The Cost of Nukes

A lot of people seem to have gotten it into their heads that nuclear power is a cost-effective, carbon-free method of generating electricity being foiled by nefarious environmentalists. But as Cato's Jerry Taylor explains, it's just not true:

The reason we hear politicians like John McCain talk so much about the need for the federal government to promote nuclear power is because investors in the private sector take one look at the economics and run screaming for the hills. Investment banks tell utilities who want to borrow money to build these things that not one red cent will be coming their way unless and until the federal taxpayer guarrantees that the entire loan will be repaid in case of default. If nuclear power were such a good economic bet, those taxpayer guarantees would not be necessary.

McCain and other big nuke-heads are talking about large subsidies for nuclear power, not about getting green tape out of the way. Personally, I don't really think we should be subsidizing any form of power generation -- a cap on carbon emissions (or a tax) would be a large de facto subsidy to everything that's not fossil fuels. But insofar as we are going to subsidize electricity it makes more sense to subsidize genuinely clean power.

Comments

Uhm, yeah. McCain is talking about a cap-and-trade system, which is, as you say, a large de facto subsidy for nuclear power. How did you miss that point? (Jerry Taylor, I'm guessing, is not in favor.) And how did you miss the fact that you constantly say it's an advantage that Barry's plan fully auctions carbon rights precisely so he can subsidize other forms of power generation? You really don't know anything about policy, do you?

Posted by Thomas | June 20, 2008 8:49 AM

Could we get a link to some actual evidence on this, rather than just a Cato assertion?

My assumption would be that the "default" investors would be worried about would come in one of two forms:

1) Sharp declines in the price of oil and/or coal make nuclear power plants unable to compete on price.

2) Some sort of meltdown, attack, or other disaster.

Now it seems that both scenarios are things Matt actually wants to see the government prevent. The government should never allow (1) to happen through carbon tax, cap-and-trade or whatever the preferred regime. It's hard for financial institutions to gauge the risk of (2), but government scientists and security officials can play a large role in assuaging fears of Chernobyl / Three Mile Island type scenarios. So I think government guarantees of nuclear plant financing would give the government a strong financial stake in preventing both outcomes.

What alternatives am I missing?

Posted by right | June 20, 2008 8:52 AM

Why did you use the term "carbon-free" in the first line of your post, thereby implying that nuclear power generation is not carbon-free?

For whatever the downsides of nuclear power may be, the big upside is that it is really is carbon-free.

Posted by Brock | June 20, 2008 9:00 AM

My understanding is that the green tape adds the expense and uncertainty that cause investors to stay away. On Long Island the Shoreham facility faced moving approval standards and never received approval to operate, even after billions of dollars of safety upgrades mandated by the state. If the end it deemed that the site was to close to poulation centers and no level of engineering could satisfy the local pols.
None of changes the fact that atomic energy does not come from the Middle East, does not contribute to greenhouse gases and is extremely efficient on a cost per kilowatt hour basis. Investors just need assurances that the plants will be allowed to open and operate.

Posted by phg | June 20, 2008 9:00 AM

When the libertarians finally roll out of bed, won't one of them say that the reason nuclear power plants cost so much is the costly studies, community relations efforts, ineffective safety regulations, etc, that are all there because of dirty hippies?

To rephrase my point - is it hard to explain the actual reason nuclear is expensive? Is Uranium expensive? Is plant construction expensive? What?

Posted by Chuck | June 20, 2008 9:02 AM

My understanding is that the insurance costs are the single biggest cost for nuclear power. Is that wrong? Obviously we want them to have insurance but I wonder if we make other forms of power have equivalent insurance in relation to potential harms and their expected chance of happening. I strongly suspect not, especially if we tried to make, say, coal or oil internalize even the health effects (not including climate change) they produce. So, it seems to me that this article is likely a bit more misleading than it might seem at first.

Posted by matt (not the famous one) | June 20, 2008 9:07 AM

Also, that's an unusual use of the term "explains" in your post, by which you seem to mean "asserts without providing any supporting evidence".

Posted by Brock | June 20, 2008 9:08 AM

Chuck wrote:

"...is it hard to explain the actual reason nuclear is expensive? Is Uranium expensive? Is plant construction expensive? What?"

The basic 'physics' reason (IMO) for the high cost of nuclear power is the very high energy and power densities in the reactor. You just have to keep shipping out huge amounts of energy, all the time, and at a constant rate-- and court disaster if you fail. Very tough and very expensive thing to do.

Posted by MattF | June 20, 2008 9:13 AM

Investors just need assurances that the plants will be allowed to open and operate.

and that the Gov't will cover costs if the joint blows the fuck up. There's the rub. I'm a big believer in corporate responsibility...

Posted by ed | June 20, 2008 9:14 AM

I'd like to say "Imagine if the trillion dollars we've spent destroying Iraq's infrastrucute and killing its citizens had been spent on alternative energy research". However, sans the war and with such a project in place Bush and Cheney would've figured out a method to spirit away most of that trillion and line the pockets of a few dozen favored corportions. With damned little to show for it. Kinda like Iraq.

Posted by steve duncan | June 20, 2008 9:14 AM

Normally I'm a big market guy but in this case I think subsidizing nuclear power is an important part of cutting green house emissions in the short and middle term. It is not enough to fight global warming when we get around to it. France has a very large nuclear program (75% of it's energy is from nuclear power) and it has an excellent safety record and environmental record and cheap electricity costs. http://www.world-nuclear.org/info/inf40.html

Nuclear power I think is an important bridge technology between dirty coal power and green renewable power like solar.

Posted by Michael Foody | June 20, 2008 9:15 AM

But insofar as we are going to subsidize electricity it makes more sense to subsidize genuinely clean power.

This sentence also begs for more explanation. The thrust of this post seems to be the nuclear power is expensive, which is a fair point as far as it goes. But nothing here explains whether/why nuclear power doesn't pass a cleanliness test.

Posted by Brad L | June 20, 2008 9:15 AM

government scientists and security officials can play a large role in assuaging fears of Chernobyl / Three Mile Island type scenarios.

You know, I don't recall any shortage of government scientists of secruity officials around either Three Mile Island or Chernobyl, before things started going to hell at either place . . .

