Nuclear comes in from cold

Nuclear power plants, shunned since the meltdown at Three Mile Island and the disaster at Chernobyl, are making a comeback in Europe and the US as companies and governments try to cut energy costs and pollution.

Finland is building the first nuclear plant approved in Europe since 1986 and France plans a new, US$3.6 billion ($5.1 billion), reactor.

Utilities group NuStart said last month that it expected to select two sites by October for the first new nuclear power stations in the United States in 30 years.

The Paris-based International Energy Agency said more than US$200 billion would be spent on nuclear power by 2030. A surge in oil prices to around US$60 a barrel and global warming concern are driving the revival.

"I am not an advocate of nuclear power, I am a realist," said Ian Marchant, chief executive of Scottish and Southern Energy in London. "I'd rather we didn't, but it's inevitable."

In April, US President George W. Bush said he wanted to expedite the licensing of new reactors. And British Prime Minister Tony Blair may decide next year whether to replace Britain's ageing nuclear plants.

Even Ukraine, where the 1986 Chernobyl blast killed 31 in the world's worst nuclear disaster, sees nuclear energy as a way to break its reliance on Russian oil.

"Since Ukraine has uranium and zirconium fields, we should be concentrating on developing nuclear energy domestically," said Prime Minister Yulia Timoshenko.

The Vienna-based International Atomic Energy Agency said 440 nuclear power plants were operating globally with a further 24 being built.

But new power plants need Government approvals, which voter referendums can block in countries such as Switzerland. In Taiwan, a US$7 billion reactor planned to start next year might not be switched on, should public concern about its safety persist.

Investors are betting on nuclear. Gerald Grandey, chief executive of Canada-based Cameco, the world's biggest uranium producer, said uranium prices had jumped 62 per cent in the past year, partly driven by hedge fund purchases in a bet on growth in atomic energy.

In Western Europe and the US, approvals ground to a halt after the Chernobyl explosion. Death rates among the more than 500,000 workers on the clean-up operation soared

The Three Mile Island meltdown in Middletown, Pennsylvania, in 1979 was the most serious US nuclear incident. It caused "negligible" harm to people and the environment but, said the US Nuclear Regulatory Commission, led to "fear and mistrust" of the industry and the Government.

The IEA said the biggest nuclear issue was storage of waste. Nuclear power stations have to store the spent uranium and plutonium fuels under water for months because they are radioactive.

Asian countries, including China, India, South Korea and Japan, are leading the global nuclear construction programme, using technology supplied by Areva and GE, as well as Westinghouse.

The Tennessee Valley Authority, the largest public power company in the US, planned to restart its 1200-megawatt Browns Ferry 1 reactor by 2007, 22 years after it was shut down, said Nils Diaz, chairman of the US Nuclear Regulatory Commission. That would cost about US$1.8 billion and new plants may be built within six years.

The IEA said nuclear plants could contribute about 200 gigawatts of the 4800 gigawatts of new capacity needed until 2030. European countries will add more than 40 gigawatts of capacity.

Nuclear capacity in Asia will increase to 8 per cent of the region's total generation in 10 years, from 5 per cent now. China plans to add about 30 gigawatts of nuclear generation by 2030, while Russia could add a further 22 gigawatts. Korea may add 17 gigawatts and Japan about 14 gigawatts.

The new nuclear stations and extending the lives of present ones will keep the share of nuclear energy at 12 per cent of global power capacity in a decade.

A study by the Royal Academy of Engineering last year showed that generating one unit of energy by gas costs 2.2p a megawatt-hour, compared with 2.3p (5.7c) for a nuclear plant, 2.6p for a coal-fired plant and 3.7p at a wind park.

A UBS study found the cost of producing nuclear power, including construction and decommissioning, is likely to be 38 ($65) a megawatt-hour in 2010, less than the 42 for a gas-fired station and the 45 for a coal-fired plant. This assumes oil prices fall to US$32.50 a barrel, after 2007. If they slid below US$28, nuclear would not be competitive.

- BLOOMBERG