Demand for electricity will boost revenue, as players use uprates to increase capacity
Los Angeles, CA (PRWEB) January 25, 2013
The Nuclear Power industry has grown over the past five years, benefiting from increased output and prices since 2007. According to IBISWorld industry analyst Deonta Smith, the price increase has been due to high uranium prices before and after the recession, which have prompted industry players to pass along costs to customers; simultaneously, the level of demand from utilities and other independent power producers has increased significantly. As such, over the five years to 2012, industry revenue is expected to grow at an average annual rate of 2.7% to $33.3 billion, including an expected increase of 2.2% in 2012.
Historically, heavy regulation has hindered industry growth because players face difficulties gaining permits for new nuclear facilities. In fact, no new facilities have been built in the United States since 1996; though one nuclear reactor is set for construction, it is still pending license approval by the Nuclear Regulatory Commission. In response to heavy regulation regarding establishing and building new power plants, industry players have used uprates, or improvements in nuclear electricity generating capacity, to boost revenue, says Smith. Getting permission from the Nuclear Regulatory Commission for uprate approval is difficult, but the process is much easier to undertake than building a new plant. Firms have used uprates to increase capacity and sell higher volumes of energy to downstream customers over the past five years, boosting the industry's performance. The US Nuclear Power industry has a medium level of concentration. The four largest industry participants include Exelon Corporation, Tennessee Valley Authority, Entergy Corporation and Dominion Resources Inc. Merger and acquisition activity has contributed to increasing concentration over the past five years, as industry players gain access to new nuclear facilities. Most of the increase in industry revenue, however, is attributable to uprates, when firms increase the capacity of existing nuclear facilities by petitioning the Nuclear Regulatory Commission. Market share concentration is anticipated to increase as the US government grants permits to existing players that have experience owning and operating a nuclear plant.
Despite the recent nuclear crisis in Japan, regulatory concerns are anticipated to ease over the next five years. Industry players will continue to use uprates to increase the volume of electricity sold over the next five years, and, pending approval, a new nuclear plant is slated for completion by 2015, bolstering the industry's revenue potential. In addition, increasing concerns regarding greenhouse gas emissions will likely limit demand for competing energy sources used to generate electricity, making nuclear power a more attractive option. At the same time, however, low natural gas prices will continue to hover near historical lows, becoming external competition for the industry. This trend will limit the industry's growth potential. Moreover, precautions to ensure that facilities are safe from potential earthquakes may increase costs for operators in the near term. Nonetheless, IBISWorld projects that industry revenue will increase over the five years to 2017. For more information, visit IBISWorld’s Nuclear Power in the US industry report page.
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IBISWorld industry Report Key Topics
This industry consists of firms that operate nuclear-powered, electric-power generation plants. The power plants use nuclear fuel to generate steam, which in turn is used to power turbines that generate electric power. The electricity reaches end-users via transmission or distribution systems.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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