[Peace-discuss] Financial impossibility of nuclear power

[C. G. Estabrook]

Nuclear Dead End: It's the Economics, Stupid
Christian Parenti | April 18, 2011

For about a decade now, nuclear boosters have been telling us that a “nuclear 
renaissance” is underway thanks to the advent of cheaper, safer and faster-built 
“third-” and “fourth-generation” reactors. Their ranks have been swelled lately 
by green champions of nuclear power like George Monbiot, who has recently 
embraced nuclear energy as an alternative to fossil fuels in the quest to 
mitigate climate change. Anti-nuke activists like Helen Caldicott have responded 
with dire warnings of nuclear apocalypse and radiation-induced cancer (see their 
exchange on a recent episode of Democracy Now! [1]).

But for all its moral urgency, this debate usually ignores the economics of 
nuclear power. It is economic factors like costs, supply chains, financing and 
profitability that will determine our future energy mix. And so far, the dollars 
and cents calculations for nuclear power just do not add up.

The argument for nukes gets even weaker when one considers the compressed time 
frame of climate change: carbon emissions must drop sooner and faster than the 
long, slow, costly process of building new nuclear plants would allow. The 
boosters of nuclear power, including greens like Monbiot, seem to forget the 
reactors don’t build themselves. They are built and operated by specific 
institutions under concrete economic circumstances like the price of capital, 
special metals, insurance and the availability of skilled labor. Once the 
economic arguments get to that level of specificity, the viability of atomic 
power falls apart.

Moreover, casting a nuclear renaissance as the panacea for climate change is 
dangerous because it threatens to delay the shift to clean energy. Continually 
pushing nukes has opportunity costs; every dollar, euro or RMB spent on nuclear 
power is one not spent on clean technology like wind, solar, hydro or tidal 
kinetics.

First, a bit of history: The initial wave of nuclear power reached its zenith 
after the Arab oil embargo of 1973. That political and economic shock sent many 
developed economies on a reactor construction spree. The logic here was 
fundamentally geostrategic, not economic: better to have power from nukes that 
operated at a loss and were subsidized by the rest of the economy than to have 
your whole economy collapse because you could not import oil. In particular, 
Japan and France went nuclear; France converted the majority of its electrical 
supply from fossil fuels to nuclear.

But these second-generation reactors, which make up the majority of the world’s 
current fleet of 443 nuclear power stations, soon proved to be prohibitively 
expensive and slow to build. After the Three Mile Island accident, hundreds of 
planned plants in the United States were canceled and construction around the 
world slowed. Bankruptcies associated with nuclear power rose, and investors 
began to turn away from it.

Even in France and Japan, building new reactors mostly halted. France became the 
most nuclear-powered country in the world, in part because its system is 
fundamentally socialized; the various companies associated with construction and 
operation of nuclear plants never had to turn a profit and managed to offload 
most of their debts onto the public. Japan’s reactors are also heavily subsidized.

In the US and the UK cost overruns on nuclear plants helped bankrupt several 
utility companies. In the US these losses helped usher in the debacle of energy 
deregulation in the mid-’90s that saw rising rates and power blackouts in 
California. When the UK began privatizing utilities its nuclear reactors were so 
unprofitable they could not be sold. Eventually in 1996, the government gave 
them away. But the company that took them over, British Energy, had to be bailed 
out in 2004 to the tune of 3.4 billion pounds.

It was around the turn of the millennium that people like British Prime Minister 
Tony Blair and Senator Pete Domenici of New Mexico began championing the second 
coming of the atom. Yes, they agreed, the critiques of the old equipment were 
correct. But the new third- and fourth-generation reactors would be safe, cheap 
and quick to build.

In February 2002, the Bush administration tried to jump-start nuclear 
construction with its “Nuclear Power 2010 program,” a package of subsidies and 
streamlined planning procedures. It was expected that these incentives would 
lead to at least one “Generation III+ unit” being operational by 2010.

It is true that Generation III reactors are safer than older reactors like the 
GE MAC 1 at Fukushima, Vermont Yankee and other plants around the world. But the 
new technology is not cheap, nor is it quick to construct. After a decade in 
which the federal government did all it could to boost this new version of 
nuclear power, only one Generation III+ reactor project has even been approved. 
Work on it has just begun in Georgia, and already there are conflicts between 
the utility, Southern Company and the Nuclear Regulatory Commission. Moreover, 
this project is going forward only because it is in one of the few regions of 
the United States (the Southeast) where electricity markets were not 
deregulated. That means the utility, operating on cost-plus basis, can pass on 
to rate-payers all its expense over-runs.

Another US reactor is being assembled at the Tennessee Valley Authority’s Watts 
Bar plant. But construction on this second-generation, Westinghouse-designed 
Pressurized Water Reactor, designed in the 1960s, was begun in 1972. After long 
delays, the unit should be up and running in 2012.

