Nuclear power race

Steve Tripoli Nov 13, 2006

KAI RYSSDAL: If you’ve been keeping an eye on trends in the energy industry, you might have noticed a couple of things. One, oil’s been stuck at plus or minus $60 a barrel for a while now. No big moves up or down.

Also, nuclear power’s getting a lot of attention. The latest bit came today. General Electric and Hitachi said they’re going to combine their nuclear-power businesses. It’s the third such marriage this year. And it says something about where the nuclear business is heading. Marketplace’s Steve Tripoli has the story.

STEVE TRIPOLI: Just last month the world’s biggest reactor builder, Areva of France, partnered with Mitsubishi Heavy Industries. Earlier this year Toshiba bought Westinghouse Electric’s nuclear design group.

STEVE KEREKES:“The reason, pure and simple, is that folks are positioning themselves to be able to address the next era of nuclear power plant construction.”

Steve Kerekes of the industry group Nuclear Energy Institute says there could be a surge of plant construction in the next 25 years. World energy needs are growing fast. Global warming from fossil fuels is a concern. And even some environmental groups are coming around. Kerekes says that combination could mean a lot of plant construction.

KEREKES:“If you were to hold the nuclear percentage constant in the United States, from where it is today which is 20 percent of our electricity supply overall, you’re talking about 50 to 60 new nuclear power plants alone.”

He says the worldwide potential is for more than a hundred plants. These marriages are about competition too. The newest partnership may help GE break into India, for instance. Industry-watcher Borje Eriksson of the Swedish firm IFS says GE-Hitachi and Areva-Mitsubishi will set the pace.

BORJE ERIKSSON:“These two will definitely take, 70-to-80 percent of the market, or even more.”

All this matchmaking’s also about combining technological clout. GE’s expertise helps allay concerns about Hitachi’s recently unreliable turbines. Borje Erikson says that when it comes to technology one partnership’s clearly ahead.

ERIKSSON:“If we look in short terms I will spend my money on Areva.”

Betting on the French company has its logic. In France, state-of-the-art nuclear plants are the main source of electricity.

I’m Steve Tripoli for Marketplace.

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