Image: A fisherman stands beside the San Onofre Nuclear Power Plant in San Diego, Calif., on March 15, 2011 © Mark Ralston, AFP, Getty Images

About a decade or so ago, many Americans were talking about a "Nuclear Renaissance." The public's unease about the industry, which dated at least as far back as the 1979 Three Mile Island accident, had begun to fade and new nuclear power plants were being proposed in the U.S. for the first time in decades.

The prospect was tantalizing: Electricity generated by nuclear power promised once again to help the U.S. in its quest to broaden its energy portfolio, reduce carbon emissions and end its long dependence on imported fossil fuel.

Now, though, optimism surrounding nuclear energy is slipping away, even as President Obama has vowed that 80% of America's electricity will come from renewable resources by 2035 to reduce greenhouse gas emissions.

Nuclear power accounted for about 19% of the total U.S. generation during 2012, according to the U.S. Energy Information Administration. Coal contributed about 45% and natural gas 23%. Renewable sources currently make up only about 10% of power production. 

"There were expectations that (a new nuclear plant) might come, but the combination of the recession and the development of shale gas practically nipped it in the bud," says John Rowe, the former chief executive of Exelon (EXC), one of the biggest operators of nuclear power plants, in an interview. "You just don't have an economic space for new nuclear anymore."

Exelon, which is based in Chicago, looked into building new reactors in Texas but scrapped the idea in 2007 when it realized the project was economically unfeasible, he said. Merchant power plant operator NRG Energy (NRG) also abandoned a reactor project in the Lone Star State in 2011. Duke Energy (DUK) shelved plans for reactors in North Carolina earlier this year.

The 2011 Fukushima nuclear disaster in Japan didn't help matters, either. Although more than 18,000 people died in the earthquake and tsunami, no one has been reported suffering from radiation sickness, and experts don't expect a major spike in illnesses in future years.

In the U.S., about 30 new nuclear plants have been announced, but construction has actually begun on only five. All of these projects are behind schedule and over-budget, according to Jim Riccio of Greenpeace, a longtime critic of the industry.

Southern Co. (SO) is at least 14 months late in its $14 billion project to add two reactors at its Alvin W. Vogtle nuclear power plant near Augusta, Ga., according to The New York Times. "Still, all is not lost," the newspaper noted. "Some of the changes since the company committed to the project seven years ago have helped it along; interest rates are at historical lows and the price for labor and materials has been held down by recession."

Scana (SCG), which owns South Carolina's largest utility, recently said its new reactor project in the state was behind schedule because a subcontractor was struggling to meet deadlines. The outlook for other projects also remains problematic.

"In the face of escalating nuclear construction costs, cheap natural gas, rising competition from increasingly inexpensive wind and other renewables, falling consumer demand, and a heightened focus on energy efficiency, the economics of these new nuclear reactor projects could not be more abysmal for ratepayers," said the Vermont Law School Institute for Energy and the Environment earlier this year in a report critical of the industry.

Indeed, as the economy faced its worst slowdown since the Great Depression, demand for electricity plunged, and it still hasn't returned to 2007 levels, according to Richard Myers, vice president for policy at the Nuclear Energy Institute (NEI), an industry trade group. He added that most of the new generating power now under construction will be natural gas-fired plants.

"It's a little dangerous to put all your eggs in one basket," he warned.

All this represents a change in fortunes for the nuclear industry. During the 1990s, as some states deregulated their electricity markets, utilities gained the ability to refinance their nuclear debt at lower interest rates. As their operating costs fell, plants that many had expected to be shuttered got a new lease on life. Some were sold to companies such as Exelon, which began adding to their nuclear portfolios. In 2011, it acquired Baltimore-based Constellation Energy for $7.9 billion. New Orleans-based Entergy (ETR) spent more than $1 billon acquiring reactors including New York State's Indian Point.

Despite the recent setbacks, industry executives argue that nuclear plants are resilient.

"The plant's age is really not an indication of how long it can run," said Myers of the NEI, adding that the industry spends about $8 billion annually on new equipment. "We invest quite heavily in all our plants."

And the future isn't entirely bleak. Small, modular reactors that are being developed appear to have some promise. They're cheaper than more conventional reactors. And given their smaller size, they also produce less radioactive waste. Some will be able to be run for extended time periods without refueling outages, according to the Department of Energy. But some critics are skeptical that the technology will pan out.

Nuclear power has the advantage over coal and natural gas of being benign from a greenhouse gas perspective, though the disposal of radioactive waste remains a crucial issue. Critics such as Greenpeace have long argued that the risks of nuclear power far outweigh the benefits.

"The continued greenwashing of nuclear power from industry-backed lobbyists diverts investments away from clean, renewable sources of energy," the environmental group says on its website. "In contrast to nuclear power, renewable energy is both clean and safe."

Earlier this month, Edison International's (EIX) Southern California Edison announced it was going to retire the two reactors at its San Onofre plant (pictured) near San Diego, which had been idle since last year. While Myers said that plant's situation was unique, former Exelon CEO Rowe said it might be a harbinger of things to come.

"I think some additional plants will have curtailed lives," he said.

One issue that needs to be resolved is the long-term disposal of radioactive waste. President Obama canceled the Yucca Mountain, Nev., storage project earlier this year. And Nevada political officials such as Senate Majority Leader Harry Reid (D-Nev.) have fiercely opposed the facility for years.

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"We obviously don't agree with that decision and continue to contest it," Myers said, adding that the "political will to tackle the problem appears to exist."

If America really wants to be energy independent, nuclear will likely have to play a role. Although waste is an issue that won't go away, fossil fuels have plenty of their own baggage, such as greenhouse gases. Renewable sources, while promising, still tend to be expensive.

Nuclear power "emits very little CO2 and other pollutants and provides a lot of energy from a very small amount of fuel," wrote Ashutosh Jogalekar in Scientific American earlier this year. "It also generates a very small amount of waste. Compared to this, coal and oil produce a lot of air pollution and waste and you also need a lot of them to generate electricity."

This article is part of an MSN Money special report on America's quest for energy independence. Up next: Alternative-fuel cars: Are we there yet?

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