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Nuclear Power: More Cost Effective Than Wind Energy

By Brian Westenhaus | Thu, 14 October 2010 13:36 | 1

If you’re a large electrical user and concerned about just what all the alternative power generation ideas will do to your stockholders, management and labor interests, knowing just what the choices will most likely mean is paramount to the business and the society in which you exist.

Sweden’s forestry, chemical, mining and steel production industries through their group SKGS, which stands forSkogen [Forest], Kemin[Chemicals], Gruvorna [Mines] and Stålet [Steel], asked PriceWaterhouseCoopers (PWC) to conduct an indicative estimate of the cost of new investment in nuclear, hydro and wind power as an alternative to fossil fuel power plants.  Just to know, so as to be informed reliably on which way is best.

The PWC calculations were made exclusive of policy instruments in the form of taxes, rebates and grants. For nuclear, however, the cost of waste management and decommissioning has been included in the calculation.

The report shows that when taxes, fees and contributions are excluded, both nuclear and hydropower are far more cost effective than investments in wind power. Wind power, the study suggests, is some 65% more expensive than hydro and about 50% more expensive than nuclear.  Somehow this writer isn’t surprised – but a whole lot of environmental types are not going to be happy that their anti nuclear claims are found fallacious.

The PWC study calculated a minimum price based on the prevailing market rate of return available in the energy sector, excluding taxes, fees and contributions. The study uses an investment that meets the market rate of return, with a minimum price for electricity from hydroelectric power at SKr 390 ($58.5) per megawatt-hour (MWh); for nuclear at SKr 421 ($63.1) and SKr 295 ($44.2) per MWh; and for wind power SKr 645 ($96.7) per MWh. Two models for nuclear were used in the study – one in which government loan guarantees are included and the other where they are not.

The actual cost expressed in the marginal form, OK – the un technical way to say that – its how much more per unit, of wind energy is higher than for hydro and nuclear power. Excluding taxes, fees and contributions, this is SKr 60 ($9.0) per MWh for hydro power; SKr 100 ($15.0) per MWh for nuclear power; and SKr 1500 ($22.5) per MWh for wind power.  That’s gives you the point that wind is 150% more expensive than nuclear.

The SKGS group’s president Kenneth Eriksson said, “The new study suggests that investments in nuclear power, as Sweden’s new energy policies now allows, is cost effective.  In a scenario where investment in new nuclear power is given the same yield, interest rate and capital structure as hydro and wind power, nuclear power will be the cheapest power source.”

The social conditions in Sweden are unique. Eriksson notes, “The study shows that wind power, with current electricity prices, is dependent on very large subsidies to become a competitive alternative, and it is virtually impossible to build new hydropower because of existing environmental laws and local opinion. There is still nuclear power, which is both carbon- and environmentally-competitive.”

Eriksson points out an unemotional view, or hardheaded business view if it suits, but the reality is jobs, investment and a healthy economy saying, “Basic industry’s approach to energy issues is pragmatic. To manage jobs and growth in Sweden, industry needs carbon-free and competitively priced electricity, regardless of where it comes from. In the debate on future energy supplies the competitiveness of different forms of energy has sometimes been unclear. For basic industry, it has been important to try to clarify and find out what new generation is affordable.”

That kind of comment isn’t what one would expect from a country where cradle to grave government oversight and a dose of Chernobyl is the normal perspective.

Back in 1980 a law set 2010 as the shutdown date for all of Sweden’s nuclear power plants.  That idea was put aside by Christian Democrat policy in March 2007. The coalition government, which also includes Conservatives, and Liberals then settled on a line that no new reactors could be planned during their first term. Then in February 2009, the coalition government moved to scrap the old anti-nuclear policies and making current policy such that new reactors may be built – but only as replacements for retiring ones and only at existing nuclear sites.

That’s more than halfway, which is far more than is getting done in the U.S.  An advantage to being a small, educated and highly literate, plus socially more uniform country is mobility on matters of policy.  Sweden isn’t going to get caught in an uncompetitive, overly expensive electrical generation program.  Power is simply too important to be left to special interests.

Currently in Sweden the electrical generation industry is dominated by two forms of generation – hydropower at up to 50% and nuclear power at about 45%. Expansion of both these low carbon forms was limited by legislation that protected undeveloped rivers and prohibited new reactors. Under the new policy, restrictions on nationally protected rivers will stay, but new reactors will be allowed and a third ‘significant’ sector will be developed from ‘cogeneration, wind and other renewable power’.

That likely means that cogeneration has a bright future in Sweden.  Wind and other renewables have a fight on their hands that is best fought with price advantages early in the battle.  Coming to Sweden with too high a price doesn’t seem to be an idea with much hope.

Everyone in the developed and developing world can take note and grant a little appreciation to Sweden’s industry group SKGS for funding the study and allowing it to get on the world stage.  Too much attention is given to those acclaiming nuclear is too expensive, and just so when regulatory operations are factored in.

But the minireactor market is just getting warmed up, the whole of the world that isn’t gobbling up cash for government’s debts are moving to growth with nuclear power in the mix in an ever increasing way making room for healthier economies.

The reports that nuclear is too expensive need not get anymore attention.  Such notions are faux research and don’t merit any attention.  Reactors by the thousands have been operating in power plants, research facilities and in ships for decades.

The U.S won’t be in a recession forever, having cheap power coming, lower taxes and more opportunity can well be a part of an economic relight.

By. Brian Westenhaus

Source: The Customers Say – Give Us Nukes

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  • Anonymous on October 15 2010 said:
    Important article, Brian. InciodentallyI proved that nuclear was the most cost effective for Sweden about 20 years ago. Of course I didn't get thanked or paid for proving this, but then I never get thanked or paid for anything in this country, except by my students. Also, nuclear is more cost effective than hydro, because it is not dependent on rainfall. I have some nice algebra to show this, and it may be in my last textbook...or somewhere.The most interesting thing is that all of the intelligent technical people understand the position of nuclear, but they have to keep quiet because the anti-nuclear booster club is still very important in this country. But, things will change, unless the Swedes prefer less money to more money, and that's not liable to happen.

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