McCain nuclear energy revival may cost $315 billion, with taxpayers’ risking over $100B
Finally, a serious publication did the math:
Who else should bear the financial risk? After all, taxpayers bear the meltdown risk thanks to the Price Anderson Act. Why should a mature industry with 20% market share bear any risk at all?
The Republican presidential nominee wants the plants built in time to help the U.S. meet a 29 percent increase in electricity demand by 2030.
Well, that is what the increase in electricity demand would be if we embrace Cheney’s third term. Kind of a self-fulfilling prophecy.
Industry estimates put their cost at $7 billion each.
Or 50% higher. But why do taxpayers bear much of the risk? Because the industry can’t succeed without you, the taxpayer, putting your wallet on the line for each and every plant that gets built:
Investment bankers, citing the industry’s cost overruns in the 1980s, say they won’t finance its long-sought “nuclear renaissance” without federal backing. “Loan guarantees get reactors built, simply put,” said Kevin Book, senior vice president and energy specialist at the Friedman, Billings, Ramsey & Co. investment banking firm in Arlington, Virginia.
No new nuclear plants have opened in the U.S. since 1996. The 1979 scare at Three Mile Island in Pennsylvania and the 1986 explosion at Chernobyl in the former Soviet Union damped support for the technology.
Congress in December authorized $18.5 billion in guarantees that cover as much as 80 percent of nuclear plant construction costs — enough to fund three typical reactors. Three power companies have already applied for the aid.
If we wanted 45 new nukes, a McCain administration might well have to put up $277.5 billion in guarantees — I guess he is a maverick after all because I can’t imagine any sane normal politician proposing that. But what could go wrong?
Taxpayers are on the hook only if borrowers default. A 2003 Congressional Budget Office report said the default rate on nuclear construction debts might be as high as 50 percent, in part because of the projects’ high costs.
Hmm. Defaults that might cost taxpayers more than $100 billion. Sounds familiar.
But if we’re bailing out Fannie Mae and Freddie Mac, the mortgage industry for the nuclear family, then isn’t it only fair to mortgage our family’s future to the nuclear industry?
[Note: Any resemblance between Mr. Burns and a chimera clone of Karl Rove and John McCain is purely prescient on the part of Matt Groening.]
Related Posts:
- Nuclear storage at Yucca jumps 38% — to $96B
- The Self-Limiting Future of Nuclear Power, Part 1
- Nukes, Part 1.5: Nuclear Bomb
- Nuclear power, Part 2: The price is not right
- McCain, NOT the candidate of change, says no to Boxer-L-W without giga-subsidies for nukes
- Nuclear Pork — Enough is Enough
- Should we take Italian nuclear waste?
- Power plants costs double since 2000 — Efficiency anyone?
- McCain calls for 700+ new nuclear plants (and seven Yucca mountains) costing $4 trillion
September 11th, 2008 at 7:03 pm
Russ mentioned in comments on a previous post - but I can’t resist quoting Frank Burns: “Never have so many suffered so much so so few could be so happy.”
Beyond that - $278 billion is an awful lot of money, but it’s cheaper than invading Iraq. (And unlike Iraq, nuclear power won’t necessarily be a complete loss.)
But most importantly, if the wind and solar proponents can make the public aware of that kind risk, nuclear power is dead.
September 12th, 2008 at 1:21 am
What if the actual action of the McCain plan was something different. Say, $300 billion for low/no carbon energy? That way it could go to both getting new nuclear plants off the ground, or it could go to getting new renewable plants started. You’ve made good arguments for not supporting nuclear, but what would you say to support for all new energy that was no coal or oil?
September 12th, 2008 at 5:55 am
Well that would be efficiency, first of all. 29% increase is business as usual. That is, another 22 years of doing not much on the huge resource of efficiency. It’s just not plausible, considering the high rate of return of efficiency research and accellerated deployment incentives.
In fact, a 29% decrease in electric consumption is entirely feasible technically and definately economically desireable, it just requires a bit of political effort on standards and incentives. It would definately cost less than 300 billion that’s for sure. Just look at the experience of other countries like Japan and many EU countries.
45 nukes by 2030 isn’t very helpful anyways. Even with life extensions, a lot of plants will have to be closed down by 2030. Combine that with a business as usual 29% increase in demand, and nuclear’s share of the electric generation pie will be roughly the same as it is today.
It goes without saying that business as usual is not very sustainable.
September 12th, 2008 at 7:56 am
Failure by your government to red-tape to death, and/or astroturf-protest to death, a 1-GW(e) nuclear reactor development project means the project goes into service — and this can mean, over a several-decades lifetime, a loss of several billion dollars in natural gas royalties.
So if the $277B figure is true, this merely ensures that government loses either way, either through lost fossil fuel income or through paying off loans from aborted projects. Loan guarantees correct the government’s conflict of interest.
Without enmity from government, reactors don’t get cancelled.
September 12th, 2008 at 11:20 am
Many if not mosts people thinking on this energy/Global Warming problem sucks.
But what do we do with that? We’re making compromises on drilling offshore because such a large part the population wants that even though it is such a small part of our overall energy situation. Compromises have to be made.
Many people won’t believe the Human Machine and Land Use Global Warming cause until the planet is 5 degrees warmer than it is now and people are having a hell of a time surviving. They just won’t.
