A nuclear energy industry veteran, Peter Bradford, recently wrote a strongly worded and pointed article on nuclear energy policy in the journal Nature (subscription required). While he is concerned with a number of approaches to nuclear, from the pro-nuclear side and the anti-nuclear side, it is his comments on the economics of nuclear energy that I think are the most compelling.
“The most implacable enemy of nuclear power in the past 30 years has been the risk not to public health, but to investors’ wallets. No new nuclear-power project has ever bid successfully in a competitive energy market anywhere in the world.”
Wow, that’s a pretty astounding and debilitating statement…. Except, anyone who follows nuclear policy and economics at all (even just for recreation) knows that’s the case.
Nuclear power may have serious environmental and health risks (my biggest concern with it is that most nuclear power options produce radioactive waste that lasts longer than the human species has existed for — how do we expect to contain that?), but for anyone who is a super techno-optimist and thinks we will be able to handle that, the bottom line that nuclear power requires massive support from the public sector (because the private sector won’t take the treacherous financial risks needed to fund nuclear power plants) is the real death knell to the technology. Nuclear economic risk is put on the backs of taxpayers, since investors don’t see nuclear as a good bet.
Damian Carrington of the UK’s Guardian nicely summarizes Bradford’s key point on this topic: “big nuclear programmes only happen when citizens sign blank cheques.” (emphasis mine)
Back to Bradford: “At the time of the Fukushima disaster, only four countries (China, Russia, India and South Korea) were building more than two reactors. In these four nations, citizens pay for the new reactors the government chooses to build through direct subsidies or energy price hikes.” (emphasis mine)
And, what has happened when a company tried to take a different route? Well, let’s look at Bradford’s example, Areva working on a new Olkiluoto 3 reactor in Finland without government support:
“Areva was gambling that the project would jump-start demand for its newest reactor design. As Olkiluoto is four years behind schedule and more than €2 billion ($2.7 billion) over budget, that gamble has fallen flat.” (emphasis mine)
What if there was a price on CO2?
Many nuclear lovers claim that a price on CO2, which should be in place worldwide now, would make nuclear competitive, but there are so many clean energy options available for a lower cost that can go up or be implemented much more quickly, I think it’s more than optimistic to say that nuclear could hold its own (without more government/taxpayer support).
By the time a new nuclear power plant is in place, solar power should be much cheaper. Wind power is already cheaper. And then there’s also cheap geothermal and hydro energy in some locations. How could nuclear compete, really?
How the UK & US go about supporting nuclear power
Now, some countries are still moving forward with nuclear. Two of those are the US and the UK. In the UK, Bradford notes that the way it is done is by essentially trying to trick the public into thinking nuclear is not being subsidized.
“The UK government is now having to torture the language of new policies to subsidise new reactors without this being recognised as such.”
In the US, well, I think not much effort is even needed to do that. The populous is so unaware of what is going on, policy-wise, and so influenced by political talk detached from policy, that politicians can do almost whatever the industries that support them want them to do.
Carrington notes: “The first licence to build new reactors in the US since 1978 was granted on 9 February.” I wonder how much of the population realizes that, and even more, so I wonder how much of the population realizes what that means or this simple fact: Georgia is one of a few states that guarantees the electricty ratepayers (customers) will pay 100% of the reactor costs, no matter what the price.
In other words, the electricity customers haves signed a blank check to an industry that consistently runs billions and billions of dollars of projected costs, and industry which already can’t compete with solar or wind power. Intelligent move, eh? I guess it pays to pay attention, and you pay someone else when you don’t.
Image: nuclear power plant in Czech Republic courtesy shutterstock