Shades of Nuclear Green

Energy costs into the 21st century

  • I thought renewables were expensive. Due to massive technological and manufacturing advances, mostly in China for solar and Europe for wind, the cost of most renewables has plummeted in recent years. Also, decades of anti-renewables propaganda don’t help.
  • I thought nuclear was cheap. Reality is, nuclear was cheap

Mispricing of nuclear energy - how and why

  • As a society, we have become remarkably bad at executing very large project. Nuclear powerplants, like Olympic stadiums and high speed rail projects, are subject to the “Iron Law of Megaprojects”: overtime, overbudget, over and over again. Startup date and construction costs are hard to check parameters that greatly influence viability of project and investment opportunity. That makes it very vulnerable to the project management equivalent of p-hacking. The 2.4MW Vogtle plant in Georgia, US, deserves special mention, with a 1200% cost overrun from $660M to $8.7Bn in 1990s Dollars ($16.2Bn in 2019 Dollars).
  • Nuclear powerplants are extremely capital intensive (~80% of total costs). As governments in the west privatised the energy generation network, these large capital costs were transferred to the private sector. Dieter Helm estimates that the costs of the Hinckley C power station in west England would have been halved if it had been financed at the 2% borrowing rate enjoyed by the government, instead of EDF’s 9% cost of capital. You can make the argument instead that the 2% financing costs are a consequence of leveraging the risk of the project with the rest of the governments operations, offloading the risk to the public
  • Experience building and maintaining nuclear power plants has taught us that they are very expensive to decommission, a process that can take decades and billions of dollars. Decommissioning costs were not appropriately taken into account in nuclear projects until the 1970s, and then they were estimated to be of the order of ~3% of total costs. Current experience decommissioning these assets have seen figures of ~10% of total costs in Europe and the US. There are strong incentives not to explore these costs at design stage, and let the taxpayer foot the bill 60 years down the line.
  1. Large costs over a large period of time
  2. "All or nothing" nature - building half of a nuclear plant costs significantly more than half of the total costs, and it will in most cases produce little to no returns
  3. Decisions being made by small number of people that are relatively insulated of the consequences of the mispricing.
    Companies (EPC contractors) will make money if the project goes ahead and fail, but won’t if the project is never started. Politicians involved will most likely be out of office and retired, having reaped the benefits of job creation in their local constituencies.

Then what next?

  • To complement renewables when they are not at their peak power production (although there are alternatives — see the European Supergrid project)
  • To develop nuclear engineering within the country. It is very difficult to sustain a military nuclear industry without a civil nuclear industry (with its network of universities engaging in nuclear engineering and research)
  • To obtain energy independence in the international stage, if the country possesses uranium but not fossil fuels
  • How much we are willing to pay to obtain a reliable energy network, and how OK we are with the impact to such network to our environment
  • How much nuclear deterrence we want our country to have (if at all)
  • The role of our country in the international community

Some other minor thoughts




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