CERA sees a dozen U.S. reactors by 2015

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HOUSTON (Reuters) - Challenges facing a nuclear revival in the United States seem only to increase, but industry experts at the CERA conference expect to see a dozen new reactors under construction in the next decade, they said Friday. "It's execution time," said Jone-Lin Wang, a senior director of Cambridge Energy Research Associates, host of the annual conference in Houston.

By Eileen O'Grady

HOUSTON (Reuters) - Challenges facing a nuclear revival in the United States seem only to increase, but industry experts at the CERA conference expect to see a dozen new reactors under construction in the next decade, they said Friday.

"It's execution time," said Jone-Lin Wang, a senior director of Cambridge Energy Research Associates, host of the annual conference in Houston.

"There's a strong possibility we will see a dozen reactors under construction by 2015," said Christopher Hansen, CERA associate director of global power.

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Because of escalating costs of steel, concrete and other basic commodities used in nuclear plants, CERA's cost estimate for nuclear reactors has risen from $2,000 per kilowatt three years ago to $3,500 per kw, Hansen said.

Even with soaring capital costs, CERA estimated that nuclear power can sell for $70 per megawatt-hour, making it competitive with coal-fired and gas-fired generation at current fuel prices -- if a $30 per ton carbon price is factored in.

"Even with high capital costs, it looks competitive," Hansen said.

While no nuclear plants have been built since the 1980s, a construction cost index created by CERA showed that the price tag to build a plant has risen about 185 percent since a 2000 base year.

Even with financial incentives offered by the Energy Policy Act of 2005 for the first few new reactors, utilities may have a hard time nailing down construction contracts and selling the projects to regulators who control whether they can recover the investment in a new reactor from rate payers.

Regulators will have to weigh lower capital costs to gas or coal-fired plants against higher and volatile fuel costs or "take larger capital costs where the operating costs are stable," said Roger Goodman, a CERA senior consultant.

While offered as a logical solution to meet growing power demand without producing greenhouse gas, the push to build new reactors is straining the capability of equipment suppliers and regulators, adding uncertainty to the process for power companies naturally averse to risk, sources said.

Nuclear "is capital intensive, with a long lead time," said Duke Energy Chief Executive Jim Rogers. "You wear a lot of risk to get through that."

Peter Lyons, a member of the U.S. Nuclear Regulatory Commission, said the agency has sufficient staff to evaluate the license permits it sees in the pipeline. However, as more applications are filed, Lyons expects more difficulty keeping trained workers who may be recruited by utilities and other companies gearing up for the new plants.

Guy Chardon, a senior vice president of equipment supplier Alstom SA, said the entire nuclear component manufacturing chain must staff up after years of little activity. The use of new reactor designs will complicate construction.

"Recovery may take years during which there will be bottlenecks," he said.

Industry sources agreed that any nuclear revival will be shut down by a reactor emergency anywhere in the world.

"Should we have any serious problem, (development) would be frozen again for a long time," Chardon said.

(Editing by Marguerita Choy)