Nuclear power, Part 2: The price is not right
In mid-2007, a Keystone Center nuclear report, funded in part by the nuclear industry estimated capital costs for nuclear of $3600 to $4000/kW including interest. The report notes, “the power isn’t cheap: 8.3 to 11.1 cents per kilo-watt hour.“ In December 2007, retail electricity prices in this country averaged 8.9 cents per kwh.
Mid-2007 has already become the good old days for affordable nuclear power. Jim Harding, who was on the Keystone Center panel and was responsible for its economic analysis, e-mailed me in May that his current “reasonable estimate for levelized cost range … is 12 to 17 cents per kilowatt hour lifetime, and 1.7 times that number [20 to 29 cents per kilowatt-hour] in first year of commercial operation.”
At the end of August, 2007 Tulsa World reported that American Electric Power Co. CEO Michael Morris was not planning to build any new nuclear power plants. He was quoted as saying, “I’m not convinced we’ll see a new nuclear station before probably the 2020 timeline,” citing “realistic” costs of about $4,000/kW, he said.
So much for being a near-term, cost-effective solution to our climate problem. But if $4,000 per kilowatt was starting to price nuclear out of the marketplace, imagine what prices 50 percent to 100 percent higher will do.
In October 2007, Florida Power and Light (FPL), “a leader in nuclear power generation,” presented its detailed cost estimate for new nukes to the Florida Public Service Commission. It concluded that two units totaling 2,200 megawatts would cost from $5,500 to $8,100 per kilowatt — $12 billion to $18 billion total!(These are the actual costs, not adjusted for inflation.)
Lew Hay, chairman and CEO of FPL, said, “If our cost estimates are even close to being right, the cost of a two-unit plant will be on the order of magnitude of $13 to $14 billion. That’s bigger than the total market capitalization of many companies in the
An October 2007 Moody’s Investors Service report, “New Nuclear Generation in the
In January 2008, MidAmerican Nuclear Energy Co said that prices were so high, it was ending its pursuit of a nuclear power plant in
MidAmerican is a company owned by famed investor Warren Buffet. When Buffet pulls the plug on a potential investment after spending $13 million analyzing the deal, it should give everyone pause.
Let’s take a look at one more example. Earlier this year, Progress Energy informed state regulators that the twin 1,100-megawatt plants it intends to build in Florida would cost $14 billion, which “triples estimates the utility offered little more than a year ago.” That would be more than $6,400 a kilowatt. But wait, that’s not all. As reported by the St. Petersburg Times, “The utility said its 200 mile, 10-county transmission project will cost $3-billion more.” If we factor that cost in, the price would be $7,700 a kilowatt.
Amazingly, the utility won’t even stand behind the exorbitant tripled cost for the plant. In its filing with state regulators, Progress Energy warned that its new $17 billion estimate for its planned nuclear facility is “nonbinding” and “subject to change over time.”
And it gets even better (by I which I mean, worse) for Florida ratepayers. Florida passed a law that allows utilities to recoup some costs while a nuclear plant is under construction. How much? About $9 a month starting as early as next year! Yes, the lucky customers of Progress Energy get to each pay more than $100 a year for years and years and years before they even get one kilowatt-hour from these plants.
This would seem to be the exact opposite of the old claim for the nuclear industry, “Too cheap to meter.” Now it’s so expensive the company raises your rates before the power even gets to the meter!
Related Posts:
- The Self-Limiting Future of Nuclear Power, Part 1
- Nukes, Part 1.5: Nuclear Bomb
- McCain, NOT the candidate of change, says no to Boxer-L-W without giga-subsidies for nukes
- Sen. Isakson (R-GA) loves nukes AND mother nature! Then Boxer debates nukes with him.
- Nuclear Pork — Enough is Enough
- Obama knows nukes, Planet Gore knows nothing
- Should we take Italian nuclear waste?
- Power plants costs double since 2000 — Efficiency anyone?
- Francophile Newt wants to build a few hundred nukes too — and shut down every coal plant!
- McCain calls for 700+ new nuclear plants (and seven Yucca mountains) costing $4 trillion
June 13th, 2008 at 10:39 am
I’ve read that the costs for new coal plants has also gone way up. I imagine that since many of the materials to build them are the same, such as industrial metals, the increases are partly because of that.
