Does nuclear power cost massive billion gov subsidies?

[vanesch]

As I don't care to see this thread locked, I hope we can get more facts on the historical costs of nuclear power in France - the entire capital and operating costs - not tangents. So far in this thread we don't have any useful facts on French nuclear costs, just assertions. Corporate debt is not that useful as a measure. The Ecologist is essentially an advocacy journal, though if there are references that can be pulled from that article I'd enjoy seeing them.

Well, I found this:
http://www.cea.fr/jeunes/themes/l_energie_nucleaire/questions_sur_le_nucleaire

where it is mentioned that the production of nuclear power in France costs 28.4 Euros per MWhr tax included, and this includes applied research, waste recycling, estimated cost for dismantling and final waste storage, according to the CEA, the French nuclear research agency. They refer to a report where this comes from, but they don't give a link and I didn't find it immediately.
Now, of course the CEA will have a rather positive opinion on nuclear power, although they diversified now and do a lot of research also in solar power and in biotechnology for instance. So I don't know how reliable this number is, but at least it is a number.

BTW, EdF is now a private company, quoted on the stock market. France was forced to do so because of European rules specifying that the electricity market should now be a private market. It does have a contract with the French state, and I think that the French state is still an important stock owner, but I don't know the details. This has given rise to a lot of strikes in France, because people didn't want EdF to become private.

 

[vanesch]

In theory perhaps, doubtful in practice. In any case you have not looked here at the principle economic factors. Plant costs. Insurance. Enrichment.

I think the thing that makes most private companies that don't already own a set of nuclear power plants, hesitate to do so, is the fear of red tape, and ultimately the fear of not being able to use their investment fully. For nuclear, you pay upfront, and you get your money through the lifetime of the plant. As there is, in many countries, a political uncertainty about the possibility of using nuclear power (phase outs decided in certain countries for instance) this means that you might have to close down - for political reasons - a plant that didn't come through its lifetime ; or not even be able to start it up. That's too much of a risk for many private companies. If it is a state-owned company, that's less of a problem, because then the state (and hence the people) is responsible for its own decisions.

 

[vanesch]

The non-nuclear part of British Energy is profitable. The nuclear part is not. Attempts to privatised BE Nuclear have failed.

Well, visibly, or EdF has the ambition of taking on all the nuclear losses in Europe, or the above proved to be wrong:

http://www.british-energy.com/

They are now part of EdF.

 

[mheslep]

Well, I found this:
http://www.cea.fr/jeunes/themes/l_energie_nucleaire/questions_sur_le_nucleaire

where it is mentioned that the production of nuclear power in France costs 28.4 Euros per MWhr tax included, and this includes applied research, waste recycling, estimated cost for dismantling and final waste storage, according to the CEA, the French nuclear research agency. They refer to a report where this comes from, but they don't give a link and I didn't find it immediately.
Now, of course the CEA will have a rather positive opinion on nuclear power, although they diversified now and do a lot of research also in solar power and in biotechnology for instance. So I don't know how reliable this number is, but at least it is a number.

BTW, EdF is now a private company, quoted on the stock market. France was forced to do so because of European rules specifying that the electricity market should now be a private market. It does have a contract with the French state, and I think that the French state is still an important stock owner, but I don't know the details. This has given rise to a lot of strikes in France, because people didn't want EdF to become private.

Thanks Vanesch.

The translator gives me:

The electricity produced in France is currently one of the most competitive in Europe. For basic operation, nuclear power, with a production cost of 28.4 euros per megawatt hour TTC, appears more competitive than gas (35 euros / MWh TTC) and coal (32 to 33.7 euros / MWh TTC) . (source : étude publiée fin 2003 par la DGEMP ) (source: 2003 study published by the end DGEMP)

These results include all present and future costs for the nuclear industry, ie research and development, processing of spent fuel, decommissioning of facilities and waste management.

Competitiveness increases if one takes into account the costs of limiting emissions of greenhouse gases which could represent between 1.5 and 15 euros / MWh for gas and coal (depending on the assumptions made on the cost per tonne CO 2).

In addition, the cost of nuclear energy is stable, as little dependent on the price of uranium, while the cost per kWh of gas origin is strongly related to gas price increases which, ultimately, is to be feared, in Due to the strong growth in demand.