Posted by rea | June 20, 2008 9:16 AM

Insurance costs play a role, the uncertainty and difficulty of disposing of waste surely plays a role (aren't investors going to be worried about what the government is going to charge for nuclear wastes down the road?), and uranium costs play a role (check out some of the environmental costs of uranium mining). I think the key fact, though, is the stunningly high cost of the plants themselves. At high energy prices, surely it could be profitable over the *long* term, barring big swings in government regulation - but private investors in the U.S. aren't exactly notorious for looking for 30 year investments, are they?

I don't like Matt's formulation about "genuinely clean power." It sounds naive, or at least simplistic. Wind power and hydropower exact their own very considerable environmental costs. Build enough windmills, and you'll change the weather a little bit, kill untold birds, etc. With hydropower you transform/destroy whole ecosystems, plus the dams eventually silt up.

Nuclear, hydro and wind are a whole lot better than burning fossil fuels, but we needn't be naive about it - they're still plenty destructive, which is why *conservation* of energy is enormously important. There's no such thing as clean power, just cleaner.

For what it's worth, I'm not opposed to large-scale public investment in nuclear power, but subsidies are idiotic. If the people are going to pay for it, they may as well own it. If that makes me a dirty (pro-nuclear) hippie, so be it. Of course, if a carbon tax alone would do the trick, so much the better.

Posted by Harvey Lobster | June 20, 2008 9:22 AM

On a purely technology level atomic power is more than competitive. Various problems of politics and regulation have driven up the cost and attractiveness to investors. It may be that some kind of bold move by the government is the only thing to get new atomics under way. It's not necessarily subsidy, but some kind of insurance guarantee there won't be another Shoreham.

Posted by Dick Mulliken | June 20, 2008 9:24 AM

Insurance, yes. Remember Three Mile Island? The industry used to claim that nobody was actually injured by the TMI meltdown, and as far as I know that is so. But look at it from the point of view of the balance sheet: A billion-dollar asset converted itself in a couple of hours into a multi-million-dollar liability. What is the cost of insuring against a risk like that, even if you ignore the potential liability to third parties?

Posted by roac | June 20, 2008 9:25 AM

Borck said: "For whatever the downsides of nuclear power may be, the big upside is that it is really is carbon-free."

Well, no.

The complicated process of producing nuclear fuel consumes considerable fossil fuel. For an excellent analysis of the carbon cost of nuclear power, see this powerpoint presentation produced by PeakOil:
http://www.peakoil.org.au/does_nuclear_energy_produce_no_co2.ppt

Physicists cited by PeakOil note that nuclear power can have as high a carbon cost as conventional coal power.

Posted by wvng | June 20, 2008 9:26 AM

I think the anti-nuclear lobby does have a lot to do with the high cost of nuclear, as indicated by the not-famous matt.

Therefore, instead of subsidizing nuclear, let's find a way to unwind a lot of the obstructionist hurdles and let it compete naturally.

Posted by Chuck | June 20, 2008 9:26 AM

rea,

Could you remind me how many people died or were injured as a result of Three Mile Island? I simply can't think of a single one.

Also, the new pebble bed reactors are far safer and don't have the same risk of meltdown as the old technology.

Posted by Mo | June 20, 2008 9:28 AM

Aren't Areva's investors pretty happy? They seem to do pretty well building and operating nuke plants.

Posted by Mo | June 20, 2008 9:30 AM

You know, I don't recall any shortage of government scientists of secruity officials around either Three Mile Island or Chernobyl, before things started going to hell at either place . . .

Sure, but science has come a long way over the last 20-30 years. As the large number of operational nuclear power plants in the US, France, and elsewhere have shown us, there's no reason nuclear power can't be safe under the right set of safeguards.

Posted by right | June 20, 2008 9:30 AM

Are these the same investment banks that thought it was a great idea to lend people 100% of home prices in hugely inflated markets, with teaser initial rates, and sketchy income information? Didn't those guys push internet IPO's? Just because they put money into something doesn't make it good idea, and I would guess that the inverse holds also, that ideas they don't want to fund are not inherently bad or unprofitable.

Posted by JimC | June 20, 2008 9:33 AM

Investors just need assurances that the plants will be allowed to open and operate.

I’m sympathetic to what your saying here, but everything I read about what it would take to ease investor fears is just awful. The last thing the government should be doing is guaranteeing that if a project is an environmental disaster that the people that paid to create that environmental disaster don’t lose money.

Posted by Christopher Colaninno | June 20, 2008 9:35 AM

Seems to be a lot misconceptions here. The sole reason for the investment community shyness about nuclear is the regulatory uncertainty. The cost of construction and operation can be dealt with. The stumbling block is that in the US, after billions are invested, one Federal judge can throw the whole project into limbo. At that point everything stops except the lawyer work and the financing meter continues to run at millions of dollars per day.

This regulatory morass negatively affects any large infrastructure project. I just read about a rail passenger route expansion that is approaching 20 years of work just on the Environmental Impact Statement.

Posted by KenG | June 20, 2008 9:57 AM

Matts economic argument falls flat because other countries like Japan, China, Russia, S Korea, France, now Scandanavia are building them right and left.

The problem of massive costs imposed by anti-nuclear activists and powerful affiliated special interest groups and a "no nukes, ever" mentality in liberal democrats makes the US problem unique.

3rd world countries face a separate barrier of lacking the stability and creditworthiness that would give them the loans to deal with high initial capital costs though cheap fuel makes it a long term plus, and the startup costs to train up a whole unique nuclear support industry. (The US initially benefited highly from elite trained military people that the Navy and AF were allowed to cherry pick for their nuclear programs - who then left the military and formed the managers, technicians, rad control folks, engineers of the civilian industry.)

The key difference is the countries that have contiued constructing when the environmentalists shut down the US program - is they build them in 3-5 years while in the US our "crown jewel" litigation system and obstructionist laws passed through legislatures have lengthened construction time from 7 years for the 1st plants up to 15-20 years for the last ones built. That delay piles up hundreds of millions in extra costs on loans that do not start to be paid off until the plant starts pumping out it's cheaply generated electricity and begins the positive cash flow to pay off the long-term loans.