Many people won’t believe that Nuclear electrical power is as expensive as it is until the Nuclear plants are built. They just won’t.
So what has to be done is to build some of these Nuclear plants so that there is real-time data on the costs. Then make the compromises to see how much of the other energy solutions can get worked into that with better efficiency, etc. Maybe it will take govenment money wasted boondoggles to get the Nuclear monkey off the real solutions backs.
September 12th, 2008 at 1:19 pm
“Many people won’t believe that Nuclear electrical power is as expensive as it is until the Nuclear plants are built. They just won’t.”
Don’t think it matters. Financial institutions are very good at reading numbers. They aren’t going to loan their money for something that will bring expensive electricity to the market a decade or more in the future.
Along side the cost analysis for a new nuclear plant they are going to have a cost analysis for a new wind farm. And they are going to have projections for the dropping price of solar electricity over the next decade.
Quicker and Cheaper is going to get funded.
September 13th, 2008 at 6:18 am
Bob,
I agree with what you wrote. I think we know the game that gets played. Those who are advocates of nuclear power will say we aren’t building nuclear power plants will say its because of those environmentalists and Not In My Backyard, which the latter is probably some truth to. The real reason is because utilities won’t build nuclear power plants is because of the cost.
Well, we have to call their bluff. Go ahead nuclear power advocates, build your nuclear plants, but make sure your money is the first in on the costs. If you can make money on the deal, great you were right. If not, then shut up.
And putting in government money means that we all lose, but without the thing playing out, they win the political battle and go back to saying it’s environmentalists who are stopping us from building these things and they say they are for reducing greenhouse gas release but they stop us from building nukes.
It’s circular game that’s getting played. Just like watching some of those guys on ‘extreme sports’ who says yah, I can jump this canyon with this motorcycle and then . . . well, we know what happens. But sometimes you just can’t convince people it might not be a good idea to do it. they have to try themselves.
September 13th, 2008 at 12:25 pm
Bob and Ronald hit the nail on the head. Yet too few people can look through the mists. It’s as dense as a Republican.
September 13th, 2008 at 1:04 pm
BTW, just ran across industry projections that state that we’ll have manufacturing in place to pump out over 4 gigawatts of thin-film solar by the end of 2004.
That’s like producing a whole bunch of nuclear plants every year. Year after year.
And before someone says that the sun doesn’t shine at night, remember that there is no way that we would build new nuclear for nighttime power. We’ve got plenty of that.
Thin-film is posed to flood early-peak hours and suck up the premium prices paid for electricity during that part of the day. Without access to the high-priced market nuclear doesn’t stand a chance. You can’t survive producing power that costs you $0.15+ per kWh and selling it for $0.08 or less.
Even a taxpayer funded plant would eventually be shut down when a moment of sanity passes through Congress.
September 13th, 2008 at 1:14 pm
Brendan wrote, “What if the actual action of the McCain plan was something different. Say, $300 billion for low/no carbon energy? ”
I’ll take a stab. I would guess that this money would let the Federal government buy outright 60,000 5MW wind turbines, generating 894 TWh a year. To put this in context, coal in the US was 1991 TWh in 2006.
However, there is no reason for the Federal government to buy them outright. Let’s say they simply gave a $200/kW tax credit and private investment would build 300,000 5MW wind turbines in response, generating 4468 TWh per year. Oops that’s more power than the US used in all of 2006.
September 13th, 2008 at 1:18 pm
G.R.L. Cowan, I don’t see any enmity from the government. I see it from ratepayers (who often get hurt) and neighbors of the reactor, but it looks to me like the Feds have been doing everything they can to promote nuclear. Yes these groups apply their pressure through regulatory agencies and courts, but that’s not government enmity; that’s democracy.
September 13th, 2008 at 1:26 pm
Cyril R says efficiency first, which is certainly right. Of course it wouldn’t take $300 billion to invest in efficiency, just the right policies, incentives, and regulations. With those alone we could have 448 TWh of negawatts in 2016, and 1,033 TWh in 2027. Compared to 4,065 TWh of total generation in 2006, and 3,691 TWh of consumption, this is serious stuff.
My numbers come from a spreadsheet model where the inefficient states approach the efficient states in kWh per capita based upon new infrastructure construction and upgrading 5% of old infrastructure each year, starting in 2010.
September 14th, 2008 at 12:40 pm
“just the right policies, incentives, and regulations”
And innovations.
Just heard a short piece on the radio (probably NPR) a few days ago about air conditioners. Seems that we have ‘one size fits all’ models in the US at the moment, but we have multiple climates.
By offering a model designed for humid climates and one for dry climates power usage can be cut by a significant amount (20%?).
In the last couple of years we’ve seen some of the best minds turn toward energy conservation. That bodes well for our future.
September 14th, 2008 at 5:18 pm
Regarding air conditioning, there’s serious innovation going on right now.
Transcritical CO2/H2O cycle heat pumps, and other cycles for A/C use less than half the electricity compared to existing one room models in operation today. They’re being installed in Japan in large numbers right now, as a result of a longstanding R&D commitment.
Just with reasonably agressive policy, to require best-case performance as standard, such a reduction can be had in 10-15 years (ACs don’t last very long). Considering the large lifecycle energy cost reduction, this appears easily justifiable policy; the total cost to the consumer would actually be negative.