I note that the third paragraph does not include insurance and I read elsewhere that the state just assumes that risk in France, i.e. the taxpayers. Given the insurance omission, I'm sceptical that other measures like major evacuation plans were paid for and updated by the nuclear industry, as they in part had to be here in the US.

 

[mheslep]

... This has given rise to a lot of strikes in France, because people didn't want EdF to become private.

They need a reason?

 

[Morbius]

Talk about living in a dream world.

These operators can't survive in the private sector.

REPEAT.. If they were successful they would be in the private sector and would have been for years.

Pumblechook,

In the USA - nuclear power reactors ARE in the private sector.

Also in the USA - the entity that makes material for nuclear weapons is a Government
operation - the Dept. of Energy.

In Britain; they melded the two operations in a single agency - BNFL.

In addition to providing commercial nuclear fuel; BNFL also provides the nuclear weapons
material for British nukes. That part of the operation is ALWAYS a Government operation.

If BNFL were broken into two pieces - a weapons unit owned by the Crown for producing nuclear
weapons material, and a commercial unit for producing reactor fuel - then we could see if this
second one were profitable.

However, because the combined BNFL makes weapons material - it is going to be Government
owned REGARDLESS of whether the commercial part is profitable or not.

Dr. Gregory Greenman
Physicist

 

[Morbius]

I think the thing that makes most private companies that don't already own a set of nuclear power plants, hesitate to do so, is the fear of red tape, and ultimately the fear of not being able to use their investment fully.

vanesch,

You got it. What power companies today fear most is what happened to one of the last nuclear power
plants to be built in the USA - but never operated.

That is the case of the Shoreham Nuclear Power Plant. The utility, Long Island Lighting Co or LILCO
borrowed billions to construct the plant. However, after it was built and in the licensing phase, then
New York Governor Mario Cuomo, who was anti-nuclear; appointed the members of the New York
Public Utilities Commission or PUC.

The PUC sets the price a utility can charge. For electricity from Shoreham, the PUC set a price of $0.00

Lilco could NOT CHARGE for the electricity generated by Shoreham. Because of that, there was
no way Shoreham could earn ANY money, and Lilco couldn't pay back its loans and went bankrupt.

THAT is what electric utilities are afraid of - PUC imposed bankruptcy because they built a nuclear plant.

Lilco didn't go bankrupt because nuclear power was inherently uneconomical. They went bankrupt because
the New York PUC MADE it uneconomical by not letting Lilco charge ANY money for Shoreham electricity.

Dr. Gregory Greenman
Physicist

 

[Xnn]

Warren Buffet recently offered to buy some nuclear plants (for the right price).
However, he has stated that the problem with Nuclear Power plant construction is that they are to big to build. They only come in 3 sizes: XL, XXL and XXXL.

 

[yolaine]

Hi,

Just have a look to that official doc:

http://www.ipcc.ch/pdf/assessment-report/ar4/wg3/ar4-wg3-chapter13.pdf

p763 and the chart "13.1.a. RD&D budgets for energy" quite interesting to get a fair idea of the public investment for R&D in nuclear...

So yes, massive billion gov subsidies for nuclear and no, absolutely not the same level for renewable energies!

 

[Morbius]

Warren Buffet recently offered to buy some nuclear plants (for the right price).
However, he has stated that the problem with Nuclear Power plant construction is that they are to big to build. They only come in 3 sizes: XL, XXL and XXXL.

Xnn,

Yes - that's Al Gore's old saw. However, when you have large demands - then you can build large
plants. For example, the Chicago / Northern Illinois area serviced by Commonwealth Edison uses
about 7 reactors. These are the "XXXL" size and you still need 7 of them to provide the power for
Chicago and its suburbs.

So what's the problem?

Dr. Gregory Greenman
Phyicist

 

[mheslep]

Xnn,

Yes - that's Al Gore's old saw. However, when you have large demands - then you can build large
plants. For example, the Chicago / Northern Illinois area serviced by Commonwealth Edison uses
about 7 reactors. These are the "XXXL" size and you still need 7 of them to provide the power for
Chicago and its suburbs.

So what's the problem?