The very attractive and intelligent lady running France's program has volunteered to have the Areva French consortium help the US out in getting back up to speed in an industry we invented and excelled at. France sites, the Greens and EuroLeft protests and gets their day in court, but the court only takes a few months to dispose of or accept challenges and petitions, then the site is approved or rejected. But if approved, they can build fast without hundreds of activist groups and regulators attempting and suceeding in stalling the project. 3 years is now what France is shooting for.

For what it is worth, America used to be that good on engineering projects. We built the Empire State Building and the whole Pentagon in a few days over a year. Now we have endless litigation of what should be allowed to be constructed at the WTC site after 7 years and it's still a Pit.
60% of the Interstate miles were done in 5 years in the 50s and at 1/8th the price per mile of construction as today in constant dollars. And rusting bridges and unfinished small stretches of side highway already costing more than a main artery through a state await completion after 25 years - blocked by court and environmental agency challenges...

Give America back it's old ability to get engineering projects done on budget and on time, and done well - we can again be as good as the French or Japanese - and 30-40 new nuke plants on top of the 105 we built before we went nuts 35-40 years ago and were paralyzed from within by hostile forces.

Posted by chris ford | June 20, 2008 9:57 AM

Nuclear power is no threat. Look at France.

I must say the author at Cato reasoning is trite. We see how effectively Bush uses fear. Investors run from nuclear because the American political system operates on fear. The nonsensical fear of nuclear reactors makes them impossible to build in a country where a handful of elected official in a community or one judge can delay a project for a half a decade. This is what prevents any sensible investment in nuclear reactors, not the inablity to secure a good return.

Yes, we need the Government guarantees not only to back the investors but to insure the project will be moved expeditiously to completion. But we lack leadership.

Posted by Llyonnoc | June 20, 2008 9:57 AM

By Dick Mulliken:
“On a purely technology level atomic power is more than competitive. Various problems of politics and regulation have driven up the cost and attractiveness to investors. It may be that some kind of bold move by the government is the only thing to get new atomics under way. It's not necessarily subsidy, but some kind of insurance guarantee there won't be another Shoreham.”
That’s half the answer. The other problem is that, regardless of fuel, a 1000 MW generator costs an enormous amount of money, and investors want guarantees that their note will be paid. How many plants of that size are in planning anywhere in the US?
Government can implement more favorable policies, but the risk always remains that the rules will be changed. In NY, partly in response to the Shoreham fiasco, the legislature passed a law setting prices for long-term electricity purchase contracts. The idea was to get the regulated utilities out of the business of owning generators. Three years later the state utilities commission was investigating those contracts for “prudence,” with the result that at least one major electric utility was driven to the edge of bankruptcy.
The truth is, if you are serious about taking carbon out of the economy, you need to think about nuclear power.

Posted by hans | June 20, 2008 10:01 AM

For those of you who want the facts of the debate, see here (http://neinuclearnotes.blogspot.com/) and here (http://atomicinsights.blogspot.com/).

There is no excuse for ignorance.

Posted by Bob | June 20, 2008 10:05 AM

For those of you who want the facts of the debate, see here (http://neinuclearnotes.blogspot.com/) and here (http://atomicinsights.blogspot.com/).

There is no excuse for ignorance.

Posted by Bob | June 20, 2008 10:06 AM

For those of you who want the facts of the debate, see here (http://neinuclearnotes.blogspot.com/) and here (http://atomicinsights.blogspot.com/).

There is no excuse for ignorance.

Posted by Bob | June 20, 2008 10:08 AM

"A lot of people seem to have gotten it into their heads that nuclear power is a cost-effective, carbon-free method of generating electricity being foiled by nefarious environmentalists."

The French and Japanese seem to do okay with it. What are they getting wrong?

Posted by Helter | June 20, 2008 10:14 AM

"To rephrase my point - is it hard to explain the actual reason nuclear is expensive? Is Uranium expensive? Is plant construction expensive? What?"

First, contrary to what Matt and his certitudenous source believe, nuclear power cheap, much cheaper than wind power, for example. The fuel costs are extremely low, and are only going to become comparitively cheaper than fossil fuels in the future.

The reason it does not attract investment is it is a very long-term proposition that could become unprofitable due to non-economic factors.

Ideally, from conception to production should take 5 years. Nuclear power is extremely front-loaded in its costs. Over 75% of the costs occur before any power is generated (coal plants have about 25% up front cost, gas even less). Interest (or opportunity cost) must be paid on the money borrowed for years before any profits are realized. Delays in this phase are ruinous. In Japan and France, reactors can be built in 5 years and are therefore profitable. In the US, there are so many problems from litigation to corrupt politicians to organized crime's domination of heavy construction that this is hard to do.

What investors really want is a guarantee that if they invest in a nuclear plant, that they will be allowed to build it. This is not something that we are willing to do here in the US.

Posted by Njorl | June 20, 2008 10:16 AM

Nuclear is not the answer. Surely we can do better with all the technology we have and find ways to rely on truly clean renewable forms of energy.

The same technological progress that some say makes nuke energy more viable also makes other forms of energy viable. The progress of technology works for all.

It's time to finally be farsighted and choose a form of energy that does not have the tragic risk associated with nukes, and does not leave the trail of radioactive waste. If nukes really caught on, then we'd be having a debate in some years about what to do with all sorts of radioactive waste.

Let's get it right this time. Let's not leap from the frying pan into the fire.

Posted by cm | June 20, 2008 10:18 AM

A lot of people seem to have gotten it into their heads that nuclear power is a cost-effective, carbon-free method of generating electricity being foiled by nefarious environmentalists. But as Cato's Jerry Taylor explains, it's just not true:

Except, it actually is true.

New definition of chutzpah:

Activists spend years litigating, legislating, and FUDing nuclear power into unprofitability, then claim that "the market" has spoken.

The market doesn't forbid reprocessing waste, the market doesn't bog these projects down in court for twenty years, the market doesn't stop them at the fall of a gavel, the market doesn't keep us from finding a place to store waste. That's all politics, and it's stupid politics. While people are wringing their hands about the theoretical risk of a little radioactive steam coming out of a reactor, or imagining that Western nuclear power plants built since 1960 are one Homer Simpson away from making Castle Bravo (check La Wiki) look like an M-80, what happens? The "activists" try to sell us on wind and solar power, which besides not being without their own environmental shortcomings, won't meet our energy requirements. The upshot of it all is that we default to coal, which not only emits billions of tons of carbon dioxide and sulfur, but also thousands of tons of the same radioactive elements that the FUDsters think they're protecting us from by making it impossible to build nuclear plants. If it weren't so sad, I'd laugh at the stupidity.

