Nuclear Power and Costs:

A Surprisingly Complex Issue

I have been reading quite a few articles lately about the costs of nuclear power.  Not surprisingly, they are all over the place.  Some articles cite the high costs of continuing to operate nuclear power plants.  Others cite the high costs of abandoning existing nuclear power plants.  The truth is not always easy to ferret out.

While I can't, in a single essay, fully analyze all the points raised in all the articles, I think it is useful to look at some of the articles and some of the points that have been made.  This blog is my first humble attempt to do that.

The first report I'd like to look at is an argument that maintaining nuclear power at 15 or 20% of the 2030 total energy mix in Japan would actually have a marginally higher cost than phasing it out completely.  This statement comes from a Japan Times report on a speech by Softbank CEO and renewable energy advocate Masayoshi Son.  Since this assertion seemed contradictory to me, I tried to look at a few of the factors mentioned in the news article.  The article indicates that Son mentioned the insurance costs in the aftermath of the Fukushima accident, the costs related to running a nuclear power plant past 40 years, decommissioning costs, and what to do with the nuclear waste.

Now, I must say that the question of how future insurance requirements for nuclear power plants in Japan will be treated is a great unknown.  I have seen no reports on the subject, so consider it an unknown at this point.  However, the other costs that Son mentions surprised me.  The usual assumptions with regard to operation beyond 40 years is that most of the costs of the plant are sunk costs and the continued operating cost is very small.  True, sometimes upgrades are necessary for longer-term operation, but these are normally a very small fraction of the cost of a new nuclear power plant--or for that matter, a very small fraction of the cost of building any kind of replacement power.  Decommissioning and waste disposal will be required whether the plants are shut down today, in 2030, or beyond that.  There may be some marginal differences (yes, more waste will be generated), but they should be relatively small.  They should not be sufficient to make an earlier shutdown of nuclear power plants a more cost-effective option.

On the other side of the equation, the article does not report Son as making any estimates of the cost of replacing existing facilities with new renewable power plants.  Every cost study I have seen indicates that there is a very substantial cost for any replacement power generation facilities, and particularly for solar or wind power plants.

Some measure of the cost of ending nuclear power completely was provided by the Japanese government, which estimated the cost of ending the use of nuclear power in Japan by 2030 at $637 billion for the replacement power needed, and estimated that would nearly double the monthly energy bill of the average Japanese household.  Once again, there is insufficient information in the article to allow me to confirm quantitatively that the numbers make sense, although qualitatively, they do fit my assertion that the costs of building solar and wind replacements would be large.

One article tried to represent both sides of the story--the Japanese government's case that ending nuclear power will be costly, and the anti-nuclear side's case that energy use can be cut.  The article had one quote that households will use 60-70% less electricity by 2030 than they do today, and therefore, would actually have lower electricity bills!  Having lived in Japan, I can tell you that the price of electricity is already much higher than the price in the US--and that Japanese already use far less energy than Americans do.  That may be no surprise, but I will add that the difference is not merely one of wasting less.  Life in a Japanese apaato (the Japanese word for apartment) is far less comfortable and less convenient than life in the average American home.  I was actually told by my utility company that I could not have air conditioning on even in one room and run the washing machine at the same time if I also wanted to keep the refrigerator and some lights on!

Of course, more can always be done to improve the efficiency of energy use, but I doubt that the average Japanese household will be able to reduce energy use by 60-70% in the next 18 years without huge sacrifices.  And without at least some heat and air conditioning, I would predict that one of the consequences will be an increase in the death rate among the ill and elderly.

In the US, the Business Council of Westchester pegged the cost of closing Indian Point at $11.5 billion.  In that case, the estimated impact on electric rates is only 6.3%.  Again, it is hard to get to the bottom of these numbers, but clearly, the loss of one nuclear power plant in a region is not the same as the loss of all nuclear power plants in a country.

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Japan's Decision on Nuclear Power:

A Good Sign?

Somewhat to the surprise of many, the Japanese government recently announced its decision on the future of nuclear power in Japan, and it wasn't the total phaseout by the 2030s that had previously been proposed.

Some view the turnaround as a capitulation to Japanese industry, which had been against the phaseout.  Others see the decision as still vague, leaving a climate of ongoing uncertainty.

Alternatively, the decision might be viewed as an example of what the late President John F. Kennedy dubbed "profiles in courage"--doing the politically unpopular thing out of a conviction that it is the right thing to do.

Others would say just the opposite.  Since the announcement was accompanied by ambiguous wording that the government would still take the phaseout goal "into consideration" in further deciding the energy future of the country, what might initially appear to be an act of political courage could actually be an attempt to straddle the fence and attempt to appease both sides.

We cannot know what the inner thinking is of the decision-makers, so it is hard to make a convincing argument about what motivated the Japanese government to make this decision, but they certainly were aware that a decision to shutter all nuclear power plants in the country was fraught with danger for Japan.

After all, many observers, both inside and outside Japan, predicted a rather dire future for a Japan without nuclear power.  Predictions are not facts, of course, but reasonable analyses of the cost and feasibility of replacement power, and the consequences of severe power shortages, present a compelling argument for, at a minimum, allowing a longer period for the possible operation of nuclear power plants and incorporating more flexibility in making decisions about Japan's energy future.

