HOW THE COST FACTOR SANK NUCLEAR ENERGY IN THE U.S.

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29 february 2016

Why America abandoned nuclear power (and what we can learn from South Korea)

by Brad Plumer, Vox on February 29, 2016

There's a compelling argument that the world ought to be building many more nuclear power plants. We'll need vast amounts of carbon-free energy to stave off global warming. It's not at all clear that renewables can do the job alone. And nuclear is a proven technology, already providing 11 percent of electricity globally.

So what's the catch? Cost. More than safety or waste issues, cost is nuclear's Achilles' heel. Modern-day reactors have become jarringly expensive to build, going for $5 billion to $10 billion a pop. Worse, the price tag seems to be rising in many places. Back in the 1960s, new reactors in the US were one of the cheaper energy sources around. Two decades later, after a series of missteps, costs had increased sixfold — a big reason we stopped building plants.

Ever since, experts have been debating whether or not nuclear's cost problems are an intrinsic flaw that will doom the technology. Nuclear skeptics, such as Joe Romm, argue that soaring costs are inevitable if you try to build massive reactors that need layers of safeguards.

But there's also an optimistic story for nuclear — one that I think is worth hearing out. A recent paper in the journal Energy Policy by Jessica Lovering, Arthur Yip, and Ted Nordhaus of the Breakthrough Institute looked at construction costs for hundreds of reactors built in the US, France, Canada, Japan, German, India, and South Korea between 1960 and 2010. Their data tells a more nuanced story.

Nuclear construction costs in the US did spiral out of control, especially after the Three Mile Island meltdown in 1979. But this wasn't universal. Countries like France, Japan, and Canada kept costs fairly stable during this period. And South Korea actually drove nuclear costs down, at a rate similar to what you see for solar. Studying these countries can offer lessons for how to make nuclear cheaper — so that it can become a useful clean energy resource.

"The biggest thing we found is that there's nothing intrinsic to nuclear that leads to cost escalations," Lovering told me. "It depends on what policies are in place, on the market dynamics. You get very different cases in different countries."

Here's a look at where America's nuclear industry went awry — and how France and South Korea avoided those mishaps.

Too rich for my blood.

Before we dive into the US story, a note on numbers. The Energy Policy paper focuses on "overnight construction costs" for power plants. This is the price of parts, labor, engineering, and land. It doesn't include fuel, operations, or maintenance, but it's the dominant component of lifetime costs. And it's phrased in terms of dollars per kilowatt, so we can compare plants of different sizes.

For context, the Energy Information Administration calculates overnight construction costs for new US power plants ordered in 2014. Today, an advanced nuclear reactor is estimated to cost $5,366 for every kilowatt of capacity. That means a large 1-gigawatt reactor would cost $5.3 billion to build. By contrast, a new wind farm costs just $1,980 per kilowatt. A new gas plant costs just $912 per kilowatt, or one-fifth as much. Even if you adjust for nuclear's higher capacity factors, that's brutal competition.

So how did nuclear get so expensive?

The story starts in the 1950s, when the Atomic Energy Commission supported the first wave of commercial reactors. As with any nascent technology, early demonstration projects were pricey. Yet within a decade, companies were figuring out how to build bigger reactors, take advantage of economies of scale, and drive down costs.

A breakthrough came in 1963 with GE's contract to build a low-cost light-water reactor at Oyster Creek, New Jersey. By the late 1960s, construction costs for new reactors had dropped to $600 to $900/kW in today's dollars — cheaper than modern gas plants. Atomic energy was on a roll.

But then ... things got messy. As utilities ordered more reactors, supply chains for parts and skilled labor became stressed, causing delays and cost hikes. Meanwhile, both industry and environmentalists were finding new safety issues to deal with. Early core cooling systems had flaws and required upgrades. California's reactors needed earthquake contingency plans. Most of these changes, Lovering says, were ultimately good things — they made the reactors safer.

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