U.S. nuclear investment to pause: analysts

By Al Yoon

NEW YORK (Reuters) – Plans for nuclear power investment in the United States will be sidelined but not derailed by the problems Japan is having with the Fukushima nuclear plant, experts said in a panel discussion on Thursday.

The state of the Fukushima Daiichi nuclear reactors after the March 11 earthquake and ensuing tsunami has rekindled the debate over whether the benefits of nuclear power outweigh the risks.

As Japan struggles to regain control of the damaged nuclear plant north of Tokyo, licensing and financing for new nuclear projects in the United States will be put on hold, according to former regulators and other experts assembled on a panel sponsored by the New York Society of Security Analysts.

“I think there will be limited impact on new plant development,” said James Asselstine, a managing director at Barclays Capital and former member of the U.S. Nuclear Regulatory Commission.

It has been decades since the U.S. has added new nuclear power plants, in part due to their higher costs versus other sources, such as natural gas, analysts said.

But the political will that had provided some hope for the industry in recent years has been weakened by the Japan experience, raising doubts about whether there can be any renaissance of nuclear power in the United States and expansion elsewhere in the world.

Energy investors have reacted to the Japan disaster with their feet.

Investors have been buying shares of companies like Siemens AG that would benefit from rising investments in non-nuclear power. Alternative power indexes have gained.

Mark Cooper, a fellow at the Institute for Energy and the Environment asserted nuclear power is 25 percent less attractive to investors after Japan shed light on risks.

Backing from the government — crucial for the financing of plants — may be at a crossroads, some analysts said.

“They cannot be built without government guarantees … shifting risk from investors and lenders to taxpayers,” said Peter Bradford, an adjunct professor at Vermont Law School who was a commissioner on the NRC when the Three Mile Island disaster struck.

Political will ” is unlikely to be there in the near future,” he said.

France — the most nuclear-dependent nation and home of reactor maker Areva — called for new global nuclear rules and proposed a global conference as President Nicolas Sarkozy visited Tokyo on Thursday.

Germany, which recently reversed a policy favoring nuclear power, said on Thursday it would raise security requirements at its 17 nuclear plants to ensure they can withstand plane crashes and earthquakes.

Meantime, American concern has lingered since a partial meltdown at Pennsylvania’s Three Mile Island plant in 1979. The Indian Point nuclear plant north of New York City has been criticized because, according to an NRC report in September, it is at the greatest risk for seismic activity among the 27 plants the NRC reviewed.

Shutdowns of current plants in the U.S. are unlikely following industry reviews, Asselstine said.

“U.S. industry and government response (to Japan’s disaster) has been measured and appropriate, he said.

Asselstine predicted regulators and investors will go ahead with a handful of projects, which will be used as benchmarks for the future of the industry that provides some 20 percent of the nation’s power.

He conceded there will be delays in the “current environment,” possibly with the approval of more U.S. guarantees for nuclear power loans.

Utility nuclear players that want to build new reactors are Southern Co, SCANA Corp, DUKE Energy and Progress Energy.

NRG Energy Inc’s $10 billion nuclear plant expansion planned for South Texas may never get off the drawing board as repercussions from Japan’s disaster spread, rating company analysts said earlier this month.

(Additional reporting by Luke Pachymuthu and Francis Kan in Singapore, Kiyoshi Takenaka and Yoko Nishikawa in Tokyo, Anna Driver and and Eileen O’Grady in Houston; editing by Carol Bishopric)

U.S. nuclear investment to pause: analysts