Thus, while some characterize the actions of the Japanese Cabinet as caving in to industry, it is encouraging that the Japanese Cabinet appeared to recognize all voices and perspectives in arriving at its decision, and at least for now, has balanced the emotional response of members of the public with the reasoned analyses of experts.

This is not to say that we can, at this point, predict how the rest of this saga will play out.  As has been pointed out many times, the tenures of recent Prime Ministers have been remarkably short.  Even absent that, there is a long road ahead for Japan.  The new Nuclear Regulatory Commission needs to establish new rules and needs to review each of the currently shut down plants before authorizing restarts.  The strong public sentiment will continue to be an issue.  All these signs point to continued uncertainty.

Nevertheless, the Japanese have at the very least put off making a decision that might have sent their economy into a strong downward spiral.  

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The Need for Multifaceted Energy Solutions:

Words of Wisdom from Marv Fertel

I was very pleased to see a recent opinion piece on US energy policy from Marvin Fertel, president and CEO of the Nuclear Energy Institute.  Too often, the proponents of each technology find themselves in the position where other energy technologies feel like competitors.  When this happens, there is a perceived need to "defend" one's own turf--to point out why it is better than the alternatives, or why the comparisons offered by others are not valid.

I don't deny that it can be important to correct erroneous information or unequal comparisons, when they are presented to the public.  But it casts the dialogue in a negative, one-sided manner, when the truth, as many of us recognize, is that we need a diverse portfolio of energy alternatives to meet our growing needs for energy, and our parallel environmental and security requirements.

Therefore, I was delighted to see that Marv Fertel, perhaps the most prominent spokesperson for the US nuclear industry as a whole, has published a very thoughtful essay on why we need a diversified mix of all energy technologies.  Since I cannot improve upon his words, I will provide some key quotes below, but I urge readers to click on the original essay:

"...the United States can and should pursue a bold and aggressive energy policy animated by a low-carbon, diversified portfolio of electricity generation, one that meets forecasted demand growth with technological innovation, reliability and environmental responsibility.  It must realize additional gains from efficiency, demand site management and conservation while recognizing that an ever-growing thirst for electricity will require innovative sources of producing or capturing energy."

"...we must continue to build additional nuclear energy to partner with other low-carbon sources like wind, solar, geothermal and hydropower." (emphasis added)

"...we should pursue an energy policy that balances our environmental goals and one that seeks to limit our exposure to imported sources."

Marv goes on to talk about both current nuclear power plant technology and the potential benefits of advanced reactor technologies and small reactor designs.  What I particularly like about his essay, is that he succinctly summarizes all the many demands on our energy sources--a sufficient and reliable energy supply, responsible environmental stewardship, limited exposure to external disruptions.  He asserts that the way to address that is with a broad portfolio of options--improvements in energy efficiency, grid reliability, demand side management, and conservation, and technological developments in fossil fuel extraction, nuclear reactor designs, renewable energy sources.  

He warns that achieving the needed mix won't be cheap or easy, but that it is important to the future of the United States.  And, I would add, to the world.

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Agneta Rising:

A New Head for the World Nuclear Association

The World Nuclear Association (WNA) recently announced that Agneta Rising will become the Director-General of the Association starting January 1, 2013, taking over from John Ritch.

I had previously reported on John's intention to leave that post.  In my earlier post, I noted that John Ritch took the helm of the WNA when the organization morphed from the Uranium Institute to its present incarnation.

John brought a tremendous amount of energy and vision to the organization, and deserves a large share of the credit for making it the important and influential force it is today in the global nuclear community.  I said then, and I reiterate now, that he will be a tough act to follow.

If anyone can fill John's very large shoes, it is Agneta.  The metaphor of a "rising star" seems appropriate for Agneta in more ways than one!  She comes to the position with a distinguished background herself.  She is currently Vice President Environment at Vattenfall AB in Sweden, and has worked in various other positions in Vattenfall since 1980.  Within Sweden, she has served on several government boards and advisory groups on nuclear matters.

Agneta is also well known on the international scene, having served as president of the Swedish Nuclear Society, the European Nuclear Society, and as a founder and president of Women in Nuclear (WIN), an organization with members in over 50 countries.  She has also been associated for a number of years with the WNA and its predecessor, the Uranium Institute, having served as chairman during the transition. 

Although it's been several years since I've seen Agneta, I got to know her 10 or 15 years ago through some of our mutual interests in nuclear professional society activities, so I personally know that she brings a great deal of enthusiasm to her work, and has an outstanding ability to work with other people.  Her selection is an excellent choice that will help continue and further develop the important work of the WNA.

I wish John the best in his "retirement"--although, knowing John, I suspect he will not stay retired for long!--and I wish Agneta the very best as she takes over this key position in the global nuclear community.

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Agneta Rising (Correction Noted):

A New Head for the World Nuclear Association

NOTICE:

This post was originally published the morning the World Nuclear Association (WNA) announced that Agneta Rising will become the Director-General of the Association starting January 1, 2013, taking over from John Ritch.

However, subsequent to publication, I discovered an error in the URL that I could not correct.  Thinking that the error might make it more difficult for people to find the post, I reposted the content on September 14 with a corrected URL.  I apologize for any inconvenience.

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