Less energy for greater Chattanooga area economy

Less energy for greater Chattanooga area economy

March 9th, 2013 by Dave Flessner in Business Around the Region

The cooling towers of the TVA Watts Bar Nuclear Plant in Spring City, Tenn.

Photo by Associated Press /Times Free Press.

Aerisyn LLC produces towers for wind turbines near the Alstom plant in Chattanooga.

Aerisyn LLC produces towers for wind turbines near...

Photo by Tim Barber /Times Free Press.

As home of America's biggest government utility and the birthplace of the peaceful use of the atom, East Tennessee has long had a love affair with nuclear power and the jobs and energy it has brought to the region.

But just as the 1979 Three Mile Island accident tripped up the first generation of nuclear power, the Fukushima nuclear meltdown that hit Japan's coast in 2011 is stalling the industry's much-touted nuclear renaissance.

For Chattanooga, the fallout from the tsunami that struck Japan two years ago Monday is now costing hundreds of hoped-for local jobs among manufacturers supplying the nuclear industry. On Friday, Alstom announced it will lay off another 80 workers at the $300 million turbine manufacturing factory the company added at Riverfront Parkway three years ago to help meet the expected growth in nuclear power.

"We have to respond to the changing market after Fukushima," Alstom spokesman Tim Brown said.

The Alstom plant that originally was scheduled to have more than 300 employees will have only 60 workers by this fall.

Green power cuts

But nuclear power equipment makers are not alone in suffering the effects of a changing marketplace. With the economy growing slower, natural gas prices near historic lows and energy conservation gaining steam, demand is also down for some green energy producers.

Adjacent to Alstom's new turbine plant, production was halted last fall at the wind tower maker SIAG Aerisyn, which filed for bankruptcy last year. The company continues to operate under a Chapter 11 reorganization plan, and general manager Joe Kelly said he hopes the renewal of the wind production credit this year will help spur new contracts to help resume plant production.

Even the 400-employee boiler equipment production at Alstom, located on the other side of the new turbine facilities in Riverfront Parkway, employs only half as many workers as a decade ago supplying primarily coal-fired power plants and the paper and pulp industries. The Alstom plants employ today only a fraction of the 5,700 employees who once worked at the riverfront facilities of Combustion Engineering when that company was in operation there in the 1970s.

The staff of the former C-E foundry shrunk following the slowdown in nuclear power plant construction in the 1980s. The 1979 accident at the Three Mile Island nuclear plant in Pennsylvania increased the regulations and costs of building new plants even as the public became more wary about the dangers from nuclear reactors.

Reactor rebound

But by the start of the 21st century, support for nuclear power grew as the environmental and economic costs of burning coal and other fossil fuels also increased. By 2005, 17 utilities had applied to build up to 26 more nuclear reactors.

But only five of those are now under construction. The Unit 2 reactor at TVA's Watts Bar Nuclear Plant is scheduled to come online by 2015, two new reactors are due to be added by 2017 at Plant Vogtle in Georgia, and two units are scheduled to be added at the Summer Nuclear Plant in South Carolina by 2018.

All five of the units are costing more than originally budgeted, however.

"Nuclear power is simply proving to be too costly, both in the hazardous wastes it produces and the enormous capital costs to build these plants," said Gloria Griffith, the former energy chairman for the Tennessee Chapter of the Sierra Club, which opposes nuclear power. "In East Tennessee, nuclear power is a major employer, but I think there will be more jobs from cleaner energy sources and from energy conservation."

But for the Tennessee Valley Authority and its power headquarters in Chattanooga, the slowdown in energy demand forced the utility to implement a "diet and exercise" program and cut 1,000 TVA and contractor jobs last year.

A coalition of nuclear power suppliers formed by the Tennessee Valley Corridor Inc. three years ago has been abandoned because of the slowdown in new nuclear construction.

"We certainly think there are long-term growth prospects for nuclear, but after Fukushima there has clearly been a slowdown in new construction, and more focus has been put on how you retool existing plants and manufacturers for the energy needs of today," said J. Wayne Cropp, president of The Enterprise Center in Chattanooga and a member of the Tennessee Valley nuclear coalition.

Future growth prospects

Tennessee's U.S. senators, both ardent supporters of nuclear power, said they expect Alstom's power business will rebound in the future.

"Obviously, we never like to see jobs leave our community," said U.S. Sen. Bob Corker, R-Tenn. "I do think nuclear energy will be an important part of U.S. energy production in the long-term, so hopefully these jobs will return at some point."

U.S. Sen. Lamar Alexander, R-Tenn., who has urged U.S. utilities to build 100 more nuclear reactors, insisted the nuclear renaissance will come.

"It's hard to imagine how the United States could produce the amount of cheap, reliable, clean energy our economy needs to grow without expanding our use of nuclear power," he said in a statement Friday. "It's unfortunate that Alstom is bearing the brunt of the weak economy and the relatively cheap price of natural gas that is slowing the growth of the nuclear industry, but the reawakening of nuclear power in the United States is proceeding, from the recent approval of small modular reactors to finding solutions to our storage of nuclear waste."

The International Energy Agency forecasts that demand for electricity will increase 70 percent from 2010 to 2035, faster than any other final form of energy. Most of that growth will come in China and other developing countries.

"Despite today's low natural gas prices, little or no growth in demand for electricity and soft power markets in the near term, we believe the long-term prospects for nuclear energy remain strong," Marvin S. Fertel, president of the industry trade group Nuclear Energy Institute, said in a recent speech. "The value proposition for nuclear energy is strong and will reassert itself as we move beyond the near-term."

Brown said Alstom will maintain its turbine production capacity in Chattanooga while it waits upon the nuclear recovery.