With China and Asia in a huge building boom and the US dollar having dropped as far as it has, at least industrial metal prices aren’t coming down either. But then prices for Concentrated Solar Power which uses alot of industrial metals would be increasing as well. I’ve read that prices for wind turbines have gone up also, partly because of the demand for them, but I’m sure some because of raw industrial metal prices.
Which is why it might be helpful to make a comparison accross the board of all energy sources because the building of new plants would be affected by price increases in the same way.
which makes the case for efficiency improvements.
June 13th, 2008 at 10:46 am
In my previous post, I only mentioned industrial metals as having cost increases. cost increases would be on many constuction items like cement. I had read somewhere that turbine prices were increasing, partly because of all those going to China.
June 13th, 2008 at 12:46 pm
Can we get some numbers on what the various power generation plants (gas, coal, nuclear, solar, wind, etc.) cost to build on a per kwh basis? This article is supposed to make me pause, but how do I know nuclear isn’t the cheapest? I’m 100% behind renewables, but have no data to refute the “nuclear is cheapest” argument by looking at this data in isolation.
June 13th, 2008 at 1:28 pm
Dennis, I have previously blogged on this.
A very good apples to apples comparison was done for the California PUC.
http://www.ethree.com/cpuc_ghg_model.html
Go to “Generation costs (word doc)(11/16/07)”
June 15th, 2008 at 4:39 am
Costs are also deceptive - what gets included, and excluded is as much political as economic. For nukes, do you count in the cost of waste disposal (never been done); health hazards; insurance against the high magnitude cost of a low-risk catastrophic accident or the surface-to-air missiles needed to protect it. For oil do you factor in the cost of invading someone else’s country to steal it. For centralised systems have you factored in the cost of the grid.
And also timing … Coal Sequestration may be initially cheap but what happens when the cheap storages run out. And do you count the cost of Solar now, or based on the economies of scale already evident in price reductions?
- Mitra
June 15th, 2008 at 6:33 pm
Joe,
Thanks for the reply, giving us the Energy & Environmental Economics Inc. website. This comparison is helpful in seeing where we stand with current economics of different options.
Nuclear energy estimates are rising dramatically, outpacing the cost increases for coal, natural gas, etc. This is due to the fact that the nuclear industry was underestimating the costs toward the beginning of the decade.
The nuclear industry was underestimating costs in the last round. The average 1980s finished cost of a nuke was about 3.2 times the original cost estimate, compared with coal plants at 1.5.
This time around, cost estimates have gone from $1000-2000/kilowatt installed, a few years ago, to up to $10,000/KW today — a five to tenfold increase!
A nuke at 10,000/KW, at a 40-year lifespan at 85% capacity factor (total number of KW produced divided by the design rating of KW), assuming an annual fixed charge rate of 15% (levelized annual payback per year for 30 years), the capital payback portion alone would be $151 per megawatt-hour. This is just capital payback and does not include fuel, operation and maintenance (O&M), waste management, subsidies, or transmission and distribution.
The study you refer us to estimates costs for nuclear to be $154/megawatt-hour, including capital, fuel and O&M. Of course, this study was done last year, and the authors have some catching up to do.
My guess is that we will be catching up for a long time to the increasing costs of nuclear energy. This will be especially true when we throw in a Yucca Mountain waste facility or two, or more, and start to remediate the other aspects of waste like mine and mill tailings.
A new website I have been working on at www.SafeEnergyAnalyst.org is put together to help with some of these cost issues.
Again, it is helpful in formulating solutions to get these analyses out there.
June 16th, 2008 at 9:25 am
We have an interesting situation developing…
1. Righties love the free market and hate government support–look at their repeated attempts to kill Amtrak funding, for example.
2. Righties love nuclear power.
3. Nuclear power can’t possibly stand on its own in a free market.
Perhaps once the righties’ heads start exploding we can harness the released energy.
June 16th, 2008 at 6:01 pm
like fusion, i fear this is an impossible dream. cognitive dissonance just isn’t a reliable catalyst in some brains — or i should say that it is suppressed in the reaction by ideological fury. reduce the inhibitor, and you get better thinking, reducing the cognitive dissonance. it’s a no-win situation.
August 11th, 2008 at 4:02 pm
In October 2007, Florida Power and Light (FPL), “a leader in nuclear power generation,” presented its detailed cost estimate for new nukes to the Florida Public Service Commission. It concluded that two units totaling 2,200 megawatts would cost from $5,500 to $8,100 per kilowatt — $12 billion to $18 billion total!(These are the actual costs, not adjusted for inflation.)