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Nuclear not the answer, as consumers pay for abandoned reactors

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Barnaby Joyce and other pro-nuclear members of the Coalition – and the numerous conservative commentators calling for nuclear instead of renewables – should take note:

The so-called “nuclear renaissance” in the United States has had another major setback, with another two reactors under construction in South Carolina abandoned after costs spiralled out of control, leaving consumers holding the bill for plants that will never be completed.

The plug was pulled on the V.C. Summer nuclear project last week after $US9 billion had already already spent, and after it became clear that the original $US11.5 billion bill for the whole project would more than double to at least $US25 billion ($31 billion).

South Carolina consumers will be left holding the bill, and 20 per cent of their electricity rates will go to pay for something that will never be completed.

Critics say the decision heralds the demise of new nuclear in the US, and expect the Vogtle nuclear reactor project in Georgia to also collapse as its costs also surge.

The Vogtle reactors, also funded by consumers and taxpayer loans, are the only two reactors under construction in the US, out of the 31 once hailed as a sign of the industry’s renaissance in the US.

Given the farce around the massive Hinkley Point project in the UK, which is running more than $2 billion over-budget after just the first year of a planned 10-year construction period, and the cost over-runs for next generation reactors in France and Finland, it seems clear that nuclear has done its dash in western economies.

Hinkley is now tipped to cost £19.6 billion, a rise of £1.5 billion, and it faces delays.

On top of that, the Independent reported last month that government figures now show the total bill to households could total £50 billion ($A83 billion), more than eight times greater than the National Audit Office’s initial 2013 estimate that a public investment of £6 billion would be required.

The spiralling costs are due to the terms of the Government’s agreement with EDF, the French state-owned electricity company, which is building the plant in conjunction with China General Nuclear Power. As in the US, the risk is held mostly by consumers and taxpayers.

France is now faced with a massive bill just to maintain its ageing reactors as it charts a course towards more wind and solar and less reliance on nuclear. A recent study suggested the country would find it cheaper to scrap the whole nuclear project and investing in wind and solar instead.

Given that France is also a nuclear arms power, and the military and civil industries go hand in hand, that is not likely to happen, but the focus is clearly switching to cheaper renewables

South Korea’s new president also wants the country to abandon nuclear power, because of its costs and risks, taking another major player out of the market, and highlighting the fact that the nuclear industry cannot survive without massive subsidies.

In the US, a dozen existing nuclear plants are also being retired because they can no longer compete with wind, solar and gas, and there is now a major push – possibly difficult to achieve with the Trump administration – to put an end to federal bailouts for existing nuclear plants that could cost more than $US275 billion.

“The message … is simple, nuclear power is uneconomic,” says Mark Cooper, a senior fellow for economic analysis, Institute for Energy and the Environment at Vermont Law School.

“The capital cost of renewables is between one-eighth and one quarter the cost of VC Summer.  Even adjusted for load factors, nuclear power is two to three times more costly then the alternatives.”

The nuclear industry is putting pressure on the Trump administration to approve a bail-out of existing nuclear generators, which they say cannot compete against wind, solar and gas.

A Department of Energy advisory committee last year recommended that nuclear receive an additional production create of $US27/MWh which would result in a bill to taxpayers of more than $US228 billion.

To put that in perspective, a newly released study by the Berkley Renewable Energy Laboratory puts the average cost of new wind farms at just $20/MWh. Solar is not far behind – and both cheaper than the subsidies needed by nuclear to keep ageing plants operating.

“Nuclear power is failing despite the fact that it is already heavily subsidised,” said Tim Judson, of the Nuclear Information and Resource Service.

“With renewable energy now surpassing nuclear by widening margins, it’s clear that subsidizing nuclear is an expensive way to slow down the growth of clean, safe, affordable, job-creating energy sources.””

Consumers are the biggest victims from the latest attempts to revive the nuclear industry, because the utilities that proposed them made sure that it was the consumers, not the investors, that took the risk.

