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Nuclear power: not green, clean or cheap

By Mark Diesendorf - posted Friday, 16 June 2006


At present there are no commercial scale fast breeder reactors operating. There is a 600 megawatt demonstration fast neutron reactor in Russia, but it has a history of accidents and does not seem to have ever operated as a breeder. The pro-nuclear study from the Massachusetts Institute of Technology (MIT), entitled The Future of Nuclear Power, does not expect the breeder cycle to come into commercial operation during the next three decades.

In summary, nuclear power, based on existing technologies, is a dead-end side alley on the pathway to reducing CO2 emissions.

Nuclear economics

In most countries where there is a competitive electricity industry, it is clear that nuclear electricity is much more expensive than fossil electricity. In the UK and US nuclear energy is even more expensive than wind power. More specifically, the MIT (2003) report (cited above) estimates that the cost of electricity generated by a new nuclear power station in the US would be US6.7 cents per kilowatt-hour (c/kWh), or about AU9c/kWh Australian. For comparison coal power in eastern Australia costs under AU4c/kWh. Wind power in US costs US4-5c/kWh and in Australia AU7.5-8.5c/kWh, depending upon site.

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When the UK electricity industry was privatised, the British Government had to impose a fossil fuel levy to subsidise nuclear electricity. By 1998 the annual subsidy had reached £1.2 billion per year, equivalent to a subsidy of about AU6c/kWh Australian on each unit of nuclear electricity generated. In addition, it has recently been estimated by the UK Nuclear Decommissioning Authority that dismantling Britain’s existing nuclear power stations will cost about £70 billion. Since a full-size nuclear power station (1,000 megawatts or more) has never been decommissioned anywhere in the world, the costs could turn out to be even higher.

The only new “commercial” nuclear power station under construction in a developed country is currently taking shape in Finland. The nuclear industry claims that this demonstrates nuclear energy is competitive in market conditions. But the power station is being built by a consortium, that includes a 40 per cent share by the government of Finland, which will sell its electricity to its own members. Thus the consortium avoids conditions of a competitive market and so has obtained finance at interest rates far below market rates. The European Commission is currently considering a complaint about this practice.

On the global scene, consider the following frank summary of the 1998 electricity generating cost study that was published jointly by the International Energy Agency and the OECD Nuclear Energy Agency. The raw data was supplied by the nuclear industries in the countries surveyed, so they are hardly likely to be biased against nuclear energy. The summary was presented by Dr Fatih Birol, the chief economist and head of the Economic Analysis Division, International Energy Agency (IEA), at an annual international forum of the Uranium Institute:

The results confirm the current cost advantage of fossil-fuelled power generation … Clearly, under BAU [business-as-usual] assumptions the contribution of nuclear power over the next two decades will be limited.

The harsh reality is, at market interest rates of 10 per cent real or more, nuclear electricity is uneconomic almost everywhere in the world. It is at least double the cost of coal power in the US and UK, and would be nearly three times the cost of coal power in eastern Australia.

The nuclear industry's solution to these harsh economic realities has been to produce a series of reports on the economics of a "new generation" of nuclear power stations that only exists on paper at present. In theory such reactors would be slightly cheaper and possibly slightly safer than existing models. The latest estimate of “new generation” economics is the report to ANSTO by leading nuclear industry figure, John Gittus, claiming that a non-existent nuclear power station, AP1000, would be competitive with coal power in eastern Australia under certain conditions.

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The Gittus report’s conditions are indicated in two alternative scenarios. One involves substantial government subsidies on the capital and operating costs of the proposed power station. The other involves "no subsidy", according to Gittus, just a massive government guaranteed, unsecured, "insured loan, which would be repaid to government, together with a retrospective premium, out of revenues from the station once it began to generate electricity".

But, what if the untried nuclear power station proves to be more expensive to build and operate than the paper study estimates? That has always been the case with nuclear power in the past. What if the earnings from electricity sales prove to be insufficient to repay the additional costs and the loans? The Gittus report is vague on such details, suggesting that the government (i.e., the taxpayer) would share the risk. If so, this is a subsidy dressed up as a loan and neither of Gittus’s scenarios is anywhere near being economically competitive with conventional coal power.

If this proposal is a good deal for the lender, why is it necessary for the government to lend anything? Surely, private financial institutions would be queuing up? Though it's strange that no private investors have funded a new nuclear power station in the US for over a quarter century, despite massive subsidies to the industry.

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For an article summarising our national scenario study, A Clean Energy Future for Australia, and related studies on four States, go here (pdf file 513KB).



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About the Author

Dr Mark Diesendorf is Deputy Director of the Institute of Environmental Studies, UNSW. Previously, at various times, he was a Principal Research Scientist in CSIRO, Professor of Environmental Science at UTS and Director of Sustainability Centre Pty Ltd. He is author of about 80 scholarly papers and the book Greenhouse Solutions with Sustainable Energy. His latest book is Climate Action: A campaign manual for greenhouse solutions (UNSW Press, 2009).

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