Nuclear: too expensive to bother

The tragedy at Fukushima has sunk a territory named the “island of fortune” into a dark futuristic nightmare, compounding three other catastrophes that successively hit the region (a monster earthquake and a tsunami, followed by an unseasonal blizzard)

The plight of its people is beyond description and, perhaps, the fact that the fourth plague was man-made makes it even harder to bear.

And yet there’s the nuclear lobby, hardly able to wait for the worst to be over  to go go back at pushing its agenda for an aggressive expansion of nuclear production.

What are their arguments? Simple indeed. As any marketing expert knows, a message has to be simple, appealing and constantly hammered to gain its way into the public’s mind. In this case:

  1. Nuclear energy is cheap. Very cheap. “Too cheap to meter” as Lewis Strauss, first president of the Atomic Energy Commission envisioned it in his infamous speech of 1954.
  2. Nuclear energy is safe. Very safe. Safer than sunbathing, safer than watching TV, safer than just lying around doing nothing.
  3. Nuclear energy is the technology of the future. a CO2 free source of energy, the only one to provide for a peaceful and abundant future.

In a three posts series, we will go over these promises and think about the costs of nuclear energy, what risks and uncertainties it creates and, finally, what would the prospects of the technology be in an undistorted market.

The most authoritative report on the cost of nuclear energy among those which are available to the public is Nuclear Power: Still Not Viable without Subsidies (2011), released on February 23rd by the Union of Concerned Scientists. It really touches on practically all the issues I bring up here, so I will summarize below the findings of the report and let the inquisitive minded follow the link to better explanations than mine.

Nuclear energy is a production system based on huge investments in return of a lower operating cost (not spectacularly lower, certainly not zero). Since the impact of the initial investment on the Kw average cost is crucial, assumptions that tend to lower this cost or that disregard substantial parts of it, will completely skew the results. Nuclear plant operators have benefited from many subsidies (direct or indirect) that tend to be obviated in any analysis concluding that nuclear generation is more efficient. Most egregiously:

  1. Construction costs: Most nuclear plants were built on public money and then transferred at much lower cost to private operators. The relatively few that were privately built have enjoyed loan guarantees, outright subsidies and the ability to transfer any costs to consumers held hostage, since electric utilities enjoy de facto monopolies in their demarcations.
  2. Construction costs have systematically overshot the initial calculation (and ended up financed by the taxpayer) However, all the studies arriving at favourable average Kw costs relative to other sources are based on foreseen, instead of actual construction costs.
  3. The industry is allowed to apply accelerated capital amortization rates, that work like a tax break.
  4. Waste management: There are no definitive waste deposit facilities for nuclear electric plants in the world.  Despite legislation to the contrary, plant operators are permitted to keep practically all of the spent fuel in cooling pools at the reactors sites, waiting for “something” to be done by “somebody”  sometime (i.e. waiting for the problem to get so big it has to be handled by the government, at taxpayers’ cost)
  5. Decommissioning: A huge but difficult to estimate part of decommissioning is passed on to the taxpayer through a mixture of tax breaks, costs directly borne by the government and residues management.

But also many of the operating costs of nuclear plants are transferred to the taxpayer and thus excluded from calculations of the cost of nuclear energy.

  1. Risk: In the next post I will go over risks in greater detail. Suffice to remember here that regulations in every country cap liabilities for their nuclear operators at levels ridiculously lower than what can reasonably be expected in the case of an actual occurrence. The US has by far the most strict regulation, and it just requires a pooled amount of 12,66 bn USD, the rest being on the taxpayer.
  2. Uranium mining enjoys tax subsidies and a lenient land restoration regime. When it’s done by the government in public land, it is provided at subsidized prices to plant operators. It enjoys a generous scheme of export credits.
  3. In some countries, nuclear is considered a renewable source, thus benefiting from price incentives.
  4. Security of the plants against terrorist attacks is provided by the police and the army, on taxes. The need of such security is obviously on a different order of magnitude than, say, for a coal plant.
  5. The price of water is set at lower levels for utilities than other consumers. On top of this, a great part of the vast amounts of water used by the nuclear industry is returned to the environment, only hotter. This destroys habitats that are not paid for.
  6. As nuclear generation lacks any amount of flexibility (a plant has to be kept producing at near maximum capacity and can’t be shut at will) they get preference when selling their output to distributors. In fact, it transfers the risk of demand peaks and troughs to other sources, since it’s unable to manage them at all.