Peter Bradford, a former Nuclear Regulatory Commission (NRC) Commissioner, and past chair of the New York and Maine state utility regulatory commissions, said using ratepayers to finance construction of nuclear reactors in advance are debacles waiting to happen.

““The primary lessons for Georgia, Virginia, and other states, from the South Carolina cancellations (as well as Levy County in Florida and Kemper in Mississippi) is that laws and regulatory decisions placing economic risks on customers instead of the investors and lenders who should properly bear them are a disastrous mistake,” he says.

“Freed of responsibility for the consequences of their mistakes, utility executives too often plunge into ill-advised schemes to pad their rate bases (and individual compensation) when they should be managing competitive processes designed to select the most cost-effective alternative.””

He warned that taxpayers could still end up on the hook for billions of dollars if the Vogtle project goes belly up.

Unlike VC Summer, Vogtle managed to win themselves more than $US8 billion in taxpayer-backed loan guarantees. Critics say it is clearer than ever that the writing is on the wall for taxpayers.

Bradford says it is clear that the any remaining illusions about a resurgence of nuclear power in the United States are now dead.

““In fact, there never was an actual ‘nuclear renaissance’, just the 31 paper applications on file at the Nuclear Regulatory Commission by early 2009.

“Now nearly all but two are cancelled, leaving a trail of economic waste in their wake. The intent of the renaissance dream was to show that new reactor designs and an expedited licensing process from which the public was largely excluded would produce reactors that could be completed ‘on time and on budget’ as well as at competitive costs.

“The expectation was that private financing, without subsidy from customers and taxpayers, would then become available to nuclear power.  That dream is now in ruins.

“The Westinghouse bankruptcy and subsequent events in South Carolina make the lessons so clear that even the most ardent nuclear propagandists probably can no longer shout them down.””  

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  • Dr Wind

    Please be careful with your USA costs of wind and solar. the $20/Mwh is a subsidized rate. The USA has probably the highest subsidies in wind, through the PTC and accelerate depreciation (about 55% -65% of total after tax revenues) in the world. Solar is not too far behind in its susidy ratio. So for wind the real cost without those benefits would be more like $50/Mwh. Still very reasonable. Solar similar or a bit higher depending on resource.

    • Alex Hromas

      The US has very high depreciation rates across the board so this argument cannot be used as a subsidy for renewables

  • Chris Fraser

    Given the relative size of the taxpayer base in Australia and the USA, that cost blowout for no result is about $AU1.22B in Australian terms. That would have bought about two CST plants.

    • Peter F

      I don’t see how you make that comparison. These 4 abandoned plants (assuming Vogtle is cancelled) + the losses that CBI, and Toshiba Westinghouse will add up to about US$25b. That is close to Australia’s entire defence budget for a year. If they were to be completed the total bill would be just under US$60b. For that money we could have 20GW of wind and 25GW of solar and 15GW of storage. Combined with existing wind, hydro,solar, biomass and a bit of gas backup that would take us to about 95% renewables

      • Chris Fraser

        I then tried to make it clearer. The totals from 4 abandonments is definitely throwing good money after bad.

  • Mark Diesendorf

    It should also be noted that the Power Purchase Agreement (PPA) prices of wind vary substantially with region of the USA. The 2016 Wind Technologies Market Report of the US Department of Energy gives USD 20/MWh for the Interior (the best region) in 2015 and about USD 60/MWh in the West (the worst region) (Fig. 47). To these prices must be added the subsidies, as pointed out by Dr Wind.

  • Ian

    Giles, could you do an article an the management of high level nuclear waste in the USA and other nuclear powers. People often compare the lousy economics of infrastructure in the West compared with the get it done efficiently and cheaply attitude of China. China is building out their nuclear power generator capability. How do their economics stack up?

