Tuesday, April 10, 2007

Are More Nuclear Power Plants in Our Future?

CNN reports that TXU, a utility company acquired by two private equity firms earlier this year, is working to build the largest nuclear power plants in the country. Something big must be under way in Texas, because the Wall Street Journal suggests that at least three other utilities are considering building nuclear power plants in Texas.

No new nuclear power plants have been built in the United States in decades, but TXU has apparently been consulting with Mitsubishi Heavy Industries of Japan who would build the reactors, so there might actually be fire at the bottom of all this smoke.

The global warming debate has cast nuclear power into a sudden environmentally friendly light. If people are really more worried about global warming than nuclear accidents or terrorism, then the country might follow the French model which derives the vast majority of electrical power from nuclear energy.

The more capitalistic angle on this renewed interest in nuclear power questions what impact private equity has had on TXU's priorities. If private equity's ability to focus on long-term profits has allowed TXU to finally act on long simmering plans, this could have major repercussions for the economy as a whole. In a world where private equity is capable of even considering spending $50 billion for Dow Chemical, no public company is safe.

Greater willingness to take on spectacular risks will undoubtedly result in higher eventual payoffs for everyone in society, but the financial disasters will be larger too. Society just needs to make sure that the risks remain purely financial and not allow private business to avoid appropriate technological safeguards.


Professor Matt said...

I came across this article... must be read!

Mitsubishi Heavy Industries, one of the biggest industrial companies in the world that makes lots of large heavy and very high quality components for nuclear plants - has set up a special office to go out and get orders for the parts from around the world.

Nuclear power plants have design lives of about 40 years, but often the operators replace the large components before then (sometimes increasing generation capacity) and the re-license them to operte longer. Almost all the plants in the USA are licensed for 60 years life now. New plants are designed to have the large components replaced once during a 60-year design life.

Anyway, Mitsubishi heavy already have a large part of this market, they can only see it getting bigger and they want more.

click here for the full story