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Rising Costs Slow The Growth Of Nuclear Power

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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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Despite PR Push, Nuclear Still Faces Uphill Battle

Despite PR Push, Nuclear Still Faces Uphill Battle

Earlier this month several highly respected climate scientists sent a letter to environmental groups urging them to support nuclear power as a solution to climate change. The letter predictably set off a debate about the importance of nuclear power, and CNN fanned the flames on November 7 when it screened “Pandora’s Promise,” a recently released documentary that depicts nuclear power in a favorable light. The showing was preceded by a debate on Crossfire between consumer advocate Ralph Nader and Michael Shellenberger, President of The Breakthrough Institute, an unabashedly pro-nuclear think tank.

The nuclear boosters charge that traditional environmental groups have stood in the way of nuclear power for decades, cutting off the lone viable source of baseload carbon-free power. While nuclear power may indeed be critical for bringing down carbon emissions in the coming decades, blaming environmental groups for the industry’s troubles is an oversimplification. Whatever supporters of nuclear power may say, the industry is facing enormous challenges due mostly to economics.

Related article: Energy Starved Jordan to go Nuclear

In fact, it is nearly impossible to build new reactors in the U.S. because of their high cost. New reactors cost billions and require years of construction before they come online. Utilities and their financiers are wary of this risk, especially when there are cheaper alternatives. The most recent example of this came on November 8 when Luminant Generation decided to withdraw its application to build two new reactors in Texas, citing cheap natural gas. Many other proposed reactors have been cancelled in recent years for similar reasons.

There are currently five nuclear reactors under construction, but it is unlikely that more will follow. The Watts Bar reactor under construction in Tennessee was originally started in the 1980’s and put on hold because of a lack of electricity demand. Construction recently resumed and is expected to be completed in the coming years at a higher cost than expected. Two reactors in South Carolina and two more in Georgia are also behind schedule and over budget.

In particular, the Vogtle reactors being built by Southern Company in Georgia were highly touted as a model for the new era of nuclear power. Using the Westinghouse AP1000 design, reactor safety would be upgraded while costs cut. The Obama administration jumped on board, awarding a loan guarantee way back in 2010, but the details have yet to be ironed out. Construction began in 2012, but it is already facing delays, with costs rising from an original estimate of $14 billion up to $15.5 billion, prompting Moody’s Investor Service in October 2013 to warn about the negative effect on the credit ratings of the utilities involved.

Related article: UK Reviving European Nuclear Energy at High Costs

Morningstar’s Utilities Observer put it less charitably in a recent report, forcefully claiming that “new-build nuclear in the West is dead.”

Even some existing reactors are beginning to shut down as they age and/or struggle to compete in a market awash in shale gas. Entergy decided to close down its Vermont Yankee plant because of economics. Dominion came to a similar conclusion earlier this year when it decided to shut down the Kewaunee plant in Wisconsin.

Still, the nuclear industry has a compelling case to make. It can produce large amounts of clean electricity. Despite safety concerns, the death toll from nuclear accidents remains orders of magnitude lower than coal-fired power plants, which kills tens of thousands every year from air pollution. With global electricity demand expected to continue to climb in the decades ahead, the world may need to call on nuclear power to meet energy demands while keeping a lid on carbon emissions. Nuclear supporters are right to highlight these strengths. Now, if only the industry can figure out the economics.

By. Nick Cunningham

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Leave a comment
  • Mos Constantin on November 15 2013 said:
    Nuclear power will become increasingly attractive in the future, but the problems of this industry (especially safety and waste management) should be treated with caution as they can cause increased big trouble.
  • SA Kiteman on November 16 2013 said:
    Yup, it's dead. Those plants in Georgia and South Carolina are really just figments of our collective imagination. Unhunh.
  • SA Kiteman on November 16 2013 said:
    Neither safety nor waste is a real issue. I is questionable whether any US plant will ever have an accident that even approaches TMI for radiation release. And TMI was negligible. My concern is that with the anti-nukes harassing American nuclear providers, the rest of the world is stuck with Russian and other less safe designs. Another instance of the anti-nuke industry being anti-good for the people?
  • David on November 19 2013 said:
    I wonder why the author does not discuss the reasons for the high cost of Nuclear power? It is not enough to say it is expensive and then move on. Why is it expensive. In an analysis of the sources of cost one engineer pointed out that most of the cost comes from needing to certify each part as being Nuclear approved. This means that every step in the manufacturing process needs to be documented for each part. I step this way, I have to log it on a sheet. I pick up the part, I log it on a sheet. I press the button to bring down the press, I log it on a sheet.

    This concept adds tremendous costs to each part needed but does nothing to insure actual reliability. Most manufactures ensure reliability by quality control after the manufacturing is done. Testing and examination are the normal methods. Documentation during assembly is no real assurance that quality is maintained but it ADDS COST. The other reason this adds cost is that very few manufactures are willing to take the hundreds of hours necessary to learn the regulations and earn an N stamp. Thus there is no competition for these parts.

    This kind of excessive regulation without regard to actual effect is the major source of our "expensive reactors."
  • SA Kiteman on November 24 2013 said:
    It sounds like the certification process is stuck in the 50s. How would you bring the certification process into the modern age and still maintain the desired oversight function?
  • SA Kiteman on December 09 2013 said:
    It should be noted that the author shifts the blame from anti-nuke "environmental groups" to economics but neglects to observe that the economics have been perverted by the same environmental groups. If energy policy around the world was rational there would be ZERO mandated purchases of "renewable" energy, no FITs, no investment tax credit, no production tax credit, no anything for "renewables". Renewability is NOT a public good. Low GHG emission MIGHT be. Sustainability is. Any ITC or PTCs to be based on the public good, not a fad.

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