Posted by TheOtherCyrus | June 20, 2008 10:23 AM

I'm involved with the financing of two proposed new nuclear plants (I'm a small cog on a large wheel), and Ken G and Njorl hit the nail on the head.

The two biggest factors in the banks' reluctance to finance a new nuke project are regulatory uncertainty and cost overruns. In effect, the capital markets are still hungover from the last nuclear building cycle party.

The good news is the DOE has a loan guarantee program, and a streamlined permitting process. And that Europe and Japan now have solid track records of building new nukes safely, and more-or-less on budget.

And next to hydro, it's about the cheapest conventional technology available, with the one of the lowest carbon footprints.

Posted by j | June 20, 2008 10:29 AM

Nuclear energy is expensive. It takes ten years to build a nuclear plant from the time they have permits and financing.

Solar is much cheaper than coal over the life span of the solar panel.

Wind is going to be cheaper than coal in the near future.

By the time the nuclear plants are built it will be the most expensive energy out there.

Posted by cheflovesbeer | June 20, 2008 10:33 AM

Nuclear energy is expensive. It takes ten years to build a nuclear plant from the time they have permits and financing.

Solar is much cheaper than coal over the life span of the solar panel.

Wind is going to be cheaper than coal in the near future.

By the time the nuclear plants are built it will be the most expensive energy out there.

Posted by cheflovesbeer | June 20, 2008 10:36 AM

"Physicists cited by PeakOil note that nuclear power can have as high a carbon cost as conventional coal power."

First, the results of Storm and Smith are not considered to be widely accepted. The more widely accepted Vattenfal study shows they are off by 2 orders of magnitude. Second, they fail to do similar lifecycle studies for fossil fuel plants. They track CO2 production for every step from mining uranium and construction to building waste disposal sites and hauling waste away, but for coal, all they do is calculate the CO2 from the coal burned.

If you do similar life cycle analysis for wind or solar energy, they come out producing twice as much CO2 as nuclear for the energy produced.

Posted by Njorl | June 20, 2008 10:38 AM

Physicists cited by PeakOil note that nuclear power can have as high a carbon cost as conventional coal power.
Posted by wv

Which is absolute rubbish when you think about it - supposedly adding up all the costs of getting the fuel done only with fossil energy for mining it, running the refinery plant, the electricity to enrich it, then the fabrication of the fuel, the carbon consumed in operations & maintenance and the personnel to operate it - all that is added to fuel and generation costs - which, for nukes, is cheaper than coal now, cheaper than other fossil or "exciting alternative energy" for decades.

How could so much expensive carbon fuel be used in creating nuke fuel when it and generating power off it is cheaper than the cheapest fossil fuel for power generation.
No doubt that answer has the old hippies who majored in sociology, poly sci or romance literature before joining the environmental movement - and arising to the title of "energy physics expert" in claims to Peak Oil of physicists like me warn of nukes spewing carbon everywhere - scratching their heads.

*********************
Nuclear power I think is an important bridge technology between dirty coal power and green renewable power like solar.
Posted by Michael Foody

Keep in mind for 30 years liberal activists assured us that cheap renewable biodiesel and ethanol would replace oil and have entirely benign effects on humanity. Now we know that isn't true, that the liberal activists lacked the scientific background to know it was all a crock that would wreck Brazilian rain forests and starve millions of Africans deprived of N American grain. Grain ethanol mandated to be added to gas by law, capable of only replacing 12% of gas use if all corn was made into fuel, and even with every gallon given a 50-cent subsidy, it still sells for 6.50 to 7.50 an equivalent gallon of gas.

I would beware - similarly - of the 30 years of steady indoctrination of Americans that "amazing, exciting dirt cheap solar" is right around the corner if we only give it's proponents more R&D money. Because it was 30 times more expensive than fossil or nuke generated electricity back i the 70s, and despite nearly 300 billion in global solar power research, test facilities, it is still about as expensive and still comes with the three "killer" flaws that make it's use marginal.

a. It is unreliable, available only part of the day, and on some days, not at all. That means you not only pay for the solar plant, but the complete cost of backup generation when the solar contribution goes away at any time.
b. It must come from remote land not used for more valuable functions, with high transmission losses and no way exists to store excess.
c. On top of losing out on reliability, closeness to market, and 24/7 availability - solar, like wind lacks the ability to ramp up and down in generation according to demand.

Japan sunk over 100 billion into "alternative energy" and pretty much has abandoned them all as viable large scale substitutes for fossil. The Japanese now focus 1/3rd of their effort on nukes, 1/3rd on top to bottom energy efficiencies in Japanese industry and society, and 1/3rd on natural gas and nat gas substitutes like coal gas, hydrogen, and deep sea methane hydrates. Germany says they are unlikely to get anymore than 20% of their energy from biomass, solar, wind, and other "exciting alternative energy" by 2050...and they started 30 years ago with 6% of their energy coming from biomass, so only 12% is what they hope to get over 60 years, and they say that the huge cost of solar and wind is diffused into all the KW-hr costs so it is affordable, but may not be if the percentage of high cost wind (15X fossil) or solar (30X fossil) is foisted on ratepayer bills significantly past the small wind, solar power present impact on bills in Germany...
Germany is also seriously rethinking on nukes - the Greens - perhaps the most radical outside wealthy Brit Lefty Elites - are screaming mad and urge more research on solar thinking it's major drawbacks will be solved and it must get cheaper eventually.

Posted by chris ford | June 20, 2008 10:43 AM

"But insofar as we are going to subsidize electricity it makes more sense to subsidize genuinely clean power."

There is no such thing. For every source of energy, you compare environmental impact to energy produced. You then decide if the environmental impact is worth the cost of avoiding. Wind, solar and hydro do have environmental impacts.