Just taking into account all capital costs makes nuclear energy more expensive than any alternative. If you add to these the above numbers 1 to 3 operating costs (which are easier to estimate), the figures are outright outrageous. In a reversal of the “too cheap to meter” slogan, it turns out that nuclear energy is in fact too expensive to bother: it would have been cheaper for the public to produce the total output of the nuclear industry by conventional means and give it away to the consumer.

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About Outis

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5 Responses to Nuclear: too expensive to bother

  1. Outis says:

    Oh, by the way, this post has been published by my friends at Minyanville (http://www.minyanville.com/businessmarkets/articles/nuclear-power-nuclear-energy-nuclear-reactor/4/14/2011/id/33954 )

    Readers with interesting personal views, like Alfred, might consider cross-commenting there to for, alas, larger exposure than this blog for connaisseurs…

  2. Alfred says:

    By “you asked for it”, I was referring to the present situation of over-reaction to the Three Mile Island accident. Meaning that instead of improving things, fixing the problems and the poor designs, everything came to a screeching halt due to the hysteria of meltdowns happening everywhere (a typical pessimism for events like that, observe the reactions to Japan’s disaster). I don’t pretend that nuclear reactor accidents are trivial or minor, I’m saying that stopping everything related to reactor development is the wrong move. There should be a push to improve the designs to ensure that something like that doesn’t happen again. Imagine if the reaction to Toyota’s cars that spontaneously accelerate was to stop them from making any other cars for the next 30-40 years because their current designs weren’t safe and any time they presented newer, safer cars it was met with “ya, but your other cars killed people”.

    I agree with you that there have been plenty of promises and basically no delivery on them. But why? Do you see any public demand for nuclear power? No. Then why push for it? So long as the public thinks that nuclear reactors = atomic bombs (they definitely *do not*) then this slow crawl will continue. On top of that, the military is not interested in a reactor design (thorium) that doesn’t produce weapons-grade uranium, right?

    Fukushima is based on an old, water-cooled reactor design. And I don’t get why they put one so close to the coast. But I’m not in charge of such things so I have no idea what studies were done. I’m sure they didn’t plan for a tsunami, but still, a disaster is a disaster. But how common is that one? How many times can you expect that scenario to threaten a reactor? Compare to how often you can expect an oil rig leak or a tanker spill.

    If you restrict energy sources to only those that are “safe and profitable” then you have to get rid of all of them because none of them are safe and profitable at the same time. Oil and coal (and natural gas) aren’t safe. Hydro isn’t even safe, one cracked dam can flood everything down-stream of it. And what is “safe”? Dams are bad news for the rivers they alter. Everything else adds carbon and can burn. I’m restricting the comparison to similar role (base load). Is it “safe enough”, that’s the key. And they all are. How many reactor accidents have their been? How wide-ranging have their effects been? Compared to oil spills, mine disasters, burning coal seams, etc.?

    I totally agree with you that the subsidies are a big issue. It’s not really a private industry based on how you describe the taxpayer outlays to keep it around. But you have to ask yourself how many other energy sources have been as technologically-restricted as nuclear power in this country? See how profitable oil or coal would be if there was no ability to improve anything and all the gear and tech being used was unchanged for decades on end due to public hysteria and yet they had to stay competitive. And how less safe would they be in that restricted scenario? A level playing field must exist *first*, then a true assessment can be made in terms of safety (most current/advanced compared to most current/advanced) and profitability (no subsidies needed).

    And it’s not even just about power production. Nuclear reactors are also the optimal choices for two other necessary issues – desalinating sea water and cracking water to produce hydrogen. Clean water and clean fuel! Add to that the newest ideas. While we (ok, I) are on the subject of ignoring advancements, the future may include mini-reactors – http://www.thetechherald.com/article.php/200846/2429/hyperion-hopes-mini-nuclear-reactors-will-power-the-world . Imagine that – tiny, sealed units buried in the ground for 7 to 10 years, providing power. Like giant batteries (when you include the turbines that they power). Dig them out, send them back to the factory for refueling, TA-DA!! There’s your safe and profitable. But that’s a hard sell to people who think “reactor” means Fukushima. And so long as people like you (and there are a lot of you out there) keep misrepresenting nuclear power in terms of out-dated water-cooled designs, like that’s the only option, this plan will never gain traction. You can’t keep the new designs from being used and then wonder why they aren’t being used. And you can’t prevent the new designs from being used and then claim that the industry has failed to deliver on promises of safety and profitability.