The problem is that the cost of financing one reactor can be more than the gross revenues of a power utility, thus too much concentrated risk in one pie. See e.g. Duke Energy - revenues ~$3.1B. If the Cherokee two reactor site they have proposed costs the same as the dual AP1000's proposed for Levy, Fla, that's $14B, 4x the annual revenue of the company.

 

[Xnn]

I agree with mheslep; Too Big = Too much Risk.

There is too much risk of cost over runs and it's too difficult to contain the risk.

This is why Nuclear Power Construction really needs to be a Government job or at least the Government needs to shoulder some of the risk.

Many years ago, I worked at a plant under construction and frankly it was something of a joke. Every few months a new estimate of when we'd be done would come out. And of course the cost only went up over time. This was at a regulated Utility and the contracts were all basically cost plus. So, there was lots of money to be made, but the economics were basically an unknown. I had the sense that the only reason we ever finished was that nobody wanted to waste all the effort that had been expended to date.

Going forward, we (the USA) really need to concentrate on just 1 or 2 designs. Ideally, they'd be ones that are already constructed, but unfortuantely what is being planned are all "new", "advanced" or some other variation. So, it's a big unknown as to how expensive it they will really be.

Of course, Nuclear construction is a great way to keep unemployment down!

 

[Morbius]

The problem is that the cost of financing one reactor can be more than the gross revenues of a power utility, thus too much concentrated risk in one pie. See e.g. Duke Energy - revenues ~$3.1B. If the Cherokee two reactor site they have proposed costs the same as the dual AP1000's proposed for Levy, Fla, that's $14B, 4x the annual revenue of the company.

mheslep,

OH BROTHER - and I suppose the cost of your home is LESS than your yearly income!

What a total contrivance! Utilities have ALWAYS built plants with a costs more than their revenues.

The question that one needs to ask is whether the amount of electricity generated by the plant is enough
to cover the interest and principal payments on the loan the utility gets to finance the construction.

The answer to that is YES - or nuclear utilities wouldn't be making any money.

The ONLY concern about the capacity of the plant is that the utility has to be able to shutdown the plant
for refueling and still meet the demands of its customers. Coal power plants tend to be about the same
size as the nuclear power plants - and they too need to be shutdown for maintenance on the turbines on
a regular basis. [ Turbine maintenance in nuclear power plants is done during refueling outages ]

For example, we will take Commonwealth Edison with 7 reactors in its fleet. Now the total capacity of
the CommEd fleet is sized to meet the peak demands during summer - with air conditioning loads. The
demand in Spring and / or Fall is less - MORE than 14% less. Therefore, CommEd can afford to shutdown
one of the nukes and still meet its demand. If a utility had a total capacity of 1300 Mw(e) of which 1000 Mw(e)
was a single nuclear power plant - then such a utility has no business buying a nuclear plant. A plant of
1000 Mw(e) out of 1300 Mw(e) is too many eggs in one basket. But CommEd has no problem with a single
reactor being 14% of the fleet capacity. Likewise, in northern California, PG&E gets about 25% of its capacity
from the 2-unit Diablo Canyon plant - so each reactor represents 12.5% of PG&E's capacity. That's not a
problem - and most large utilities have no problem having over 1000 Mw(e) represented by a single plant.

This "too big" argument is a total "red herring".


Dr. Gregory Greenman
Physicist

 

[Morbius]

There is too much risk of cost over runs and it's too difficult to contain the risk.

Xnn,

Most of the delays to nuclear power plants were caused by lawsuits. What the USA needs to do
it get rid of the two step licensing scheme.

When a utility proposes a plant and applies for a construction permit - THEN you can have all the
lawsuits to decide if / how the plant should be built.

However, once the Courts have ruled - and the NRC has approved a construction permit - then there
should be NO MORE LAWSUITS! The Courts have spoken. The NRC should oversee the
construction of the plant, and if it is built according to the construction permit - then the utility gets a
license to operate the plant. This would be just like a building inspector issuing a certification of
habitability for a recently completed house.

Instead, the USA had a system in which once the plant was built and the utility had to pay on a loan;
we allowed more lawsuits to question whether the plant should have been built. We also allowed a
State organization like the New York state PUC to set a cost of $0.00 for the cost of electricity
generated by the plant as in the case of Shoreham.

