Nuclear Power: Climate Fix or Folly?
Amory B. Lovins, Imran Sheikh, and Alex Markevich
April 2008 RMI Solutions article “Forget Nuclear,” updated and expanded by ABL 31 Dec 2008
Nuclear power, we’re told, is a vibrant industry that’s dramatically reviving because it’s proven, necessary, competitive, reliable, safe, secure, widely used, increasingly popular, and carbon-free —a perfect replacement for carbon-spewing coal power. New nuclear plants thus sound vital for climate protection, energy security, and powering a vibrant global economy.
There’s a catch, though: the private capital market isn’t investing in new nuclear plants, and without financing, capitalist utilities aren’t buying. The few purchases, nearly all in Asia, are all made by central planners with a draw on the public purse. In the United States, even new 2005 government subsidies approaching or exceeding new nuclear plants’ total cost failed to entice Wall Street to put a penny of its own capital at risk during what were, until autumn 2008, the most buoyant markets and the most nuclear-favorable political and energy-price conditions in history—conditions that have largely reversed since then.
This semi-technical article, summarizing a detailed and documented technical paper1, compares the cost, climate protection potential, reliability, financial risk, market success, deployment speed, and energy contribution of new nuclear power with those of its low- or no-carbon competitors. It explains why soaring taxpayer subsidies haven’t attracted investors. Capitalists instead favor climate-protecting competitors with lower cost, construction time, and financial risk. The nuclear industry claims it has no serious rivals, let alone those competitors—which, however, already outproduce nuclear power worldwide and are growing enormously faster.
Most remarkably, comparing all options’ ability to protect the earth’s climate and enhance energy security reveals why nuclear power could never deliver these promised benefits even if it could find free-market buyers—while its carbon-free rivals, which won more than $90 billion of private investment in 2007 alone, do offer highly effective climate and security solutions, far sooner, with higher confidence.
Uncompetitive Costs
The Economist observed in 2001 that “Nuclear power, once claimed to be too cheap to meter, is now too costly to matter”—cheap to run but very expensive to build. Since then, it’s become severalfold costlier to build, and in a few years, as old fuel contracts expire, it is expected to become severalfold costlier to run.3 Its total cost now markedly exceeds that of coal- and gas-fired power plants, let alone the even cheaper decentralized competitors described below.
Construction costs worldwide have risen far faster for nuclear than for non-nuclear plants. This is not, as commonly supposed, due chiefly to higher metal and cement prices: repricing the main materials in a 1970s U.S. plant (an adequate approximation) to March 2008 commodity prices yields a total Bill of Materials cost only ~1% of today’s overnight capital cost. Rather, the real capital-cost escalation is due largely to the severe atrophy of the global infrastructure for making, building, managing, and operating reactors. This makes U.S. buyers pay in weakened dollars, since most components must now be imported. It also makes buyers worldwide pay a stiff premium for serious shortages and bottlenecks in engineering, procurement, fabrication, and construction: some key components have only one source worldwide. The depth of the rot is revealed by the industry’s flagship Finnish project, led by France’s top builder: after three years’ construction, it’s at least three years behind schedule and 50% over budget. An identical second unit, gratuitously bought in 2008 by 85%-state-owned Électricité de France to support 91%-state-owned vendor Areva (orderless 1991–2005), was bid ~25% higher than the Finnish plant and without its fixed-price guarantee, and suffered prompt construction shutdowns for lax quality.
The exceptionally rapid escalation of U.S. nuclear capital costs can be seen by ...
As the Director of Strategy and Research for the World Nuclear Association candidly put it, “It is completely impossible to produce definitive estimates for new nuclear costs at this time....”5
By 2007, as Figure 1 shows below, nuclear was the costliest option among all main competitors, whether using MIT’s authoritative but now low 2003 cost assessment, the Keystone Center’s mid-2007 update (pink bar), or later and even higher industry estimates (pink arrow).6 For plants ordered in 2009, formal studies haven’t yet caught up with the latest data, but it appears that their As the Director of Strategy and Research for the World Nuclear Association candidly put it, “It is completely impossible to produce definitive estimates for new nuclear costs at this time....”5
By 2007, as Figure 1 shows below, nuclear was the costliest option among all main competitors, whether using MIT’s authoritative but now low 2003 cost assessment, the Keystone Center’s mid-2007 update (pink bar), or later and even higher industry estimates (pink arrow).6 For plants ordered in 2009, formal studies haven’t yet caught up with the latest data, but it appears that their billion of investment to supply electricity, while per-capita real income rose 79% (1975–2005).
Its new houses, for example, now use one-fourth the energy they used to. Yet California is further accelerating all its efficiency efforts, because there’s so much still to save. McKinsey has found that efficiency can profitably offset 85% of the normally projected growth in U.S. electricity consumption to 2030.12 Just using all U.S. electricity as productively as the top ten states now do (in terms of Gross State Product per kWh consumed, roughly adjusted for economic mix and climate) would save about 1,200 TWh/y—~62% of the output of U.S. coal-fired plants.13
Saving electricity costs far less than producing and delivering it, even from existing plants....
...
Conclusion
So why do otherwise well-informed people still consider nuclear power a key element of a sound climate strategy? Not because that belief can withstand analytic scrutiny. Rather, it seems, because of a superficially attractive story, an immensely powerful and effective lobby, a new generation who forgot or never knew why nuclear power failed previously (almost nothing has changed), sympathetic leaders of nearly all main governments simultaneously, deeply rooted habits and rules that favor giant power plants over distributed solutions and enlarged supply over efficient use, the market winners’ absence from many official databases (which often count only big plants owned by utilities), and lazy reporting by an unduly credulous press.
Isn’t it time we forgot about nuclear power? Informed capitalists have. Politicians and pundits should too. After more than half a century of devoted effort and a half-trillion dollars of public subsidies, nuclear power still can’t make its way in the market. If we accept that unequivocal verdict, we can at last get on with the best buys first: proven and ample ways to save more carbon per dollar, faster, more surely, more securely, and with wider consensus. As often before, the biggest key to a sound climate and security strategy is to take market economics seriously.
Download this 15 page open access article:
Nuclear Power: Climate Fix or Folly?
Report or White Paper, 2009
http://www.rmi.org/rmi/Library/E09-01_NuclearPowerClimateFixOrFolly This semi-technical article, summarizing a detailed and documented technical paper (see “The Nuclear Illusion”
(2008)), compares the cost, climate protection potential, reliability, financial risk, market success, deployment speed,
and energy contribution of new nuclear power with those of its low- or no-carbon competitors.
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