    So I’m not trying to turn this into a uh-huh/nuh-uh argument but you can’t really do a comparison of two things when one of them has been so ramped-back compared to its competitors. I admit that I am very pro-nuclear power (and I really really want oil/coal and hydro gone) but I can also see its problems. But weighing them same-to-same nuclear power is the future. It is not the end, though. It’s a step towards fusion (if that can even happen) or matter/anti-matter or whatever comes next. I’m not fission’s biggest fan, just a bigger fan of fission than the alternatives. Something better comes along, I never heard of nuclear power.

    • Outis says:

      Alfred

      Thank you as always for your views. I think at this point I start to see an area of comfort where maybe we can agree on a number of things. I think it is safe to say we agree that we disagree about the nature of nuclear risks, about which I will explain my views in my next post.

      I might differ with you also regarding your notion that the nuclear industry has somehow been held back to develop new technologies. I rather think that a lot of public money has been used to research in this field and no idea has been left unexplored. If they are still at an embryonic stage it is rather due to their infeasibility as of now than to any kind of resistance, which has proved futile for water cooled models.

      I believe that the reason the industry itself has devoted comparatively few resources to research is precisely that they can’t be bothered as long as the present scheme works wonderfully to artificially inflate their wallets.

      I think we can agree that subsidies have in fact been the most potent brake to innovation here. The way I see this, nuclear generation should be still confined to the experimental field. I say we need the technology (and you are not the only one asking for it on environmental grounds – http://www.ecolo.org/lovelock/) let’s devote all the money that is being squandered on subventions to research and lets keep the scale of the operations strictly experimental.

      The first rush to nuclear energy was at the same time candid (the promise of it all!) and disingenuous (a way to wash the face of nuclear arsenals development) It pretty much stopped with the Three Mile Island accident and the backlash that followed. by the eighties, however, the move toward privatization created powerful interests for the expansion of facilities and for continuation of the existing scheme.

      The best solution I can think of for the current mess would be: shutting down of existing facilities in a reasonably short period. Move of existing facilities to public operation. Elimination of subsidies to this industry. Considerable increase in research budget for alternative energies, including but not limited to nuclear, based on a set of criteria including potential to alleviate all kinds of pollution, relative cost, risk… Market-based subsidies schemes should be limited to technologies with manageable (even if big) risks. Since I am at it, I would also like to see this research done by an international body such as IAEA, on a multilateral budget funded by member countries.

      Nuclear should only be allowed for commercial operation when risks are sufficiently proven to be contained (not just based on non-yet-negated hypotheses about vulnerability but through testing in the required time-frames) At which moment it should operate without subsidies and pay in full its operating costs, such as insurance, fuel storage and all the rest, including royalties for the new technologies.

      Not that we can decide that by mutual agreement by you and me, but it would be a start. How ’bout that.

  3. Alfred says:

    You forget an important fact. Facts, really. You (the public) asked for this scenario. First, the public lost their minds over Three Mile Island, effectively halting all advancements and development in nuclear reactor technology since that point. Other countries, against all predictions by anti-nuclear power critics, are not glowing in the dark with irradiated populations. There have been many advancements in reactor designs including some that use helium in place of water to cool the reactor (no radiation danger) and that shut down if the coolant escapes (no meltdown). 100% safe? No. Neither is coal or oil or hydro. But any argument against nuclear power in this country in terms of danger is negated by the operational records of Japan, France, Germany, etc. compared to energy sources. And if you want to compare disasters, talk about coal seam fires – http://en.wikipedia.org/wiki/Coal_seam_fire.

