http://www.earthpolicy.org/Updates/2008/Update78.htm
October 28, 2008 - 10
Copyright © 2008 Earth Policy Institute
The Flawed Economics of Nuclear Power
Lester R. Brown
Over the last few years the nuclear industry has used concerns about
climate change to argue for a nuclear revival. Although industry
representatives may have convinced some political leaders that this is
a good idea, there is little evidence of private capital investing in
nuclear plants in competitive electricity markets. The reason is
simple: nuclear power is uneconomical.
In an excellent recent analysis, “The Nuclear Illusion,” Amory B.
Lovins and Imran Sheikh put the cost of electricity from a new nuclear
power plant at 14¢ per kilowatt hour and that from a wind farm at 7¢
per kilowatt hour. This comparison includes the costs of fuel,
capital, operations and maintenance, and transmission and
distribution. It does not include the additional costs for nuclear of
disposing of waste, insuring plants against an accident, and
decommissioning the plants when they wear out. Given this huge gap,
the so-called nuclear revival can succeed only by unloading these
costs onto taxpayers. If all the costs of generating nuclear
electricity are included in the price to consumers, nuclear power is
dead in the water.
To get a sense of the costs of nuclear waste disposal, we need not
look beyond the United States, which leads the world with 101,000
megawatts of nuclear-generating capacity (compared with 63,000
megawatts in second-ranked France). The United States proposes to
store the radioactive waste from its 104 nuclear power reactors in the
Yucca Mountain nuclear waste repository, roughly 90 miles northwest of
Las Vegas, Nevada. The cost of this repository, originally estimated
at $58 billion in 2001, climbed to $96 billion by 2008. This comes to
a staggering $923 million per reactor—almost $1 billion each—assuming
no further repository cost increases. (See data).
In addition to being over budget, the repository is 19 years behind
schedule. Originally slated to start accepting waste in 1998, it is
now set to do so in 2017, assuming it clears all remaining hurdles.
This leaves nuclear waste in storage in 121 temporary facilities in 39
states—sites that are vulnerable both to leakage and to terrorist
attacks.
One of the risks of nuclear power is a catastrophic accident like the
one at Chernobyl in Russia. The Price-Anderson Act, first enacted by
Congress in 1957, shelters U.S. utilities with nuclear power plants
from the cost of such an accident. Under the act, utilities are
required to maintain private accident insurance of $300 million per
reactor—the maximum the insurance industry will provide. In the event
of a catastrophic accident, every nuclear utility would be required to
contribute up to $95.8 million for each licensed reactor to a pool to
help cover the accident’s cost.
The collective cap on nuclear operator liability is $10.2 billion.
This compares with an estimate by Sandia National Laboratory that a
worst-case accident could cost $700 billion, a sum equal to the recent
U.S. financial bailout. So anything above $10.2 billion would be
covered by taxpayers.
Another huge cost of nuclear power involves decommissioning the plants
when they wear out. A 2004 International Atomic Energy Agency report
estimates the decommissioning cost per reactor at $250–500 million,
excluding the cost of removing and disposing of the spent nuclear
fuel. But recent estimates show that for some reactors, such as the
U.K. Magnox reactors that have high decommissioning waste volumes,
decommissioning costs can reach $1.8 billion per reactor.
In addition to the costs just cited, the industry must cope with
rising construction and fuel expenses. Two years ago, building a 1,500-
megawatt nuclear plant was estimated to cost $2–4 billion. As of late
2008, that figure had climbed past $7 billion, reflecting primarily
the scarcity of essential engineering and construction skills in a
fading industry.
Nuclear fuel costs have risen even more rapidly. At the beginning of
this decade uranium cost roughly $10 per pound. Today it costs more
than $60 per pound. The higher uranium price reflects the need to move
to ever deeper mines, which increases the energy needed to extract the
ore, and the shift to lower-grade ore. In the United States in the
late 1950s, for example, uranium ore contained roughly 0.28 percent
uranium oxide. By the 1990s, it had dropped to 0.09 percent. This
means, of course, that the cost of mining larger quantities of ore,
and that of getting it from deeper mines, ensures even higher future
costs of nuclear fuel.
Few nuclear power plants are being built in countries with competitive
electricity markets. The reason is simple. Nuclear cannot compete with
other electricity sources. This explains why nuclear plant
construction is now concentrated in countries like Russia and China
where nuclear development is state-controlled. The high cost of
nuclear power also explains why so few plants are being built compared
with a generation ago.
In an illuminating article in the Bulletin of the Atomic Scientists,
nuclear consultant Mycle Schneider projects an imminent decline in
world nuclear generating capacity. He notes there are currently 439
operating reactors worldwide. To date, 119 reactors have been closed,
at an average age of 22 years. If we generously assume a much longer
average lifespan of 40 years, then 93 reactors will close between 2008
and 2015. Another 192 will close between 2016 and 2025. And the
remaining 154 will close after 2025.
But only 36 nuclear reactors are currently under construction worldwide
—31 of them in Eastern Europe and Asia. Although there is much talk of
building new nuclear plants in the United States, there are none under
construction.
What these numbers indicate, Schneider points out, is that plant
closings will soon exceed plant openings—and by a widening margin in
the years ahead. The trend is clear. From 2000 to 2005, an average of
4,000 megawatts of nuclear generating capacity was added each year.
Since 2005, this has dropped to only 1,000 megawatts of additional
capacity per year.
Even if all reactors scheduled to come online by 2015 make it, the
projected closing of 93 nuclear reactors by then will drop nuclear
power generation roughly 10 percent below the current level. Unless
governments start routinely granting operating permits for reactors
more than 40 years old, a half-century of growth in world nuclear
generating capacity is about to be replaced by a long-term decline.
Despite all the industry hype about a nuclear future, private
investors are openly skeptical. In fact, while little private capital
is going into nuclear power, investors are pouring tens of billions of
dollars into wind farms each year. And while the world’s nuclear
generating capacity is estimated to expand by only 1,000 megawatts
this year, wind generating capacity will likely grow by 30,000
megawatts. In addition, solar cell installations and the construction
of solar thermal and geothermal power plants are all growing by leaps
and bounds.
The reason for this extraordinary gap between the construction of
nuclear power plants and wind farms is simple: wind is much more
attractive economically. Wind yields more energy, more jobs, and more
carbon reduction per dollar invested than nuclear. Though nuclear
power plants are still being built in some countries and governments
are talking them up in others, the reality is that we are entering the
age of wind, solar, and geothermal energy.
Copyright © 2008 Earth Policy Institute
For more information on the new energy economy, see Chapters 11-13 in
Plan B 3.0: Mobilizing to Save Civilization, available at www.earthpolicy.org
for free downloading.
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