Congress should amend our laws to prohibit this type of "second guessing". We make a decision to
build / operate the plant - OK'ed by the Courts and State - and then those decisions can not be
reversed.

Dr. Gregory Greenman
Physicist

 

[mheslep]

mheslep,

OH BROTHER - and I suppose the cost of your home is LESS than your yearly income!

What a total contrivance! Utilities have ALWAYS built plants with a costs more than their revenues.

Please name one energy project in the past 30 years for which the total project cost exceeds 4x annual revenues of a utility buying the project.

The question that one needs to ask is whether the amount of electricity generated by the plant is enough
to cover the interest and principal payments on the loan the utility gets to finance the construction.

The answer to that is YES - or nuclear utilities wouldn't be making any money.

Amusing.
Businesses, unlike a home buyer, are generally wary of committing the entire resources of an enterprise because of the risks involved. The business must make a prediction of growth of demand, in this case electrical, in the market. What if there's a big outlier drop-off in demand growth, say caused by a severe recession like we're experiencing now? What if there are major flaws in the construction phase caused by faulty materials used by the contractor, causing major rework delays as there were in Olkiluoto?

Why can't you be bothered to actually look anything up? You'll find numerous statements along these lines from utility CEOs and bond rating agencies like Moody's.

 

[Morbius]

P
Why can't you be bothered to actually look anything up? You'll find numerous statements along these lines from utility CEOs and bond rating agencies like Moody's.

mheslep,

YOU are the one that needs to look things up! How do you "think" that Commonwealth Edison
was able to build 10 nuclear power reactors over the last few decades?

Sure - some utilities are smaller and can't utilize a nuclear power plant in their fleet because the
size is too big. Sure - some utilities have CEO's that are more conservative.

However, there are utilities / CEOs that have been able to finance and afford nuclear power units
in their fleet of power plants - which is why the USA currently has 104 operating nuclear power plants.

What's your point? Is it that we should forgo building nuclear power plants because they are "too big"?

That's the type of brainless comment I expect from Al Gore - but not somebody that posts here.

We have 104 OPERATING nuclear power plants in the USA - so they are NOT "too big".

Dr. Gregory Greenman
Physicist

 

[Morbius]

What if there are major flaws in the construction phase caused by faulty materials used by the contractor, causing major rework delays as there were in Olkiluoto?

mheslep,

You mean "What if the utility doesn't do it job of oversight on the project?"

If the utility hires a poor contractor and / or the utility and contractor are not doing their job of making
sure that they are not purchasing faulty materials - then there can be delays - as with a FOSSIL plant
too. If the materials in a coal-fired boiler don't meet the ASME codes - that causes delays too.

Why would you assume that this is a problem unique to construction of nuclear power plants?

It is also a problem that can be readily avoided by proper oversight by the utility and by hiring a
contractor that knows how to build a nuclear power plant.

If a utility attempts to build a nuclear power plant "on the cheap" - then they are going to find that it
costs them more money in the long run.

However, there are many nuclear power plants - like those in the CommEd system where your
hypothetical problems were avoided by good oversight and construction practices.

It's not like nobody has built a nuclear power plant before, so that there are unknown problems.
The lab I work at built a major facility that ran over budget because it was the first of its type. But
we're not talking about that in the case of a nuclear power plant.

Dr. Gregory Greenman
Physicist

 

[Astronuc]

I'm not so sure that "too expensive" is a red herring. I hear this mentioned by the utilities, and already two utilities have backed away from plans on new plants.

Utilities are skittish, especially given the financial situation. I imagine Wall Street will be skeptical about new plants.

The last reactors completed were started in the late 70's and things have changed a lot since then.


Shoreham is a bizarre case. Firstly, like others build last, it was way over budget due to lawsuits (intervenors), but also because of engineering problems and retrofits. Then it was not allowed to operate and as previously pointed out, it was 'taken over' by the state, which paid $1 and allowed the utility to raise rates.

Cost is a big issue at utilities, which have cut staff to the bone.

 

[Morbius]

I'm not so sure that "too expensive" is a red herring. I hear this mentioned by the utilities, and already two utilities have backed away from plans on new plants.

