How Much Will New Nuclear Power Plants Cost?
2 Nov, 2008 03:03 pm
The costs of building new American nuclear reactors may be much higher than quoted by the industry.
A collection of new studies, however, suggest that these figures may underestimate the cost of building new nuclear units by more than a factor of 3. Researchers from the Keystone Center, a nonpartisan think tank, consulted with 27 nuclear power companies and contractors, and concluded in June 2007 that the cost for building new reactors would be between $3,600 and $4,000 per installed kW (with interest). They also projected that the operating costs for these plants would be remarkably expensive: 30 ¢/kWh for the first 13 years until construction costs are paid followed by 18 ¢/kWh over the remaining lifetime of the plant. (For comparison, the average residential price for electricity was about 10 ¢/kWh last year).
Just a few months later, in October 2007, Moody’s Investor Service projected even higher costs due to the quickly escalating price of metals, forgings, other materials, and labor needed to construct reactors. They estimated total costs for new plants, including interest, at between $5,000 and $6,000 per installed kW. Florida Power & Light informed the Florida Public Service Commission in December 2007 that their estimated the cost for building two new nuclear units at Turkey Point in South Florida was $8,000 per installed kW, or a shocking $24 billion. And in early 2008, Progress Energy pegged its cost estimates for two new units in Florida to be about $14 billion plus an additional $3 billion for T&D.
Remember, too, that these costs do not include the expense of storing nuclear waste. In August 2008, the U.S. Department of Energy offered an updated estimate of the cost for building and operating Yucca Mountain, the planned centralized repository being erected in Nevada. The DOE noted that the expected costs for Yucca Mountain jumped from $57.5 in 2001 billion to $96.2 billion today, and this latter figure only covers the costs of building the facility and transporting waste until 2133.
Furthermore, researchers at Georgetown University, the University of California at Berkeley, and the Lawrence Berkeley National Laboratory assessed financial risks for advanced nuclear power plants utilizing a three-decade historical database of delivered costs from each of 99 conventional nuclear reactors operating in the U.S. The study pointed out two unique features of advanced nuclear power plants that make them prone to unexpected increases in cost: (a) their dependence on operational learning, a feature not well suited to rapidly changing technology and market environments subject to local variability in supplies, labor, technology, public opinion, and the risks of capital cost escalation; and (b) difficulty in standardizing new nuclear units, or the idiosyncratic problems of relying on large generators whose specific site requirements do not allow for mass production.
History does indeed seem to confirm this trend. The Congressional Budget Office reported in May 2008 that the actual costs of building 75 of the existing nuclear power plants in the U.S. exceeded industry quoted estimated by more than 300 percent. The industry, in other words, reported average construction costs for these plants at $45.2 billion (in 1990 dollars) but the facilities ended up costing $144.6 billion (in 1990 dollars). This increased their construction costs from $938 per installed kW to $2,959 per installed kW.
The lesson, in other words, is simple. The historical record, along with new projections from actual utilities and energy consultants, implies that industry cost estimates for new nuclear power plants cannot be trusted. As we move forward in debating which options will best meet our electricity (and possibly energy) needs in the next few decades, we should all beware that the experience with nuclear power in the United States shows how truly expensive that option can be.
For further reading:
Pam Radtke Russell, “Prices Are Rising: Nuclear Cost Estimates Under Pressure,” EnergyBiz Insider (May-June, 2008), available at http://a4nr.org/library/economics/may.june-energybiz/view.
The Keystone Center, Nuclear Power Joint Fact-Finding (July, 2007), available at http://www.keystone.org/spp/energy07_nuclear.html.
Nathan E. Hultman, Jonathan G. Koomey, Daniel M. Kammen, “What History Can Teach Us About the Future Costs of U.S. Nuclear Power,” Environmental Science & Technology (April 1, 2007), pp. 2088-2099, available at http://rael.berkeley.edu/files/2007/HultmanetalNuclearViewpoint2007.pdf.
“Nuclear Waste: Distant and Expensive Mirage,” Electricity Journal 21(7) (August/September, 2008), pp. 23-24, available at http://www.science-direct.com/science/journal/10406190.
Congressional Budget Office, Nuclear Power’s Role in Generating Electricity (Washington, DC: CBO, May, 2008), available at http://www.cbo.gov/doc.cfm?index=9133.