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The Future of Nuclear Energy Projects in Texas

May 12, 2011

Nuclear energy has contributed a significant part in the country’s power generation capacity and has received affirmed commitments and support from the Obama administration. Many see nuclear power as a clean and sustainable source of electricity, which is in line with America’s energy policy that relies on combining energy resources from fossil fuels, alternative energy and nuclear energy. Nuclear power is seen as an important factor for the country to gain true energy independence, providing cheap electricity available for all.

However, the recent earthquake and tsunami that created the nuclear incident at the Fukushima station in Japan is changing this trend, particularly affecting the building of two new reactors set to increase Texas electricity capacity. US nuclear regulators have expressed uncertainty for the future of nuclear energy in the country, forcing investors like NRG Energy Inc to impair its net assets in its joint Texas nuclear development joint venture with Toshiba American Nuclear Energy Corp.

Support from Lawmakers

Despite the nuclear crisis in Japan, Texas lawmakers are still in full support of nuclear energy development for Texas electricity generation. While many acknowledged that the US should learn lessons from the nuclear meltdown in Japan, many believed that the country should not readily abandon this significant source of electricity just because of unavoidable accidents. These lawmakers are adamant that the country should continue to exploit the benefits that can be derived from nuclear power, undaunted by the events in Japan.

Such lessons include changing the designs of new and existing nuclear plants to higher standards that are less prone to the effects of natural disasters such as earthquakes. However, such changes in the design and the subsequent changes in nuclear energy regulations in Texas and the United States will significantly add up to the already large investments poured into nuclear power development.

Renewable Energy on the Rise

The Japan nuclear meltdown is not the only thing pressuring investors like NRG Energy to back out of its plan of developing new nuclear reactors in Texas. In a state where consumers have the power to choose their energy options, renewable energy resources such as wind energy have grown steadily with more stability and added capacity, undermining nuclear energy’s original reason for development – to give more abundant and reliable energy equivalent for every dollar.

Last year, global renewable energy resources surpassed that of nuclear energy for the first time, occurring months before the tsunami incident that threatened Japan’s Fukushima Plant. In Texas, wind energy produces more capacity for generating Texas electricity than nuclear plants.

There are issues however with transmission facilities that will bring generated electricity from renewable energy farms down to the consumer. To address this, massive transmission projects and new technology developments for advanced energy storage are in motion to resolve such issues – further posing a threat to the development of Nuclear Power in the state.

Texas Nuclear Energy Investors Backing Out

 NRG Energy announced that it will still continue to support the Nuclear Energy project but only as an equity partner and will not provide further investments. According to NRG Chief Executive Officer David Crane, “The extraordinary challenges facing U.S. nuclear development in the present circumstance and the very considerable financial resources expended by NRG on the project over the past five years make it impossible for us to justify to our shareholders any further financial  participation in the development of the STP project.”

This decision is a clear sign of how the Fukushimaincident has made it difficult for US companies to invest and participate in the global nuclear energy development. Triggering new regulatory changes, companies may not be able to deal with the additional costs needed to satisfy design changes for new and existing nuclear reactors.

The Future of Nuclear Energy in Texas

The world has seen how nuclear energy can be a risky investment in generating electricity. With regulatory changes, these risks will be compounded with additional costs that will make investing and maintaining nuclear power plants much more expensive. With renewable energy gaining ground in producing Texas electricity, the future may not be so bright for nuclear energy in the state.

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