In my in-box are a dozen e-mails wanting my reaction to Eduardo Porter’s column in yesterday’s New York Times in which he insisted that of all non-carbon based energy sources, nuclear power is “the cheapest and most readily scalable.”
Whether my correspondents knew that in my former life I meticulously established the spectacular failure of nuclear power plants to stay on budget and produce affordable electricity, or they simply thought I might have a halfway informed opinion on reactors’ proper role in combating the climate crisis, I can’t say. But I dutifully opened up Porter’s column and was quickly appalled.
Finland’s Olkiluoto fiasco shows that reactor cost escalation isn’t peculiar to the U.S.
The column fails the single most critical precept in nuclear economics: don’t confuse promise with performance. I made this point in 1979, a month before the Three Mile Island reactor accident, in a review of a book that plumbed that very theme. I was struck with how the authors of Light Water: How the Nuclear Dream Dissolved — two business academics with experience in the American and French Atomic Energy Commissions — showed that from Day One nuclear power proponents mesmerized themselves with idealized cost estimates that ignored reactors’ innate complexities and razor-thin tolerances — twin Achilles Heels that time and again broke project budgets and sowed mistrust among policymakers and the public, especially in the U.S.
Things haven’t changed. In June, Porter’s colleague Matt Wald, who has covered the nuclear industry for the Times since the early eighties, reported on a nuclear plant under construction in Georgia named Vogtle — one of two reactor projects underway in the U.S. First, Wald summarized the disastrous cost escalation at predecessor projects 30 years ago:
In those decades parts of plants were built, ripped out and rebuilt because of design and regulatory problems, leading to ruinous costs. Examples sit across the muddy construction site: Vogtle 1 and 2, which opened in 1987 and 1989, cost $8.87 billion. When they were proposed in 1971 the estimated cost was $660 million.
Wald noted that the new project, Vogtle 3 and 4, had instituted cost-control measures to lock-in plant designs and also replace often-chaotic field assembly with prefabricated parts. But, he noted:
[T]he company that was supposed to be making prefabricated parts like clockwork, from a factory in Lake Charles, La., was shipping them with some parts missing or without required paperwork. Southern [Company, the reactor owner] built a cavernous “module assembly building,” 120 feet high and 300 feet long, where the parts were supposed to be welded together, largely by robots, into segments weighing thousands of tons. But shipments stopped last August and are still arriving too slowly.
“[I]t remained to be seen,” the Georgia state construction monitor told Wald, “whether modular construction would actually save time.” Meanwhile, 5,000 miles away from Vogtle and “stifling” U.S. regulations that for decades have been blamed for “suffocating” nuclear power here, an ambitious reactor project in Olkiluoto, Finland has run completely off the rails.
“The massive power plant under construction on muddy terrain on this Finnish island was supposed to be the showpiece of a nuclear renaissance,” the Times reported back in 2009. “The most powerful reactor ever built, its modular design was supposed to make it faster and cheaper to build. And it was supposed to be safer, too.”
Instead, the Times reported then, “after four years of construction and thousands of recorded defects and deficiencies, the price tag . . . has climbed at least 50 percent.” That was just the beginning. By December 2012, three-and-a-half years after the Times article appeared, the cost of the Olkiluoto reactor had doubled again, according to Wikipedia, to 8.5 billion euro — nearly triple the original €3 billion delivery price. So calamitous is the cost spiral that the Finnish electric utility owner and the French reactor supplier are suing each other.
Why bring up Vogtle and Olkiluoto? Because they exemplify the real-world experience that Porter ignored. (They also constitute a majority of reactor construction now underway in the Western economies.) Instead, Porter hung his column on — you guessed it — paper cost estimates from the U.S. Energy Information Administration and the U.K. government. Here’s Porter’s faithful workup of nuclear vs. wind and solar, per EIA:
Take the Energy Information Agency’s [sic] estimate of the cost of generating power. The agency’s [sic] number-crunchers include everything from the initial investment to the cost of fuel and the expense to operate, maintain and decommission old plants. Its latest estimate, published earlier this year, suggests that power generated by a new-generation nuclear plant that entered service in 2018 would be $108.40 per megawatt-hour. . . This is not cheap. . . Still, nuclear power is likely to be cheaper than most power made with renewables. Land-based wind farms could generate power at a relatively low cost of $86.60 per MWh, but acceptable locations are growing increasingly scarce. Solar costs $144.30 per MWh, the agency estimates. A megawatt-hour of power fueled by an offshore wind farm costs a whopping $221.50.
