Weighing the financial risks of nuclear power|
Posted on Tuesday, April 03, 2007 @ 21:47:25 EDT by vlad
Enticed by the gleam of government subsidies, many companies are
rushing to invest in nuclear power, expecting that new technology and
safer reactors will make them as good an investment as other types of
A new study appearing in the April 1 issue of the journal Environmental Science and Technology
notes, however, that the country's history of unexpected cost overruns
when building nuclear plants should sound a cautionary note for power
companies that nuclear power may not be financially attractive.
"For energy security and carbon emission concerns, nuclear power is
very much back on the national and international agenda," said study
co-author Dan Kammen, UC Berkeley professor of energy and resources and
of public policy. "To evaluate nuclear power's future, it is critical
that we understand what the costs and the risks of this technology have
been. To this point, it has been very difficult to obtain an accurate
set of costs from the U. S. fleet of nuclear power plants."
The study, conducted by a research team from Georgetown University,
Stanford University and UC Berkeley, analyzes the costs of electricity
from existing U.S. nuclear reactors and discusses the possibility for
cost "surprises" in new energy technologies, including next-generation
What they found was a range of electricity costs, from 3 cents per
kilowatt hour to nearly 14 cents per kilowatt hour, with the higher
costs attributed to such problems as poor plant operation or
unanticipated security costs.
"In the long term, whether these plants are 4 cents or 8 cents per
kilowatt hour, they are still a good deal, if you think carbon is an
issue," Kammen said, referring to the carbon dioxide emissions from
oil, coal and gas-fueled power plants that exacerbate global warming.
"If the argument is that cost really needs to be important, then I'm
not sure nuclear competes that well."
Some politicians also tout the increased security benefits of
having domestic sources of energy, but this doesn't translate into
decreased risk for investors, the study notes.
"In a deregulated electricity environment, investors will
increasingly share the financial risks of underperformance of
generation assets," said co-author Nathan Hultman, assistant professor
of science, technology and international affairs at Georgetown
University in Washington, D.C., and a visiting fellow at the James
Martin Institute for Science and Civilization at the University of
Oxford. "We don't have a good way of forecasting these risks yet, but
looking at the historical data can be one way to understand the
possibilities and scenarios for the future."
No new nuclear power plants have been built in the United States in 29
years, in part because they've proved to be poor investments, producing
far more expensive electricity than originally promised. In 2005, about
19 percent of U.S. electricity generation was produced by 104 nuclear
The Energy Policy Act of 2005 and the Advanced Energy Initiative of
2006 sought to change that, offering financial incentives for new plant
construction that employs new reactor and new safe-operating
technologies. Current nuclear plant operators have given notice that
they intend to apply for approval of 27 new "generation III+" reactors.
But Kammen points out that in the past, when U.S. companies have
introduced new technologies, they've run into unexpected costs that
have kept electricity prices high. France, on the other hand,
standardized the design of its nuclear power plants and encountered
fewer cost surprises.
"Some U.S. plants were really well done, and they happen to be the
older ones," he said. "If we can learn the lessons from those plants,
which are often simplicity of design and standardization of design,
then I think nuclear could make a comeback."
New and safer technologies are essential to making nuclear power
more acceptable, he said, but "we need to optimize a few designs, we
don't need a proliferation of types of plants, because we have proven
we are not good at managing them."
The answer to the increased riskiness is not more government
subsidization, he added, but more savvy investment decisions by the
companies interested in nuclear power.
The project leader for the study was Jon Koomey, a staff scientist
at Lawrence Berkeley National Laboratory and a consulting professor in
the department of civil and environmental engineering at Stanford
University. Additional aspects of this large study will be published
later this year in Environmental Research Letters, an open-access journal published by the London-based Institute of Physics.
Source: UC Berkeley
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