General Electric Co. and Hitachi Ltd. on Monday launched a joint nuclear business because of rising demand for electricity and increasing concerns about carbon dioxide emissions from coal-fired plants.
John Krenicki, president and chief executive of GE Energy, said at a news conference that nuclear plants produce virtually no carbon gases and reactors can take the place of aging power plants that rely on fossil fuels.
"We believe nuclear is going to step in and we're getting ready to execute that plan," he said.
Customers seeking fuel diversity to avoid relying on oil and coal are helping to rebuild a market for nuclear energy that faltered beginning in 1970s as safety worries mounted. And nuclear energy could become more attractive if Congress and state legislatures eventually impose a carbon tax to discourage carbon-producing plants, Krenicki said.
The GE-Hitachi alliance plans to spend between $350 million (257 million EUR) and $400 million (294 million EUR) for nuclear plant designs and certification. The designs, which have been in the works for about 11 years, are expected to be completed by 2010, said Andy White, chief executive of GE Energy Nuclear.
Except for in Japan, the business that will operate internationally is 60 percent owned by GE and 40 percent by Hitachi.
In Japan, the business will be about 80 percent owned by Hitachi and approximately 20 percent by GE.
GE and Hitachi, which agreed last November to establish the venture, say they are combining their nuclear businesses to provide advanced boiling water reactor plants and related services. To avoid ceding business to competitors, the two companies also will offer equipment and services for a separate nuclear plant technology known as pressurized water reactors.
"We are coming together at the right time, at the right place and in the right circumstances," said Masaharu Hanyu, president of Hitachi-GE Nuclear Energy.
The two companies have worked together since the 1980s to develop reactors in Asia. GE brings to the partnership its expertise in designing boiling water reactor plants and Hitachi's strengths are in manufacturing reactor components and construction methods, White said.
GE officials said polls show public support for construction of nuclear plants, though Chief Executive Jeffrey Immelt cautioned that broad acceptance of nuclear energy may take time.
"We've been in this business for 50 years. We're not naive about how this changes over time," he said. "I would say it's hard to believe simultaneously in energy security and reduction in greenhouse gases without ... nuclear power. It's just intellectually dishonest."
About 100 nuclear power plants operate in the United States, but an order has not been placed for a new reactor since 1973, six years before an accident at the Three Mile Island plant in Pennsylvania and opposition to nuclear power by environmental activists who said the plants were unsafe.
White said technological advances, such as digital control systems and computer designs of nuclear plants, have been applied to several generations of nuclear plants in the past 30 years, improved their safety and security.
The United States now gets about 20 percent of its electricity from nuclear reactors.
Construction of plants in the GE-Hitachi deal will be slow because of the time required for design, licensing and approval of nuclear plants. Two or three plants will be built in the next 10 years.
The world's nuclear power giants are counting on growing demand not only in the United States but also in China, where the power market is expected to grow significantly. Immelt said India also can provide a strong market for nuclear power.
In 2005, President George W. Bush signed an energy bill that provides incentives to build new nuclear power plants in the U.S.
GE shares rose 16 cents to $38.64 in late afternoon trading Monday.