In Western Europe the situation is very similar. Only two Generation III+ 
reactors are under construction. The plant closest to completion is Olkiluoto 3 
in Finland. This 1,600-megawatt European Pressurized Reactor (EPR) is being 
built by Areva, the French government-controlled nuclear construction firm. The 
reactor was scheduled to take four years and cost about $5 billion. But now 
construction will take at least eight years and is 68 percent over budget, at a 
projected final cost of $8.4 billion. Some fear that the Olkiluoto 3 could 
bankrupt its owner, TVO. The other EPR under construction is in Flamanville, 
France. It began in 2007 and is now two years late and at least 50 percent over 
budget. In the best-case scenario, it will open in 2012.

In the United States, the Nuclear Regulatory Commission’s review process to 
certify the safety of the EPR is itself two years behind schedule.

There are sixty-four, mostly old-style nuclear plants under construction 
worldwide, and most of these are in Asia. Sixty-plus reactors might sound like a 
lot, but when you compare that to the overall size of the world appetite for 
energy, it’s not much. If all of these nuclear power plants are completed they 
will add 62.56 gigawatts of capacity, which is less than one-third of 
already-existing wind capacity worldwide, which was at 196.63 gigawatts at the 
end of 2010.

Of the sixty-four nuclear plants under construction worldwide, twenty-seven are 
in China and eleven are in India. China already has thirteen operating reactors, 
which produce less than 2 percent of its total electricity. India gets a little 
more than 2 percent of its electricity from existing nuclear plants. If China 
finishes building all of the nuclear plants under construction there, nuclear 
power will still only account for 9 percent of the country’s total electricity.

Even in China wind is outpacing nuclear power. China’s total installed wind 
capacity, which has been roughly doubling every year for the past several years, 
was 44.7 gigawatts at the end of 2010. The Chinese wind sector is set to reach 
as much as 200 gigawatts by 2020, according to the China Wind Power Outlook 2010 
report. That figure dwarfs the 10.06 gigawatts of nuclear power online now, 
which will increase by only 27 gigawatts if all of China’s planned plants get 
built. “China is not going nuclear they way France did the 1970s,” says Stephen 
Thomas, professor of business at the University of Greenwich in the UK.

An analysis by economist Mark Cooper, senior fellow for economic analysis at the 
Vermont Law School, found that adding 100 new reactors to the US power grid 
would cost $1.9 to $4.1 trillion. And the problem is not simply this direct 
investment.

“Once a utility embraces a huge nuclear project, their finances are completely 
tied up. The company’s management is completely tied up. They begin to look at 
all other alternatives—efficiency and renewables, which you can buy in smaller 
bites—as threats to their big project,” said Cooper. “They become very hostile 
to sensible policy. And then you end up with extremely expensive power.”

In a comparative analysis of US states, Cooper found that the states that 
invested heavily in nuclear power had worst track records on efficiency and 
developing renewables than those that did not have large nuclear programs. In 
other words, investing in nuclear technology crowded out developing clean 
energy. That’s dangerous because the primary problem facing clean alternative 
energy is the “price gap”—they are still more expensive than fossil fuels. As 
I’ve outlined in these pages previously (see “The Big Green Buy [2]”), economies 
of scale, along with subsidies and planning, will help close this price gap.

Only when clean technologies—like wind, solar, hydropower and electric 
vehicles—are cheaper than other options will global capitalism make the switch 
away from fossil fuels. The good news is that clean tech is catching up. An 
authoritative study by the investment bank Lazard Ltd. found that wind beat 
nuclear and that nuclear essentially tied with solar. So the race is tight. The 
Worldwatch Institute reports that between 2004 and 2009, electricity from wind 
(not capacity but actual power output) grew by 27 percent, while solar grew by 
54 percent. Over the same time, nuclear power output actually declined by half a 
percent.

Another danger with pursuing the myth of a nuclear renaissance is the overall 
timing of climate change. Science tells us that aggressive emissions reductions 
need to start immediately. Emissions need to peak by 2015 and then decline 
precipitously if we are to avoid catastrophic climate change.

A massive industrial-scale build out of fourth-generation nukes—the ones that 
are supposed to be safe, cheap and easy to build—would arrive too late to stave 
off climate change’s tipping points. The US Department of Energy (DoE), a major 
booster of all things nuclear, gives 2021 as the earliest possible date for a 
fourth-generation nuclear plant to open. Keep in mind, no American nuclear plant 
has yet been built on time or within budget, so the DoE’s forecast is very 
optimistic.

Nuclear power is simply not going to sweep in over the next handful of years and 
change the energy mix and save us from these tipping points. The 
catastrophically tight timeframe of climate tipping points means we must scale 
up actually existing clean technology. That will take massive investments and 
serious planning—but that project has already begun. Alternatives are slightly 
cheaper than nukes, come online faster and are growing robustly.

In other words, nuclear power is not only physically dangerous; it is also 
economically wasteful and slow, especially when built in market economies. Quite 
simply, it is a stupid way to address climate change.

As the wags like to say: “Nuclear power is the energy source of the future. And 
it always will be.”

Source URL: 
http://www.thenation.com/article/159997/nuclear-dead-end-its-economics-stupid

Links:
[1] http://www.democracynow.org/2011/3/30/prescription_for_survival_a_debate_on
[2] http://www.thenation.com/article/37528/big-green-buy