Tokyo-based Toshiba, which just a decade ago placed a major bet on the U.S. nuclear power plant industry, it exiting the business. My, how the mighty have fallen. In 2006, Toshiba shelled out $5.4 billion to acquire a majority interest in Westinghouse Electric, a move the company believed would accelerate its entry into the U.S. nuclear market by virtue of technology that enabled the building of smaller, cheaper nuclear power plants as well as easier-to-build full scale reactors. Now, thanks to a plethora of problems that delayed construction by years causing billions of dollars in cost overruns, Toshiba is taking an eye-popping $6.3 billion write-down for the businesses and is concurrently looking to unload its stake, presumably for pennies on the dollar.
Challenges in the U.S. Nuclear Power Construction Industry
Toshiba’s stunning exit from the U.S. nuclear construction industry literally brings nuke construction to a screeching halt. There are only four reactors currently under construction in the U.S. – all Toshiba projects. Although Toshiba plans to finish these four projects, it will cease operations afterward. And there are no other players in the industry due to the alarming long term trends of rising construction costs, increased regulations, the emergence of Fukushima-induced fear, and a decrease in institutional expertise after decades of very little new construction.
Impact on Climate Change
Whether you favor nuclear power or not, to me this is troubling. According to the International Energy Agency, nuclear power capacity must increase by 100% in order to keep climate change under control. Apparently, there is no other realistic way to accomplish this goal. Although 60 reactors are currently under construction in other countries, especially China, without the introduction of new capacity in the U.S., it may not be enough. And this does not bode well for reliability, as warmer global temperatures translate into an increase in the frequency of severe weather. The only solution is for utilities to place even more emphasis on emergency preparedness, including upping the frequency of exercises and drills.