    Second, nuclear energy is “renewable” insomuch as it is possible to recycle over 90% of the nuclear “waste” (spent fuel rods) into new reactor fuel – http://www.heritage.org/research/commentary/2007/12/recycling-nuclear-fuel-the-french-do-it-why-cant-oui (the U.S. does not but other countries do). Try recycling oil or coal and see what you get. Further, you completely ignore thorium reactors – http://en.wikipedia.org/wiki/Thorium and their safety benefits which include that same nuclear “waste” being used as fuel. I wonder why you would ignore such a useful and safe version of nuclear power. ‘Bias’ comes to mind. Either that or a stunning lack of research procedures on your part.

    Third, cost. What does “cost” mean? Cost in terms of profits and bang for the buck is what got us the recent BP Gulf spill (which you claim is safer and cheaper). At least there was no radiation, right? Whew! I think most tree-huggers would say that “cost” means what would you pay in order to save the Earth (or what’s the cost of *not* preventing carbon emissions). And Step #1 in that Global Warming doomsday scenario is getting rid of carbon emissions. Nuclear power has zero carbon emissions (ya ya, minus the cost of building the reactor itself and mining the fuel but that happens with coal and oil as well). Only 20% of this country’s power comes from “clean” (nuclear, hydro, solar, wind) sources. That means that when you charge up your “zero-emissions” electric car? Ya, it’s actually 80% carbon-burning, haahahaa. Less emissions than a gasoline car, to be sure, but just because the emissions are happening in a remote location doesn’t mean they aren’t happening.

    So you can talk about government cooking the books about the cost of nuclear power (and you’re right, they are) but your criticism carries no weight so long as you pull the same move by pretending that nuclear power’s benefits don’t far outweigh the dangers. You have two choices – either a carbon-free environment with the occasional (until thorium reactors appear) danger of radiation leaks *or* an environment choked with carbon and roasting through higher and higher temps… but without the risk of some radiation.

    • Outis says:

      Alfred,

      Thank you for posting here and for your passion. Let’s see:

      First of all, I don’t remember myself, nor the public asking for the present situation. Nuclear energy developed as an afterthought of government military programs and, in the ésprit of benevolent despotism of the era, it was assumed to make the populace happy. After all, it meant “too cheap to meter” electricity. It is very important to remember that these empty promises were made as far back as 1947 and have failed to fulfil themselves yet, as readers may find an echo of them in the promises of the now long heralded panaceas that you remind us of here.

      The reason why I didn’t mention Thorium reactors, much less things like helium cooled ones (or indeed lead, sodium or super-critical water cooled models, molten salt, very high temperature systems, or any of the many so-called Generation IV types) is that, alas, they are not operational after many decades of promise.

      Among them Thorium based pellet fuel models are the most advanced ones, having being experimented with by Germany, UK and India, among others. Honestly, I don’t know what makes you claim they are the solution to accidents, but I imagine you refer to the grand vision of MSR, where an internal check against criticality is built into the reaction. Well, I guess that an atomic explosion is not the only risk to fear, ask around Fukushima if you don’t believe me. Besides, this is a reactor type that has been on the to do list of nuclear industry since its inception and even before (as far back as the 40’s there was already speculation about this fuel for commercial use)

      I would like your optimism if it were not for the facts that:

      1. after 60 years we are still waiting for the nuclear industry to make good on its promises
      2. It’s kind of a déjà vu when we here “this time is diferent” molten salt, helium, thorium, CANDU, very safe, wait to see, yadda, yadda, yadda. We’ve been waiting for a while and the patter is: planned costs are vastly thwarted by reality and profitability remains ellusive
      3. Safety has to be proven by operation. Unfortunately, when, as it will, it turns out that some unforeseeable circumstances made the safety hypothesis null, consequences are dire. The industry won’t pay, it’s the government who does.

      And this is the point of this post. How a supposedly private industry is in fact dependent on subsidies, which create private profits in exchange for public risks.

      And oh, yes: oil and coal do create CO2, a deplorable emission which is now being taxed in vast parts of the world. Where, pray, are the risks or the emissions of nuclear energy taxed?

      Bottom line for me is: I agree with you in the need of a solution but nuclear is not it at this point. It should be scaled back to where it belongs (basic research) until the moment it becomes safe and profitable (if and when) In the meantime it’s just a very expensive way to divert resources from other lines of investigation (why, even from NUCLEAR investigation) As for real solutions: scale back population and consumption, there are no silver bullets.

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