Those of you who remember the 1993 Michael Douglas movie “Falling Down” might recall a particular line that was repeated again and again throughout: “not economically viable.” Well, an analysis by a US CPA concludes that a nuclear power renaissance — viewed by some as our only hope for averting catastrophic climate change — might be deserving of the same description.
“Business Risks and Costs of New Nuclear Power,” (PDF) a study by Colorado-based CPA Craig A. Severance, finds that the nuclear industry’s consistent history of cost overruns, coupled with a new focus on as-yet unproven (in real life) next-generation plant designs, indicates the eventual cost of nuclear-generated electricity would be, compared to today’s prices, beyond prohibitive:
“Generation costs/kWh (kilowatt-hour) for new nuclear (including fuel & O&M (operations and maintenance) but not distribution to customers) are likely to be from 25 – 30 cents/kWh,” writes Severance, co-author of the 1976 book The Economics of Nuclear and Coal Power and former assistant to the chairman of the Iowa Commerce Commission. “This high cost may destroy the very demand the plant was built to serve.”
By contrast, the average US residential electricity cost in 2008 was 11.29 cents per kilowatt-hour, according to the Energy Information Administration.
“It seems to have been forgotten that the reason U.S. utilities stopped ordering nuclear power plants was their conclusion that nuclear power’s business risks and costs proved excessive,” Severance writes.
The current economic downturn won’t help, either, he adds:
“Given nuclear’s long lead time and the fact most nuclear costs occur after year 5, construction of a nuclear power plant will outlast any normal length recession. If other countries suffer less than the US, cost escalations may actually return even before the US economy recovers.”
A recent report in Time magazine reached similar conclusions:
“The math gets ugly in a hurry,” writes Michael Grunwald in a piece titled, “Nuclear’s Comeback: Still No Energy Panacea.” (Former Republican presidential candidate John) McCain called for 45 new plants by 2030; given the nuclear industry’s history of 250% cost overruns, that could rise to well over $1 trillion. Ratepayers would take the main hit, but taxpayers could be on the hook for billions in loan guarantees, tax breaks, insurance benefits and direct subsidies — not to mention the problem of storing radioactive waste, if Congress can ever figure out where to put it. And those 45 new plants would barely replace the existing plants scheduled for decommissioning before 2030.”
Not economically viable? Sure sounds like it.
The paper suffers from the same problems all papers do that are written solely to reach a predetermined conclusion.
The author bases all his nuclear-cost calculations on worst-case assumptions. Some nuclear plants have seen cost over-runs because of litigation from political groups, but others have been built on schedule and within budget. But the writer assumes that all future plants will face the same political attacks. The world would be better served if people were given accurate information instead of anti-nuclear propaganda like this article.
To illustrate the author’s separation from reality, consider this quotation from his article: “Energy storage and load management offer additional solutions to reduce, shift and better manage loads. Pumped-water and compressed-air energy storage as well as utility-scale batteries are now being implemented.” A more false statement could hardly be imagined. Not only are there no large-scale energy storage systems being implemented, not only are none to be implemented in the foreseeable future, there is no imaginable system on the distant horizon. For more on this point, please look at Solar Energy, Wind Power, Intermittency, and Storage.
The author believes that reducing electricity demand will solve the problem. Not so. The most effective thing that can be done to reduce greenhouse-gas emissions is converting fossil-fuel applications to electricity — battery-powered cars, electrified rail transport, heat pumps in place of furnaces, etc. etc. Electricity demand will definitely rise, not fall.
Typical of such anti-nuclear polemics, this article references a study by Cambridge Energy Research Associates that calculated the construction cost of obsolete reactor designs using obsolete manufacturing and construction methods at current prices. The CERA study ignores actual data of contemporary designs available from countries that are building nuclear plants. This data shows the CERA study to be wildly wrong.
As would be expected, the author nowhere considers the costs of alternatives to nuclear energy, which have risen in parallel with nuclear costs for the very same reasons. He also leaves out the pertinent fact that most wind turbines, which are the only renewable energy source close to competing with nuclear, are imported from Asia, where workers’ pay and safety standards are much lower. The heavy subsidies wind projects get now benefit foreigners much more than they do Americans. Since the US is running an unsupportable trade deficit, it’s not clear at all how this can proceed.
All the author has achieved is proving that by carefully selecting material that serves his purpose and ignoring inconvenient facts he can succeed in confusing his readers.
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