Nuclear power is cheaper. At 1.87Â¢/kWh (2008 figures), it's 68% the cost of coal and 25% the cost of natural gas. However, after the Three Mile Island accident, no new nuclear power plants were built for 30 years. Fears about global warming inhibited new construction of coal-fired plants.
As a result, from 1992 to 2005, some 270,000 MWe of new gas-fired plants were built. At the time,gas plants seemed to have the lowest investment risk. As a result, only 14,000 MWe of new nuclear and coal-fired capacity came on line. This helped drive up natural gas prices, forcing large industrial users of it offshore and pushing gas-fired electricity costs towards 10 Â¢/kWh.
Annual electricity demand is projected to increase to 5 trillion kWh in 2030. With rising oil and gas prices, and concern about global warming, nuclear power has started to look attractive again. In the late 1990s, nuclear power was seen as a way to reduce dependency on imported oil and gas. This policy change paved the way for significant growth in nuclear capacity.
The Energy Policy Act of 2005 provided financial incentives for the construction of advanced nuclear plants. There were also three regulatory initiatives which eased the way:
- A streamlined design certification process,
- Provision for early site permits,
- Combining the construction and operating license process.
Initially, the US was a pioneer of nuclear power development. The first commercial pressurized water reactor, Yankee Rowe, started up in 1960 and operated until 1992.(Source: World Nuclear Association, "Nuclear Power in the USA," March 2011)
Impact of Three Mile Island AccidentThe Three Mile Island accident effectively ended the nuclear power industry in the U.S. No new nuclear power plants were approved, although several that were under construction at the time of the accident were completed. As a result, the U.S. lost the engineering ability to build new plants. It had to ask Japan to send over its engineers to do the job.
The economic cost of the Three Mile Island disaster is nowhere near the cost of other nuclear power plant disasters. Japan's nuclear meltdown could cost $200 billion. The Chernobyl nuclear disaster cost in the hundreds of billions of dollars.
Hurricane Katrina was the most expensive U.S. disaster, costing between $125 billion to $250 billion. It knocked GDP growth to 1.3% in the 4th quarter 2005. It affected 19% of U.S. oil production and briefly spiked gas prices to $5 a gallon.