    • Coley

      I suspec that China gets its plants on time and on budget due to its ‘command economy’ ensuring a much lighter regulatory burden and a lack of protestors-:)

    • André Balsa

      There is no way that any country will have vastly different costs for the storage and management of high level nuclear waste / spent nuclear fuel, because the same basic physics principles apply: the costs of dealing with high level nuclear waste / spent nuclear fuel are astronomical in every case.
      As for the costs of building and operating new nuclear reactors in China, they are irrelevant for all market-driven Western economies.

  • André Balsa

    Thank you for this very good article which accurately portrays the latest nails in the coffin for the US nuclear industry.
    As the article mentions, the situation in France is quite similar. Areva, technically bankrupt, was broken into pieces and government-owned EDF was forced to buy the nuclear reactor building activities of Areva, a highly political decision.
    Just like in the U.S., consumers and taxpayers in France will be paying for the demise of the nuclear industry for the decades to come.

    We should also not forget the astronomical costs of the basically unsolvable problem of safely storing and managing spent nuclear fuel (basically until the end of times). Just about all countries with commercial nuclear reactors keep their spent nuclear fuel rods (which contain 1% of plutonium besides a number of other radiotoxic, lethal substances) in actively cooled pools on the nuclear power plant sites. There is no known technology for the safe long-term storage of spent nuclear fuel.

    Just like climate change, we are leaving this basically unsolvable problem for future generations to deal with – and pay for.

    • RobSa

      You are correct. The article doesn’t touch on the costs associated with spent nuclear fuel.

      • André Balsa

        Well, actually we should distinguish between short term costs and long term costs. In the short term, the costs of storing spent nuclear fuel in “dry casks” are very high, but known. Dry casks are steel / concrete containers weighing many tons and they cost $1~2 million a piece. Hundreds of these are needed at each nuclear power plant. But they are rated for 50 years, under “ideal” conditions. Under more severe conditions, their rating reduces to 25~30 years.
        One can assume that even if a long-term storage technology is found that costs half as much these dry casks per 100 years of storage or so, we are still dealing with many $ trillions in storage costs, which we are basically leaving for future taxpayers to pay for – or they can choose to deal with widespread radioactive contamination of what will be left of the planet at the time.
        The “bury and forget about it” or “dump it in the ocean and forget about it” “remedies” are not applicable to spent nuclear fuel, unlike other forms of pollution.

    • Ian

      You say with confidence that the long term storage of spent nuclear fuel is unsolvable and the nuclear power industry says that long term storage of high level nuclear waste is just round the corner, its only sitting at the existing nuclear power plants in temporary storage until it has cooled down enough to reprocess. If you’re correct then the nuclear industry is lying and we have a very serious problem on our collective hands, probably dwarfing the global warming issue.

      • André Balsa

        “If you’re correct then the nuclear industry is lying and we have a very
        serious problem on our collective hands, probably dwarfing the global
        warming issue.”
        The problem of safely storing hundreds of thousands of tons (yes, tons) of spent nuclear fuel is indeed a very serious problem. However, it doesn’t dwarf the global warming issue: it adds to it, just like ocean acidification, plastic pollution, resource depletion, etc.
        More specifically, the issue of safely storing hundreds of thousands of tons of spent nuclear fuel differs from all the other issues because of the toxicity and half life of plutonium (26,000 years), which makes up 1% of the weight of spent nuclear fuel. By comparison, the “pulse” of CO2 generated by burning fossil fuels in the last 140 years or so, will be absorbed in the coming 2,000 years or so.

  • David Boxall

    The only rational reason for nuclear power, it seems, is nuclear weapons. Assuming we consider nuclear weapons rational.

  • DJR96

    Clearly the economics of conventional nuclear means it as an industry is dead, never mind constructing new ones.
    People need to realise that coal-fired generation won’t be too far behind either. What happens when the cost of renewables is cheaper than the cost of shovelling coal into a boiler? (Never mind the cost to build!)
    There’s a concept bureaucrats need to start getting used to.

  • Joe

    ‘Nu Clear ‘energy can join Cleeen Coal and HELE Coalers as sounding good as the words roll off the tongue but to the informed ….we are not having any of it.