the country both quicker and cheaper.  They greatly increased economic productivity.

Another example of successful economic investment by government was in the initial development of commercial nuclear power. Even during World War II's Manhattan Project, scientists and engineers were eager to moonlight on the anticipated peaceful use of atomic energy and with peace, the newly formed Atomic Energy Commission got busy with a series of innovative reactor designs to make commercial electricity.  The first nuclear "juice" was produced by 1951, lighting a string of four light bulbs.   The eventual sorting-out of the unworkable and the impractical was largely complete by the early 1960s, primarily funded by the federal government.  Eventual amendments to the Atomic Energy Act allowed privately held industrial companies and electric utilities to begin implementation of real nuclear power plants able to pay for themselves through the production and sale of electricity.

The first Arab Oil Crisis of 1972 was a tremendous stimulus to nuclear power.  In 1970, 35% of US electricity was fueled by oil, increasingly imported and rapidly increasing in price and decreasing in security of supply.  The first wave of commercial nuclear plants, along with construction of additional coal-burning plants, subsequently reduced our use of oil in electrical generation to about 2% today.  These operating plants are doing well financially; Warren Buffett recently tried to buy several but lost out in bidding to a French company.

The US is poised for a second wave of new nuke construction.  The principal regulator, the Nuclear Regulatory Commission, has been requested to schedule reviews for over 30 new reactors.  The first new application showed up September, 2007, for two units in Texas with 24 others already in the hopper.  Orders for long-lead hardware have been placed but actual site construction must await the myriad of government permits required.

Yet, it remains uncertain how many of these proposed plants will be built.  The technical and commercial risks are well in hand since the basic technology is merely an evolution on the tried-and-true.  Most of the proposed reactors are to be built on sites that already have operating reactors on them so environmental surprises should be rare.  What concerns investors are the legal and political risks.  The most notorious past example was when county officials in a single Long Island county effectively wiped out $6 billion of private investment by refusing to participate in an evacuation drill for the Shoreham nuke in the 1980s.  The company went bankrupt and sold the whole utility to the state of New York for $1.

In 2005, Congress proposed to mitigate those external risks that nuclear investors face by offering an insurance pool against frivolous lawsuits, changing rules, and local political intransigence.  Writing these regulations for the pool grants has seemed to take forever and in any case is too little and almost too late. Designed for a few "bleeding edge" pioneers, the tentative few have become a mad rush, swamping the original allocation of insurance funds.

But our political leaders are now casting about for a quick economic stimulus for the economy.  They want a way to create jobs NOW, hopefully doing something productive.  One risk is that, like the last stimulus package, Congress will give in to the temptation to play Santa Claus in February, mailing out checks to everyone.  Exactly how that's supposed to help the economy remains unclear.

Instead, I propose that Congress bankroll immediate construction of a dozen new nuclear reactors at existing nuke sites.  This meets the common concern that infrastructure projects be "shovel-ready."  Starting with existing nuclear power plant sites minimizes risk of undiscovered environmental issues. Local political acceptance is usually well resolved after years of "good neighbor" operation, not to mention the millions of dollars annually that flows into the local economy and government treasuries.

While fabrication of long-lead components may eventually constrain the startup schedule, we could start the massive work of digging the foundations and laying the concrete and reinforcing steel that is so much of nuclear construction.  With a bit of tweaking of current regulations on "limited work authorizations", those plants that have turned in applications to the NRC of acceptable quality could start "turning dirt" within a couple months.  Congress could mandate the early construction rule changes and guarantee the job-creating funds committed.  Actual startup of the reactors would still require detailed inspections and tests by the NRC, but that is, at best, a few years off.  Since current requirements effectively prohibit construction until after the application is approved, this proposal would shave off years of delay in the operation of an expanded nuclear fleet.  Plus, it would put price pressure on any proposed new coal plants and surely reduce coal's future market share, if that be the new Administration's policy goal.

So what's the worst that could happen should a project run into difficulties down the road?  The government would have paid some guys to dig a hole.  Then they would have to pay some more guys to fill it in.  This plan just defaults to regular government work.  

Joseph Somsel is a nuclear engineer involved in the design, licensing, and construction of nuclear power plants.