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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