Posted by Njorl | June 20, 2008 10:51 AM

It's astonishing to me that this thread has gone on so long about how totally awesome and trouble-free nuclear power is, and nobody has adressed the small matter about what to do with waste matter that will be radioactive for thousands of years. Even assuming the economic and CO2 benefits outweigh the risks, any expansion of nuclear power makes the headache of transporting and storing all that waste bigger.

Posted by Chilly | June 20, 2008 11:00 AM

"I’m sympathetic to what your saying here, but everything I read about what it would take to ease investor fears is just awful. The last thing the government should be doing is guaranteeing that if a project is an environmental disaster that the people that paid to create that environmental disaster don’t lose money. "
Posted by Christopher Colaninno

This can be dealt with. The government performs the environmental impact study for some fee. For an additional small fee, the government issues a large performance bond based on the study. The construction proceeds as scheduled. If a genuine environmental reason for not building the plant arises, the government stops construction and pays the bond. If there is no environmental problem, the government keeps the fee. The ratio of the fee to the bond depends on how accurate the government thinks its study is.

Posted by Njorl | June 20, 2008 11:09 AM

Nuclear is unpopular on Wall Street because of its enormous capital cost. Period.

To build a gigawatt nuclear power plant costs somewhere between $4 billion and $6 billion. Why? Because you can't use just any old batch of steel to build the pipes and reactor core pressure vessel. There are just a handful of companies capable of doing this work and they are running flat out. Unless the number of suppliers increase--and there are reasons to believe they won't--you can't actually build nukes in the quantity being talked about.

For what it's worth, building a gigawatt of coal power costs between $1.2 billion and $1.6 billion, and the installed cost of a combined-cycle gas turbine is something like $400 million per gigawatt. Wind is slightly more than coal; new solar is around the same as nuclear and falling.

Capital costs have to be financed up front, and the only way nuclear plants make sense is if you amortize that cost over thirty or more years. But who really wants to bet on whether a nuclear plant that goes online in 2012 will be able to charge steep enough rates in 2042 to continue paying off its loans? That's the essential uncertainty. Indeed, it's quite likely that by 2042, the cost of power from wind, solar, geothermal and tidal/wave energy will be much cheaper on a per kWh basis, even if you factor in some sort of storage.

That's why nuclear backers want so many government guarantees. They need Uncle Sam to cover insurance liabilities. They need him to pony up for cost overruns. And they need him to guarantee that the owner of a new nuke will be able to force ratepayers to buy his electricity--even at above-market rates--far into the future. Without such government intervention, there would be no nuclear power industry in the U.S. Environmentalists have nothing to do with it.

Posted by jlw | June 20, 2008 11:11 AM

It's astonishing to me that this thread has gone on so long about how totally awesome and trouble-free nuclear power is, and nobody has adressed the small matter about what to do with waste matter that will be radioactive for thousands of years. Even assuming the economic and CO2 benefits outweigh the risks, any expansion of nuclear power makes the headache of transporting and storing all that waste bigger.

Because the waste, like so much else in this debate, is another largely made-up, political problem. The short answer is: Recycle it and use it to produce more energy. What's left can be put in Yucca Mountain, but we produce a lot more waste than we would if we were permitted to recycle the stuff.

Posted by TheOtherCyrus | June 20, 2008 11:15 AM

Wow. Can you say "whoops," anyone? Or as we know it, WPPS? There's a VERY good reason why public subsidizing of nuclear power is looked at with a skeptical eye that has NOTHING to do with Three-Mile Island. I'm really shocked no one has brought it up already.

Here in Washington state, we still remember the mess that was WPPS. For those of you who don't recall, back in 1983 the Washington Public Power System (WPPS) defaulted on $2.25 billion in municipal bonds associated with its nuclear construction program. That default remains the largest municipal default in U.S. history. THERE's your big reason for fiscal institutions to run screaming. Believe me, even if you don't remember WPPS, financial institutions do.

Of course Washington state also has the ongoing mess that is Hanford Nuclear Reservation. Just given our state history, I'll take figuring out the nontrivial issues (and trust me, they're not small) around hydro and wind power over another nuclear experiment, thank you very much.

Posted by susfe | June 20, 2008 11:19 AM

Carbon free power without nuclear in a world of 7 billion people just can't happen.

Existing pressurized light water reactors have 2 problems: core meltdowns from cooling system failure, and generation of radioactive waste with half-lives of thousands of years.

Both these problems can be solved with fast neutron reactors, which use liquid metal coolants. They can be designed so fission is impossible under meltdown conditions, and can be fueled with the trans-uranium elements that have the long half lives, converting them into waste with 30 year half lives

Posted by kafka | June 20, 2008 11:26 AM

"For what it's worth, building a gigawatt of coal power costs between $1.2 billion and $1.6 billion, and the installed cost of a combined-cycle gas turbine is something like $400 million per gigawatt. Wind is slightly more than coal; new solar is around the same as nuclear and falling."

There is very little wind power that can be utilized with capital costs around that of coal. If you want to actually generate significant amounts of power, you will need to develop less choice locations, which will have three times the costs ~$3.5 billion/GW capacity. The cheap capital costs require reliable wind, cheap land, and proximity to a market. You're just not going to find these ideal locations for a lot of wind power production.

Posted by Njorl | June 20, 2008 11:34 AM

"Of course Washington state also has the ongoing mess that is Hanford Nuclear Reservation. "

Hanford has nothing to do with nuclear power. It was a weapons facility that, because of secrecy, was allowed to ignore any regards for safety. No US nuclear power plant was ever run with the reckless disregard for human safety that was present at Hanford.

Posted by Njorl | June 20, 2008 11:41 AM

How odd, to see a slew of comments by people who actually know what they're talking about. Surely the Second Coming is at hand.

I've always wondered why people with a fear of nuclear power are completely casual about nuclear weapons. Not that they're to go off spontaneously, but somehow they seem scarier than reactors. We have about 1200 nukes stored south of town here and it's almost impossible for the locals to even remember that they're here.

Posted by gcochran | June 20, 2008 11:52 AM

Ok, if you don't like the messes that are Hanford and Rocky Flats, does the private sector disaster that was Church Rock ring a bell? I'm not saying that coal mining or oil drilling aren't risky, but uranium mining and refining does seem to carry an extra risk burden that always seems to drop out of the equation.

