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Demand for Nuclear Rises

Posted By Nicolas Loris On September 24, 2008 @ 9:57 am In Energy | Comments Disabled

Everyone wants a piece of the nuclear action. The people want nuclear power; a poll a few months back reported that 2 out of 3 Americans favor building new nuclear plants [1]in the U.S. Recognizing the long-term benefits nuclear can provide, many companies are chomping at the bit to provide nuclear for them.

For instance, Electricite de France (EDF) bid to purchase Constellation Energy [2], a major player in the nuclear market, which was nearly $10 more a share than the next highest bidder, Warren Buffet’s MidAmerican Energy.

Yes, the upfront costs of getting into (or expanding) the nuclear business is significant, but that isn’t stopping major international investors from recognizing nuclear’s benefits. Whether it is building new plants or snapping up nuclear companies that hit the market, the fact is that nuclear power can produce clean, affordable energy for decades and that is attractive to investors.

Bidding wars over nuclear companies is nothing new. In 2005, Westinghouse, a major player in the nuclear business, was put up for sale. While the initial price tag was around $1.5 billion, in January of 2006 Toshiba announced it purchased the company for $5.4 billion [3]. In the end, buyers had high hopes for the deployment of its AP1000 pressurized water reactor [4]and were betting on the general push for nuclear in the future. Constellation’s nuclear play is likely a reason for the attractiveness of that company as well.

As these purchases and mergers move ahead, it is important that the private sector be allowed to assess the real risk associated with their moves. Either way, it shouldn’t be up to us or the government to decide, it should be up to these companies to take the risk or if they feel the reward is worth it.

If we take away anything from this financial crisis, it’s that the government shouldn’t be involved in the financial decisions made by private firms. This means getting rid of the subsidies for all energy sources. When the government becomes a sponsor, the profits are privatized while the losses are socialized, meaning the burden falls on the taxpayer. The policies our government should focus on are: 1.) Fixing the issue of nuclear waste [5]2.) Creating a stable regulatory environment [6].

Fast-tracking the permitting process would be a useful first step in creating a stable regulatory regime. Heritage Research Fellow Jack Spencer outlines steps Congress can take here [7].


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/09/24/demand-for-nuclear-rises/

URLs in this post:

[1] 2 out of 3 Americans favor building new nuclear plants : http://www.foundry.org/2008/06/12/2-out-of-3-americans-favor-building-nuclear/

[2] Electricite de France (EDF) bid to purchase Constellation Energy: http://www.baltimoresun.com/business/bal-constellation0922,0,6300746.story

[3] purchased the company for $5.4 billion: http://www.nytimes.com/2006/02/06/business/06cnd-nuclear.html

[4] high hopes for the deployment of its AP1000 pressurized water reactor : http://www.neimagazine.com/story.asp?storyCode=2033820

[5] Fixing the issue of nuclear waste : http://www.heritage.org/Research/EnergyandEnvironment/bg2149.cfm

[6] Creating a stable regulatory environment: http://www.heritage.org/Research/EnergyandEnvironment/bg2086.cfm

[7] here: http://www.heritage.org/Research/EnergyandEnvironment/wm2062.cfm

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