Astronuc,

I'm sure some CEOs are ultra-conservative when it comes to a nuclear power project.

However, I think "too expensive" is mixed in with the uncertainty of the political situation.

I bet one could plot how much money the utilities are willing to risk as a function of the
uncertainty of having the investment pan out. Because of our current licensing system,
as well as the fact that a utility's plans can be essentially "vetoed" in the latter stages
by State regulators - as happened at Shoreham - then I completely understand the
unwillingness of utility CEOs in this matter.

However, rather than foregoing nuclear power, or doing nuclear power "on the cheap" - we need
to address the uncertainties. We need to be able to assure a utility that once they have won their
case in Court - that a subsequent lawsuit can't overturn the previous win. [ In other legal cases,
the legal profession has the concept of a "second bite at the apple" - which means to redo the
adjudication of a resolved legal issue. "Second bites" are usually not permitted - except when it
comes to nuclear power plants. ]

We have to ensure that State PUCs don't "abuse" their power by dictating that a utility has to
give away power for free if it is generated by a nuclear power plant as New York did with Shoreham.

If we did that - I bet a lot of this "too expensive" talk would go away. Even under current conditions,
there are some utilities that are willing to build more nuclear power plants.

For example, Detroit Edison in Michigan realizes that the long term view for their service area with all
its industry; will require more electric power generation capacity - and Detroit Edison has announced
its intent to build Fermi Unit 3 to join the currently operating Fermi Unit 2.

For those utilities that are willing to commit to building more nuclear capacity - we should help enable
them to do so.

It's not useful for us to say "they're too expensive - let's not build nuclear power plants".

That's just throwing in the towel for no good reason.

Dr. Gregory Greenman
Physicist

 

[mheslep]

...Why would you assume that this is a problem unique to construction of nuclear power plants?

I have not assumed that, said nothing of the kind. Please don't attribute to me that which I did not say.

 

[Andrew Mason]

What's your point? Is it that we should forgo building nuclear power plants because they are "too big"?

That's the type of brainless comment I expect from Al Gore - but not somebody that posts here.

We have 104 OPERATING nuclear power plants in the USA - so they are NOT "too big".

"Big" is a problem for regions with low populations/density. It is certainly a problem for Saskatchewan, whose government is encouraging the development of nuclear power in the province. The province has 1 million people in an area (651,000 km^2) almost the size of Texas. Total electrical consumption is 3,000 MW. The electrical grid is designed around small power plants distributed around the province.

The proposal is to build two 1000 MWe nuclear plants. There is an enormous cost in creating the electrical grid to distribute that much power from one location throughout the province or for export to other jurisdictions.

AM

 

[Astronuc]

I think we all agree about the political issues associated with nuclear power, and even big power plants. Not only do some folks not want nuclear (but some certainly do), but some don't want transmission lines.

Utilites are run by businessmen who are averse to risk. Big costs mean big risks, which is why utilities have expected some funding (including loan guarantees) from the US government before they commit to new nuclear power plants.

There are numerous sites around the country that can accommodate one or more units. These sites were designed for 2, 3, or 4 and even up to 5 units (e.g. Palo Verde). The problems with TMI and the fire at Browns Ferry really put a damper on new plants for the last three decades. The industry hopes that the successes since then will help pave the way for new plants.

Still we have to determine a solution to the accumulated spent fuel. That's also a political problem, and it doesn't help that we seem to change directions with each new administration or congress.

 

[Andrew Mason]

Still we have to determine a solution to the accumulated spent fuel. That's also a political problem, and it doesn't help that we seem to change directions with each new administration or congress.

It is also a technological problem. One best solution is to use it. That solution would require reactors that, with secure reprocessing, will use all the energy in the fuel (Uranium or Thorium) and dispose of fission products after they have cooled off (in a hundred years). We are at least 25 years away from such technology. In my view it would be a mistake to accede to political pressure to do something now with spent fuel that would render the fuel unusable in the future. That is one sure way to create a storage problem lasting eons.