Case closed, eh? $108.40 a MWh for nukes, $144.30 for solar, $221.50 for offshore wind? I’ll leave it to others to see if the EIA figures for renewables properly credit the still-ongoing declines in unit costs for photovoltaics and wind. My point here is that the nuclear numbers in Porter’s column overlooked not just Vogtle and Olkiluoto but the deep-seated problem that invariably leaves paper estimates of reactor costs bearing as little resemblance to the real thing as campaign promises bear to officials’ actual policies: the fabulous energy density that makes nuclear power so appealing in theory requires heroic countermeasures that demand degrees of perfection that are only achievable, if at all, through a punishing array of rules, regulations, paper trails, quality assurance, inspection, checking and double-checking that come at enormous cost.
I documented this in painstaking detail long ago in a book, Power Plant Cost Escalation, that took me several years to conceptualize and several more to quantify and compose and finally publish, in 1981. The book’s bottom line was that through the 1970s, costs of completed U.S. nuclear plants rose twice as fast as costs of completed coal-fired plants; while the higher costs at least paid for coal plants to become much cleaner but not for nuclear plants to be made any safer, judging by the steady drip of nuclear mishaps that culminated in the meltdown of the final nuclear plant in my database, Three Mile Island Unit 2. (The book is on-line here, as a 12MB pdf, or you can pick up a hard copy from me, cheap; send me an e-mail.)
This work went viral in the energy and business world of the time, giving me a good run as expert witness for state government agencies charged with representing utility consumers in electricity rate cases. Eventually I moved on — to bicycling advocacy, road traffic pricing, and, of course, carbon taxing. These days I mostly steer clear of nukes per se, and, indeed, of specific technologies, preferring to agitate to get the most-level playing field possible, via full-cost carbon pollution pricing.
The problems with Porter’s column don’t stop with his slavish adherence to paper estimates of reactor costs. He flogs Germany for its 0.9% bump in CO2 emissions last year (“even as they declined in the United States and most of Western Europe”), ignoring that German GDP grew relative to that of every other major European economy, and that the drop in U.S. CO2 was mostly due to the horrific (and possibly transitory) boom in fracked natural gas.
Indeed, from 2010 to 2012, a two-year period encompassing the March, 2011 Fukushima catastrophe and Germany’s subsequent decision to turn off 29% of its nuclear power production (reducing reactor output from 140.6 terrawatt-hours in 2010 to 99.5 TWh in 2012), Germany actually held constant its use of fossil fuels to make electricity.
How did German society make up for the 41.1 TWh drop in reactors’ electricity generation? Numerically, it was simple:
- German solar-photovoltaic generation grew from 11.7 TWh to 28.0 TWh (a rise of 16.3 TWh).
- Wind generation grew from 37.8 TWh to 46.0 TWh (a rise of 8.2 TWh).
- Total consumption of electricity fell by 16.4 TWh (from 610.9 TWh to 594.5 TWh), despite GDP growth.
(Figures are based on data from Bundesministerium für Wirtschaft und Technologie, Statistisches Bundesamt, Arbeitsgruppe Erneuerbare Energien-Statistik (AGEE-Stat).)
The institutional mechanisms are more complex and involve feed-in-tariffs and other mechanisms to elicit investment in renewables. (You can get the full scoop on how Germany turned off nearly 30% of its nuclear power without burning more fossil fuels from the excellent Energy Transition (The German Energiewende) blog run by Craig Morris at the Heinrich Boll Institute.)
Now that’s a story worth pursuing, and one I pitched to Porter in an e-mail the week before Labor Day. Perhaps my note was too gentle. In retrospect, I might have ripped a page from Nate Silver’s playbook and muttered a cautionary tale about the 2012 election pundits who went with discredited over robust poll data and predicted a Romney victory.
Photo: BBC World Service / Flickr.
Jan Lundberg, independent oil industry analyst says
Charlie, my first reaction to the headline of the Porter piece was characteristic of this lonely curtailer, like the broken record that I am, offering people on the pollution gravy train and other cornucopians some information they don’t want to hear:
We don’t need the energy. We don’t need the nuke energy, and we can and must curtail much of the fossil energy ASAP. Either we’ll have a livable planet because intelligent decisions are made now, or we won’t. But we really can get along today with a fraction of the energy per capita consumed now. It’s about lifestyle change and boycotting long-distance corporate products (those not shipped appropriately/harmlessly such as by bike-cart or sailboat).
The game of “choose nuclear or fossil” is just that, a game, that we need not play.
What’s more, to claim that we can have a renewable energy consumer economy with today’s overpopulation is bullshit, since petroleum is so versatile and flexible and it had the huge net-energy advantage of its salad days for general infrastructure growth. The danger of the renewable energy utopia is that it is used as a pie-in-the-sky delaying tactic for energy curtailment today. Obama is an example: maximize fossil and nuke power for now, and some day (when we’re fried and dead) we’ll have the renewable, clean energy economy. It’s easy to buy into it and go with the money today. Simple living is not respected by the go-getter would-be masters of the universe.