Posted by Western Dave | June 20, 2008 11:54 AM

Hanford has nothing to do with nuclear power. It was a weapons facility that, because of secrecy, was allowed to ignore any regards for safety. No US nuclear power plant was ever run with the reckless disregard for human safety that was present at Hanford.

Hanford was also a crash project, built in 1943 and 1944 when the US thought it was racing to beat the Germans to the atomic bomb, and when nothing like it had ever been built before. During WWII, a lot of corners got cut in a lot of areas. Extrapolating from Hanford to reactors built even a decade later, let alone ones that would be built today, is thus completely invalid.

Posted by TheOtherCyrus | June 20, 2008 11:54 AM

Costs in a nutshell:

1. Huge upfront building cost, takes 10 years to break even, but then profitable for next 40.

2. Lots of building materials are no longer made in the USA. Must be built out of country, and imported, raising cost even higher.

3. Delays delays delays. Everytime they get close to breaking ground, or to the next step in construction a lawyer stops them, this is NIMBY in action and on a project of this size its cost is astronomical (and on purpose.) You get the hundreds of workers there, the materials there and shut the site down for another year in courts. Thats a huge cost.

4. Insurance. Don't think we need to explain that, but the Government is the only organization capable of insuring Nuclear at this time. Of course they have experience (see US Navy.)

---
if the government can get involved, by guaranteeing loans AND making insurance available we solve half the problems overnight. Thats what most of these "subsidies" are. They're not giving money away, they're making money available that no private institution is willing to.

Then we need to somehow clear the red-tape and bureaucracy that ties up the construction for extra years. If the government wants, they can build it in my backyard (please) I'd be happy to see those 3 coal plants go away.

The first issue can only somewhat be reduced, and that's by starting to build. Once we start, industries will reform in the US, *our* trained engineers that now work in South Africa and France will come home and start working on Nuclear plants here.

Lastly, fuel is one of the smallest costs in Nuclear, and if we relegalized fuel reprocessing we'd be lowering its cost (and removing waste disposal cost.) The waste that isn't recycled is easily stored on site (deep underground) like they do in Canada (this waste is not *used* fuel rods, but retired equipment and most barely radioactive.)

Posted by Evinfuilt | June 20, 2008 11:57 AM

It's astonishing to me that this thread has gone on so long about how totally awesome and trouble-free nuclear power is, and nobody has adressed the small matter about what to do with waste matter that will be radioactive for thousands of years. Even assuming the economic and CO2 benefits outweigh the risks, any expansion of nuclear power makes the headache of transporting and storing all that waste bigger.

Yes, but that is a problem is ongoing and exists whether or not the US continues its nuke program or not. The US has a lot of waste that has to be disposed of somehow (not to mention France, Germany, Japan, etc.), and the policy of environmentalists has been to call it bad names rather than to work on a solution. The feeling i get from environmentalists is that they don't want nuclear even if it is a good solution and they are obstructing doing anything about waste disposal in order to sabotage nuclear power as an option. One proposed solution besides Yucca Mountain: http://www.theatlantic.com/issues/96oct/seabed/seabed.htm

The basic approach towards energy should be to try and diversify the sources of energy so we aren't dependent on any single source. We are unlikely to find any single substitute for fossil fuels; it will most likely be a number alternatives including nuclear and renewable power.

Posted by amorphous | June 20, 2008 12:05 PM

Personally, I don't really think we should be subsidizing any form of power generation -- a cap on carbon emissions (or a tax) would be a large de facto subsidy to everything that's not fossil fuels. But insofar as we are going to subsidize electricity it makes more sense to subsidize genuinely clean power.

The phrasing of the first part of this is extremely dodgy. The cap on carbon emissions is a de facto charge for external costs of carbon emission. Not having the cap (or a tax) is a de facto subsidy to carbon emitting energy sources. Having it is leveling the playing field, not subsidizing those energy sources ... both nuclear and sustainable renewable energy ... that do not share the problem of dumping the same external cost off on all of society (indeed, as a global problem, taking a free ride on the back of all societies around the world).

The second part misses a critical point. The core economic rationale for subsidies at this point for sustainable renewable power generating technologies is the infant industry argument. A newly established industry will often have higher costs, both capital costs and operating costs, than a mature industry. Therefore, infant industry subsidies can allow industries become established that are able to continue going on their own feet once they get over the establishment hurdle.

One important point in infant industry subsidies is that either they should be neutral as to the specific project that goes ahead ... like portfolio standards that allow a wide range of sustainable renewable energy technologies to qualify on an equal footing ... or you need a government that is real good at picking winners, like the Japanese in the 1950's. Given the state of our government bureaucracy after three decades of Republican and quasi-Republican government, I have a strong preference to the first of the two.

Given the massive US trade deficit ... during the Clinton administration breaking the long-time ceiling of 3% of GDP and heading to the 5% range under Bush ... and the fact that the US imports 70%+ of its crude oil and approaching 50%+ of its total energy ... there's a strong case for infant industry subsidy for sustainable, renewable energy sources that are harvested domestically. Add in the climate crisis argument, and the case only becomes stronger.

Nuclear, on the other hand, has already had its infant industry subsidy, sometimes recalled as "Bombs for Peace", back in the 1950's.

Posted by BruceMcF | June 20, 2008 12:22 PM

My understanding is that the economics of nuclear power do in fact require the public (rather than private markets) to provide loan guarantees and insurance, and that really isn't just because environmentalism and NIMBYism has run amok--it is a direct product of the high sunk costs/long payback periods/uncertainty about alternatives and scale of potential liabilities respectively. And to my knowledge the French and Japanese haven't solved these problems--rather, their national governments have just gone ahead and provided the necessary public subsidies.

But that doesn't mean those public subsidies are a bad idea. Personally, I think nuclear power as one of many components of an overall cleaner and more domestic energy plan makes sense, in large part because nukes can complement other forms of clean energy (e.g., running at night or where there is insufficient wind), which creates a larger net positive externality to providing this bundle of approaches since it allows more switching.

And I don't think a carbon tax is a complete solution. That is because carbon is not the only externality in question--roughly as important in my view is switching to a more domestic supply, and a carbon tax doesn't price that externality into the equation.

