Nuclear Gold Mine or Shaft?

By Bill Moore

Posted: 05 Nov 2009

I had a conversation recently with some friends in the nuclear power business and asked where the nuclear power plants would come from if we DID begin to build them. The answer was amazing. The super-pure stainless steel will come from Germany, and it would be fabricated into steam-supply-systems in China, and the overall contractor would probably be Mitsubishi from Japan, and the construction contract would probably go to a firm in Korea that would send workers to the U.S. Well, I said, what’s in it for the U.S.? They laughingly said: "the spent fuel."
-- Michael Eckhard, President of ACORE
What's that old Country Western ballad about the guy whose wife divorces him, taking him for all he's worth. He laments, "She got the gold mine and I got the shaft."

Well, economically speaking, if the nuclear power industry and its lobbyists have their way, they'll get that gold mine of fat government subsidies on power "too expensive to meter," while we taxpayers get the shaft in the form of unknown utility rates, not to mention leaving our great, great, great, great, great, great.... grandchildren a radioactive legacy we bequeathed to them generations before they were ever born.

But this screed isn't about the environmental dangers of nuclear power; it's been relatively safe over the last few decades with only two catastrophes in the last thirty years: Three Mile Island and Chernobyl, though there have been reports of close calls.

Instead, it is the economic catastrophe that nuclear power represents. Of all the forms of electric power generation the California Energy Commission studied for their 2009 report entitled, Comparative Costs of California Central Station Electricity Generation Technologies, only nuclear power was projected to continue to increase in costs, as the below Figure 3 graph from the report illustrates. Concluded the Commission, "Nuclear continues to rise beyond competitive range" [page 15].

In 2007, the Commission issued a similar report and when you compare the levelized costs between the two reports, nuclear power (Westinghouse AP 1000 PWR) showed the greatest increase of more than 100% in just two years time when projecting megawatt hour costs for 2018. While solar thermal (parabolic trough) and ocean wave showed the greatest cost drop, both actually below that of nuclear power. (See figure 20).

In a 2008 paper entitled Business Risks and Costs of New Nuclear Power, Craig A. Severance reported "Capital costs to build all power plants have been rising much faster than inflation. A power plant with a long lead time (e.g. nuclear or coal) is exposed to much greater risks of cost overruns, than generation units with short lead times (e.g. natural gas, wind, or solar). Total “all-in” costs to build new nuclear are likely to equal approx. $8,900- $10,500/KW. Paying for this capital cost alone would cost approximately 17- 22 cents/kWh."

Moody's Investors Services issued in June 2008 its own warning, entitled, "Nuclear plant construction poses risks to credit metric, ratings." While Moody's recognized "new nuclear appears to be one of the most compelling solutions for electric-power generation amid more stringent environmental regulations -- particularly related to greenhouse gases, which nuclear plants do not emit," it also cautions:

Our preliminary analysis leads us to conclude that financial credit metrics will deteriorate meaningfully without significant mitigating factors or other structural provisions.
Those "significant mitigating factors" and "structural provisions" would be federal guarantees that pass off more of the risk to taxpayers, rate payers and consumers, which is precisely what nuclear industry and its lobbyists appear to be looking for. Despite already generous subsidies found in the 2005 Energy Policy Act, the industry is, warns the Union of Concerned Scientists, looking for a blank check.

Warns the UCS:

A recent Congressional Budget Office (CBO) report concluded that S. 1462 (known as the American Clean Energy Leadership Act of 2009) would exempt the Department of Energy’s (DOE) Loan Guarantee Program, which was established under the Energy Policy Act of 2005, from Federal Credit Reform Act provisions requiring such programs to be funded each year by congressional appropriation. “The effect of this exemption,” the CBO stated, “would be to give DOE permanent authority to guarantee such loans without further legislative action or limitations.” That means DOE could give virtually unlimited loan guarantees to expensive and risky new technologies, all underwritten by taxpayers without congressional oversight.

While I don't have a problem with the government providing seed money to get promising new, if risky (in terms of ROI, but not human health or the environment) technologies off the ground, the nuclear power industry has had half a century of subsidies and still hasn't found a way to raise private capital to build new plants, to say nothing of dealing with its concentrated radioactive waste. There are just too many risks for Wall Street, so the industry is dependent on government largess, or what the libertarian Cato Institute calls "corporate welfare" for the nuclear power industry. It noted somewhat laconically in a 2003 broadside that, "The federal government has always maintained a unique public-private partnership with the nuclear industry, wherein the costs of nuclear power are shared by the public but the profits are enjoyed privately."

As if to underscore the economic uncertainty associated with investing in nuclear power, the U.S., British, French and Finish nuclear safety agencies recently ordered Westinghouse (AP-1000 PWR) and Areva (Europe Pressurized Reactor) to redesign their respective nuclear reactor enclosures, which were deemed insufficient in terms of structural integrity in the event of seismic and other potentially catastrophic events. This will, of course, delay projects from Finland to China, further driving up their costs. Areva's EPR plant in Finland is already three years behind schedule and way over budget.

Unlike nuclear power, renewables are becoming increasingly cost competitive today. Geothermal is estimated at $3000kW, on a par with coal, which itself could double in cost as newer, cleaner scrubbers and technology drive up its cost into the $5,000 kW range. Concentrated solar is around $4,500 kW, while solar PV is rapidly headed south of $7,000. Wind power is in the $2,5000 kW ballpark and also declining.

Being a partner in HydroKinetic Lab, I believe there is huge potential in taping the power of flowing water in rivers and ocean currents, and would love have the government "risk" a few hundred thousand on our HyPEGS concept. Where nuclear power is headed north of $6,000 kW installed capacity with government subsidies (and $10,000 without), we estimate our system could cost closer to $1200 kWh and like wind and solar, the fuel is free, clean and forever: something you can't say about current uranium-based or even future, thorium-based nuclear power. I learned today that it's costing utilities -- and their ratepayers -- $4 million a month to store the 70,000 tons of spent nuclear fuel rods scattered at some 100 plant sites around the U.S.A.

The only reason we'll build nuclear power plants is to make a few people wealthier at the expense of everyone else. They will, as the song goes, get the "gold mine" while the rest of us get the "shaft" in the form of ever-high utility rates and pools of spent, radioactive fuel rods with no place to go except our collective backyards. That's not what I call a smart investment.

Addendum

Der Spiegel featured a lengthy exposé on the problems of the Areva reactor in Finland in an Oct. 15, 2009 article entitled, Problems Plague Launch of 'Safer' Next-Generation Reactors

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