Thanks for your painstaking work.
Pedal on,
Jan
Jonathan Michaels says
Another point that seems to be missed in the energy density argument is that solar can be put on roof tops and the sides of buildings. Don’t think nuclear is going to get to that position soon. I would suggest that distributed solar has negligible land use as it adopts existing structures.
Bill Weinberg says
Thanks for taking on this propaganda. I wrote it up on my website and gave you a link.
http://ww4report.com/node/12764#comment-451845
A S Love says
Cost is central to your negative take on Porter’s advocacy for new nuclear. So too is it to the case for a CO2 tax as a most efficient way to secure the benefits of reduction of CO2 in atmosphere. Fair and rigorous treatment of alternatives requires cost analysis in every case. For example what is the cost of the incremental electrical energy Germany has got from wind and solar? I suspect quite high (and don’t count the portion of the cost offset by state subsidy). What is the avoided cost of the incremental electrical energy from nuclear that Germany is now not producing and using? Here of course capital costs, including overruns, are sunk and therefore nil. I suspect quite low. Therefore I suspect cost of the shift from nuclear to renewable energy is high. It may be worth it, but honest treatment requires it be quantified and supported.
Alex Marshall says
Great column, Charles. You’ve articulated well what Eduardo missed.
As someone without any stakes in the game, so to speak, but who tries to work out where he stands, it seems to me both of you missed something that is significant in my mental universe: France.
France, as I understand it, supplies most of its electricity through nuclear power, so much so, that it even exports electricity. France also has an enviable safety rate with nuclear power. And of course, its carbon emissions are low because of this.
If the above is true, what I think it points to is that nuclear power is inseparable from the general political economy of a country. Why does France arguably have a much better track record than other countries with nuclear power?
I believe that France has such a good track record with nuclear power because the entire thing is essentially state run. State-trained engineers, who went to the Polytechnic and other top state schools, work on projects that the state owns. Because, unlike in The United States, there are not competing private companies, there can be one model that works well and which everyone knows. Parts can be interchangeable between plants, and engineers and administrators can be trained to supervise a few models, rather than different proprietary ones. Private companies here, like Honeywell and General Electric, I assume don’t share information about their proprietary models. An engineer trained with one company has problems with the other. In contrast, the state-led model of France, which of course has a high reputation with infrastructure, offers a good contrast.
I do mention nuclear power in my last book, The Surprising Design of Market Economies, but just in passing. I contrast France’s experience with Great Britain, whose labor government attempted to build nuclear power plants in the late 1960s and early 1970s, with disastrous results. http://www.amazon.com/Surprising-Design-Market-Economies-Constructs/dp/0292717776
I don’t know how much France spends to produce its nuclear power. What does it cost France per kilowatt hour? I don’t know. A good question though. Wikipedia just informed me that France’s electricity prices to households are the 7th cheapest among the 27 countries of the European Union. http://en.wikipedia.org/wiki/Nuclear_power_in_France It also says that newer nuclear power plants in France, cannot be built as cheaply as older ones.
Eric Sanderson says
Charlie, thanks for the great post! I’d love to see you extend the logic of carbon taxing to other kinds of wastes, including the radioactive remains from nuclear power. If we taxed the wastes as a function of the time it takes nature to absorb them (in this instance, thousands of years), then the economy would talk to the environment in a way that would naturally produce both better economic and environmental decisions.
William Weinstein says
Great post, great clarifictions! Thanks, Charles.
Paul Chernick says
Olkiluoto’s cost appears to be continuing to rise, since Areva took a €150M writeoff for the first half of 2013, on top of the €400M in 2012. Through 2011, Areva had written off €2.8B, so total writeoffs are now €3.35B, more than the original cost estimate.
Areva’s most public problems have been related to the quality of concrete, welds, and other standard parts of nuclear construction, so this does not seem to be entirely a problem of building the first unit of this particular design.
The second new Areva plant, Flamanville 3, has also experienced significant problems causing delays and cost overruns. It has experienced problems with cracking in its foundation concrete, and with welds in its secondary containment liner. The French nuclear regulator Autorité de Sûreté Nucléaire (ASN) has required that EDF suspend related operations, take corrective action, and develop action plans for future processes.
Flamanville started construction in Dec 2007 with €3.3B cost estimate and an in-service date of June 2012. It was up to €8.5B at the end of 2012, with operation scheduled for 2016. And the EDF announcement refers to the costs as being “on a constant currency basis,” so the estimate may not include inflation. Nor is it clear that EDF is computing AFUDC for the plant. In US utility terms, we could be talking over $10,000/kW for Flamanville.
It will be interesting to see how much Areva and its partners write off on Hinkley C.
The nuclear industry has been overoptimistic by large multipliers since its initial estimates in the 1960s. So I’m used to that.