Posted by DTM | June 20, 2008 12:23 PM

Different people seem to have touched upon the top reasons support is needed, but to bring them together, my understanding for the major reasons why federal support is needed include:

- Liability. Private insurance is not available for something with such large liability (similar to how most insurance companies are not willing to insure damage caused by "acts of war.")
- Up-front costs needing to be amortized over long, long periods.
- Nimbyism and getting the political will to force some people to live by power plants. (Incidentally, I grew up 30 miles from Diablo Canyon, which was not only a nuclear power plant, but was a nuclear power plant built basically on top of the San Andreas fault. Nimbyism could have been stronger in my area I guess).
- Uncertainty over the governments long term willingness/ability to handle waste. In fact, I believe there are a number of suits in federal court now as they are defaulting on past agreements to do so.

Posted by bjh | June 20, 2008 12:58 PM

Rather than sink billions into guarantees to build new nukes right away (or to start them right away) a proper U.S. energy policy would start by admitting that the present generation of nuclear reactor designs aren't going to cut it in terms of inherent safety, energy extraction from fuel, costs, waste production and efficiency. Instead, we should build some research reactors that explore advanced technologies such as pebble bed and molten salt cores; if in 15 to 20 years those designs prove their worth (and prove cost-effective) start a French-style crash program to build them.

In the mean time, deploy as much wind and solar as possible on BLM land and in Federal waters (invoking, if necessary, the same anti-NIMBY powers the Bush administration has used in building the southern border fence), work on deep geothermal and ocean power, retire coal generating stations on their 45th birthday, impose all sorts of efficiency standards on vehicles, buildings, etc. etc. To work, it has to have all sorts of moving parts, but they all have to be aligned toward one goal: producing markedly less carbon waste--per unit of GDP, per capita, and overall.

Nukes that are being built today are too capital-intensive to be much use in working toward that goal. Nuclear energy can be a part of the solution, in theory, but we need smarter, better designs before that can happen.

Posted by jlw | June 20, 2008 1:28 PM

One thing about the waste issue: it's true that current nuclear waste is dangerous for a very long time; thousands of years for most of it. But coal waste is loaded with heavy metals, which are dangerous forever. Mercury doesn't have a half-life. Currently coal waste is being put into landfills, which if they leak will eventually leach mercury, cadmium, etc. into the groundwater. I think this problem is manageable, but it's subject to essentially the same worries and constraints as storage of nuclear waste.

This is not a brief for nuclear; I would be thrilled if we could solve the storage and efficiency issues with solar or something else. I just think it's important to understand that existing generation has serious downsides over and above the carbon emissions.

I think we need to explore all options, including solar where it makes the most sense (the Southwest desert, mainly; nothing but sun and empty land out there), tidal, wind, hydro, and more efficient usage. I'm open to the idea of nuclear if it can be made to work. Just about anything to have less coal burning seems like a net win.

Posted by Don Munsil | June 20, 2008 2:13 PM

One interesting area not mentioned, other than a poster saying the design precludes meltdown - is applying the very different "pebble bed" reactor to direct retirement of coal as fuel in coal-fired plants. The idea is to hook up a pebble bed reactor to the boiler of an existing coal plant and run it all on nuclear. Swapout costs are thought to be 400-500 million, including site upgrade, minor turbine mods, and a complete pebble delivery system.

Another nice thing is Gen IV plants (pebble, fast metal cooled) operate as much higher temperatures - 900 DEG Celsius. Which makes them in the perfect temperature range for hydrogen production from electrolysis - making such nukes, if the anti-nuke NIMBYs can be stopped - the source of the hydrogen economy that may well run vehicles and industry fuel cells in the future.
The current method uses scarce natural gas and high temperature steam to "break" natural gas into hydrogen and loads of waste CO2 gas.

Run your Gen IV plant, retire a coal plant. Or, build a brand new one, but with the capacity to use a portion of it's electricity and lots of off-peak electricity to electrolyze water after it has been heated to 900 DEG C by the reactor coolant gas.

Hydrogen fuel cell economy with almost no fossil fuel used in production, and only water as its waste product.

Drill. Conserve. Force a slowdown in world population growth. Commit to building nukes on a big scale, accept that Gen IV plants will have startup kinks to work out. Recognize the nuclear waste problem is 100% political, not lack of technology for safe disposal solutions. By all means go for the 3-7% that wind and solar might one day provide.
After 30 years of special interest groups and lawyers in robes forcing America to sit around with it's thumb up its ass?
It's time to end that! Roll up our sleeves! Get cracking, and get it done!

Posted by chris ford | June 20, 2008 2:16 PM

By all means go for the 3-7% that wind and solar might one day provide.

There is no reason why solar plus wind plus geothermal plus ocean power plus storage can't supply all our energy needs. As they are deployed en mass, their costs will go down--certainly well below what new light water reactors would be--and the resource available is larger than the known reserves of uranium. With the exception of photovoltaic solar, all these renewables are based on robust 19th century physics, which make them easy to scale.

Again, nuclear is fine in theory. But the nukes being built today are, dollar for dollar, inferior to renewables.

Posted by jlw | June 20, 2008 3:16 PM

Nuke power in the US was built upon a foundation of subsidy. That's the same as everywhere else. America was unique in that we had to adopt the story that it was a free enterprise exercise. Nothing has changed of course.

The original subsidy was Uncle Sam paying for the initial design work 100%. Then they subisidised the fuel costs. That essentially ended and many contracts pertaining to long term fuel costs were broken but nobody sued. It would have looked bad. Then Uncle Sam subsidized the long term waste disposal and after 40 year and a trillion bucks or so later not one OZ has been put away.

I left out the most important subsidy of all as far as building them. When utilities went to the insurance companies to get liability for off site damages the green eye shade guys went to work and then they said so sorry, we won't cover. Thus congress supplied the insurance. It was probably inadequate but the industy knew that Uncle Sam once he took on the liability would be on the hook for everything.

The existing plants are not themselves insured. PG&Z had to swallow whole the loss of TMI. Around a billion bucks as I recall but that is probably a low number.That was half of the death knell of nukes. The other was inflation as the late 70s inflation made them so expensive that the no longer made economic sense. Guess what, the same thing here. Estimated costs have doubled since 02, and they were not cheap then.