AM

 

[Morbius]

It is also a technological problem. One best solution is to use it. That solution would require reactors that, with secure reprocessing, will use all the energy in the fuel (Uranium or Thorium) and dispose of fission products after they have cooled off (in a hundred years). We are at least 25 years away from such technology. In my view it would be a mistake to accede to political pressure to do something now with spent fuel that would render the fuel unusable in the future. That is one sure way to create a storage problem lasting eons.

Andrew,

If you reprocess / recycle spent nuclear fuel - the longest lived radioisotope in the waste stream will
be Cesium-137 with a half-life of just 30 years.

The problem won't last eons because the radioactivity won't.

Additionally, if one converted the fuel to some other form, borosilicate glass, for example; and it was
determined another form was better - the conversion is NOT irreversible.

The WORST thing is probably to do nothing.

Dr. Gregory Greenman
Physicist

 

[Morbius]

I have not assumed that, said nothing of the kind. Please don't attribute to me that which I did not say.

mheslep,

If you use that argument as an argument against nuclear power - then you ARE assuming that
some other form doesn't have the problem.

If ALL the options have the same problem; then there's no reason to bring it up.

I will attribute to you an line of reasoning that you don't understand that you are making.

Dr. Gregory Greenman
Physicist

 

[Xnn]

In order to justify construction of a multi-billion $ nuclear plant the potential payback needs to outweigh the risk.

A year ago, it looked like oil was going thru the roof and the price of all energy forms were following. This made future Nuclear look much more promising than it does now.

 

[mheslep]

mheslep,

If you use that argument as an argument against nuclear power - then you ARE assuming that
some other form doesn't have the problem.

If ALL the options have the same problem; then there's no reason to bring it up.

I will attribute to you an line of reasoning that you don't understand that you are making.

All large power projects have greater difficulty getting private funding because of the financial risk to the organization. A failure or large delay in a small project is a loss on the balance sheet. A failure or large delay in project many times the size of the company may mean the end of the company. The 1988 bankruptcy of Seabrook's New Hampshire owner is an example, and there are others. This is one reason small projects, of any kind, are overwhelmingly preferred. Of the 1,522 coal fired power plants in the US, only 12 are over 1000MWe. All of the nuclear proposals currently before the NRC are greater than 1000MWe. The median coal plant size is 100-200MWe. Thus nuclear is at a disadvantage in obtaining financing, not insurmountable perhaps, but none the less a disadvantage.
http://www.sourcewatch.org/index.php?title=Existing_U.S._Coal_Plants
http://www.nrc.gov/reactors/new-reactors/col.html

 

[Pumblechook]

As far I know EDF remains in French Gov Hands.

They own 85% of the shares.

 

[Morbius]

The median coal plant size is 100-200MWe. Thus nuclear is at a disadvantage in obtaining financing, not insurmountable perhaps, but none the less a disadvantage.

mheslep,

The only reason the median coal power plant size is so low is that you are counting many older plants.
Most of the more recent coal power plants are in the neighborhood of 1000 Mw(e).

However, there is NOTHING that restricts a nuclear power plant to being over 1000 Mw(e).

If a utility desires a plant with lower power - then they can have one. For example, the
Palisades Nuclear Power Plant south of South Haven, Michigan on the shore of Lake Michigan
is a 730 Mw(e) unit that is comparable in size to many newer coal power plants:

http://www.nrc.gov/info-finder/reactor/pali.html

The reason that utilities are ordering nuclear power plants with capacities >1000 Mw(e) is that
is what the WANT / NEED!

Dr. Gregory Greenman
Physicist

 

[gmax137]

However, there is NOTHING that restricts a nuclear power plant to being over 1000 Mw(e).

Well that's true as far as it goes, but there are a number of costs that scale at less than proportional to the power - and that means that (in crude terms) building and operating two 500 MWe plants is going to cost more than one 1000 MWe plant. To pick a trivial example, the application costs to get a license are not based on the output of the unit. Neither are the payroll costs to run it - that's one big reason you see so many dual units. But the big difference is probably in construction. Take the containment vessel - its volume scales with power; but its construction probably scales closer to its surface area (material cost). That kind of thing pushes the economics to higher power units.

All that said, keep in mind that W designed and licensed the AP600 before they did the AP1000; if you'd really rather have a 600 MWe unit I am sure they would be glad to build one for you.