The part of the article that really got me was the claim that “Land-based wind farms could generate power at a relatively low cost of $86.60 per MWh, but acceptable locations are growing increasingly scarce.” First of all, utilities in the Plains states are building and buying wind for $30-$40/MWh, which without the PTC would be $50-$65/MWh. You can get $80/MWh wind in New England, which is hardly a great location (crowded, scenic, and not very windy). And locations are getting scarce where? Not in the Plains. Or the Maritimes. Or Wyoming. or the Midwest. As the hub heights rise, the wind regime becomes more favorable. There is no lack of wind resource.
David Collins says
Thanks for a timely, appropriate article! And what a joy to read the thoughtful comments.
Disclaimer #1: I have worked in Nuclear, was well paid; this put one of my kids through college. Disclaimer #2: I have worked in Automotive, was well paid; this put another of my kids through college.
I am of the opinion that Automotive has wrought awesome damage. But this is a separate issue.
From my privileged position inside Nuclear, I could easily see what was going on, right and wrong. Worst was the arrogance. We can be slipshod, because we have in-depth redundant safety. We can afford cost overruns, because the electricity is so cheap. And yet, this is the industry that gave rise to Quality Assurance!
This arrogance continues. Sickeningly many (fortunately not all) “champions” of Nuclear claim it will allow us to have a tomorrow like today, only with more goodies for everybody instead of yesterday’s fortunate few.
Then there is the arrogance of those who would have us believe that “Renewables” can deliver it all.
Interesting, how little enthusiasm True Believers have in the Carbon Tax!
Michele Oberholtzer says
I think it’s important to emphasize that the “campaign-promise” version of the nuclear balance sheet a missing a major line item- waste management. The EIA citation mentions that it includes “everything from the initial investment to …” but waste wasn’t on there! This is typical. As long as our country lacks a long-term solution for nuclear waste, that messy issue remains unresolved in Environmental Impact Assessments and budgets alike. Even if nuclear projects stuck to their price and time schedules, they’d be missing a very expensive, very long-term, and very real cost.
Bob Wallace says
Good article. How about we add some real world prices for wind and solar that we could use in comparison to the UK/Hinkley Point strike price of $0.16/kWh for new nuclear?
Solar –
“The cost of large-scale solar projects has fallen by one third in the last five years and big solar now competes with wind energy in the solar-rich south-west of the United States, according to new research.
The study by the Lawrence Berkeley National Laboratory entitled “Utility-Scale Solar 2012: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States” – says the cost of solar is still falling and contracts for some solar projects are being struck as low as $50/MWh (including a 30 percent federal tax credit).”
“Another interesting observation from LBNL is that most of the contracts written in recent years do not escalate in nominal dollars over the life of the contract. This means that in real dollar terms, the pricing of the contract actually declines.
This means that towards the end of their contracts, the solar plants (including PV, CSP and CPV) contracted in 2013 will on average will be delivering electricity at less than $40/MWh. This is likely to be considerably less than fossil fuel plants at the same time, given the expected cost of fuels and any environmental regulations.”
http://reneweconomy.com.au/2013/big-solar-now-competing-with-wind-energy-on-costs-75962
Wind –
“The prices offered by wind projects to utility purchasers averaged $40/MWh for projects negotiating contracts 2011 and 2012, spurring demand for wind energy.”
http://newscenter.lbl.gov/news-releases/2013/08/06/new-study-finds-that-the-price-of-wind-energy-in-the-united-states-is-near-an-all-time-low/
http://www1.eere.energy.gov/wind/pdfs/2012_wind_technologies_market_report.pdf
So wind for about a nickle and solar for about six cents if one takes away the 2.3 cent PTC that applies to the first ten years of production.
When renewables are 3x cheaper than new nuclear it hardly makes sense to even consider building a reactor.
Chris Robertson says
Charlie,
Great post. Here is a scenario on PV costs and benefits in Oregon. Assume existing PGE and PacifiCorp 2013 avoided cost rate schedules; goal to produce 20 percent of 2012 GWh by 2030 with PV, half on land and half on buildings; installed PV prices at about mid-2013 mean US prices and declining at rates that keep them well above DOE SunShot goals for 2020 (and excluding empirical plants in Europe at even lower costs); existing federal tax policies where ITC reverts to 10 percent in 2017; efficient use of federal tax benefits. This scenario reduces the NPV of the Oregon electric system in 2012 $ by about $2 billion.
There are costs and benefits not counted in this analysis (integration, added and/or avoided infrastructure, improved grid O&M, risk mitigation for low water years and higher gas costs, etc.) that on balance could move the results either way. If a carbon tax were to be implemented here then I think there would be no question that PV construction would boom over the next couple of decades.
Also note that The City of Palo Alto, CA recently signed long term PPAs with PV plants at about $70/MWh.