Additional semi factoids:

Urnanium is rare and there is nowhere near enough on earth to replace even a fraction of existing coal generating capacity. There was 100 million years ago but you see it decays away.

When you think about it a gigantic reactor is a very very silly way to boil water. In fact when you think about it the entire centralized generating, long line distributed model is flawed. At least as being the only model. Distributed production is going to take root for sure.

The new subsidy will come to pass and it will be worse than the last for Uncle Sam will guarantee the financing. No mess like PG&E having to pay for the blazing hot wreck of TMI. Free Enterprise ideologs will experience profound ecstasy the day it passes.

Posted by rapier | June 20, 2008 4:42 PM

Nuke power in the US was built upon a foundation of subsidy. That's the same as everywhere else. America was unique in that we had to adopt the story that it was a free enterprise exercise. Nothing has changed of course.

The original subsidy was Uncle Sam paying for the initial design work 100%. Then they subisidised the fuel costs. That essentially ended and many contracts pertaining to long term fuel costs were broken but nobody sued. It would have looked bad. Then Uncle Sam subsidized the long term waste disposal and after 40 year and a trillion bucks or so later not one OZ has been put away.

I left out the most important subsidy of all as far as building them. When utilities went to the insurance companies to get liability for off site damages the green eye shade guys went to work and then they said so sorry, we won't cover. Thus congress supplied the insurance. It was probably inadequate but the industy knew that Uncle Sam once he took on the liability would be on the hook for everything.

The existing plants are not themselves insured. PG&Z had to swallow whole the loss of TMI. Around a billion bucks as I recall but that is probably a low number.That was half of the death knell of nukes. The other was inflation as the late 70s inflation made them so expensive that the no longer made economic sense. Guess what, the same thing here. Estimated costs have doubled since 02, and they were not cheap then.

Additional semi factoids:

Urnanium is rare and there is nowhere near enough on earth to replace even a fraction of existing coal generating capacity. There was 100 million years ago but you see it decays away.

When you think about it a gigantic reactor is a very very silly way to boil water. In fact when you think about it the entire centralized generating, long line distributed model is flawed. At least as being the only model. Distributed production is going to take root for sure.

The new subsidy will come to pass and it will be worse than the last for Uncle Sam will guarantee the financing. No mess like PG&E having to pay for the blazing hot wreck of TMI. Free Enterprise ideologs will experience profound ecstasy the day it passes.

Posted by rapier | June 20, 2008 4:45 PM

Nuke power in the US was built upon a foundation of subsidy. That's the same as everywhere else. America was unique in that we had to adopt the story that it was a free enterprise exercise. Nothing has changed of course.

The original subsidy was Uncle Sam paying for the initial design work 100%. Then they subisidised the fuel costs. That essentially ended and many contracts pertaining to long term fuel costs were broken but nobody sued. It would have looked bad. Then Uncle Sam subsidized the long term waste disposal and after 40 year and a trillion bucks or so later not one OZ has been put away.

I left out the most important subsidy of all as far as building them. When utilities went to the insurance companies to get liability for off site damages the green eye shade guys went to work and then they said so sorry, we won't cover. Thus congress supplied the insurance. It was probably inadequate but the industy knew that Uncle Sam once he took on the liability would be on the hook for everything.

The existing plants are not themselves insured. PG&Z had to swallow whole the loss of TMI. Around a billion bucks as I recall but that is probably a low number.That was half of the death knell of nukes. The other was inflation as the late 70s inflation made them so expensive that the no longer made economic sense. Guess what, the same thing here. Estimated costs have doubled since 02, and they were not cheap then.

Additional semi factoids:

Urnanium is rare and there is nowhere near enough on earth to replace even a fraction of existing coal generating capacity. There was 100 million years ago but you see it decays away.

When you think about it a gigantic reactor is a very very silly way to boil water. In fact when you think about it the entire centralized generating, long line distributed model is flawed. At least as being the only model. Distributed production is going to take root for sure.

The new subsidy will come to pass and it will be worse than the last for Uncle Sam will guarantee the financing. No mess like PG&E having to pay for the blazing hot wreck of TMI. Free Enterprise ideologs will experience profound ecstasy the day it passes.

Posted by rapier | June 20, 2008 4:49 PM

"Nuke power in the US was built upon a foundation of subsidy. That's the same as everywhere else. America was unique in that we had to adopt the story that it was a free enterprise exercise. Nothing has changed of course."

In a sense coal, oil, and natural gas power has been subsidized in that their pricing never included the environmental costs (e.g. global warming) of using them.

"Uranium is rare and there is nowhere near enough on earth to replace even a fraction of existing coal generating capacity. There was 100 million years ago but you see it decays away."

Fast neutron reactors consume 99% of the available energy in uranium fuel, as opposed to the current light water reactors, which consume less than 1%. The amount of uranium ore ALREADY MINED would provide the U.S. with a 600 year supply of nuclear fuel if it were all used in fast neutron reactors.

Posted by kafka | June 20, 2008 5:50 PM

I think we've had enough additional semi-factoids for one day. Here's some "facts":

According to International Atomic Energy Agency (IAEA) data, "coal contains an average of about 2.08 parts per million (ppm) of uranium, 4.58 ppm thorium and 0.054 ppm potassium-40"

For a 1000MW coal plant, this works out to about 8 tons of Uranium, and 17 tons of Thorium per year.

Natural Uranium runs to 24 million MJ/kg, if used in a breeder reactor. One single KG of natural Uranium, thus, is capable of supplying 3/4 of a MW for a year. Using the IAEA's average value, the Uranium in the coal used by a 1000MW plant would supply SIX 1000MW nuclear power plants for a year.

Of course, some US coal mines average closer to 200 tons of Uranium for that same quantity of coal.

Bottom line: You could run the entire economy on nuclear power using the uranium we're already mining in the form of coal, and just consider coal power plants Uranium ore concentrators. And that's not taking into account the Thorium.

The idea that there isn't enough Uranium out there to switch to a nuclear powered economy is insane.

Posted by Brett Bellmore | June 20, 2008 7:35 PM