Synopsis: Nuclear power is losing its support in the United States and abroad in the wake of the Fukushima disaster and rising concerns over nuclear accidents, a new study contends, but the high and uncertain cost of building new nuclear plants is the primary driving force behind the decline in enthusiasm for that source of energy.
"The Fukushima crisis has put an end to a recent surge in enthusiasm for nuclear power," a report from the Energy Institute at Haas (University of California at Berkeley) has found, and there is little, if any, prospect for a resurgence in building new nuclear plants in the United States.
"The crisis at the Fukushima plant has brought to the forefront ongoing concerns about nuclear accidents and the handling and storage of spent nuclear fuel and has reminded the world about the risks associated with nuclear power," it said.
The barriers to building new nuclear plants are numerous, the report said, including "concerns about nuclear accidents," the risks of storage of spent fuel, the fact that natural gas and coal continue to be much cheaper to operate power plants, the likelihood of alternative and lower-cost technologies such as wind and solar becoming more available, the increased cost from "expanded regulatory oversight for current and future nuclear power plants particularly with regard to seismic risks," the high cost of capital to build reactors due to uncertainties over the technology that hasn't been used to build a new plant for more than 30 years, and what the final cost of building any plant will turn out to be.
A two-reactor plant today could cost $8 billion, it said.
"Almost every nuclear plant ever built in the United States has ended up costing more to build than was originally estimated," the report said. "Part of the explanation for the increase in cost is that plants kept taking longer and longer to build."
The mounting concerns about nuclear risks are very legitimate, the report said, but "in the end, the biggest stumbling block for nuclear power continues to be cost."
All these factors are starting to influence the industry worldwide. On September 18, Siemens, the German industrial and engineering conglomerate, announced it is withdrawing from the nuclear industry in response to the Fukushima disaster and "the clear positioning of German society and politics for a pullout from nuclear energy." German chancellor Angela Merkel announced in May that all of the country's 17 nuclear reactors would be shut down by 2022. Siemens had built them all.
Siemens has already withdrawn from a planned joint venture with a Russian nuclear firm, and in 2009, withdrew from an eight-year-old nuclear joint venture with a French energy firm. (See: BBC News Business)
The Energy Institute report, authored by Lucas Davis, assistant professor at the Haas School of Business, University of California, Berkeley, did not address factors affecting future upgrades of the existing 104 nuclear power reactors at 65 plants in the U.S., which includes the Diablo Canyon and San Onofre plants. All these 104 reactors were ordered built prior to 1974, it said. The ages of the plants have become the key motivation for requiring improved and more frequent maintenance to maintain safety, according to other reports, which also drives up operational costs.
But the report's conclusions about new nuclear plants being cost-prohibitive would seem to apply to any proposals to replace any of these old reactors with new ones. The inference also might be drawn that at some point, all the factors weighing against building new plants could also come into play in determining at what point the costs of maintenance and safety improvements—as recommended by a recent study—may outweigh the profits for owners, such as PG&E at Diablo Canyon and Southern California Edison (primary owner) at San Onofre, as the plants continue to age. The Diablo Canyon opened in 1985 and San Onofre's two operating reactors in 1983 and 1984.
However, construction of the Diablo Canyon plant was completed earlier in 1973, and then a seismic fault, the Hosgri fault, was discovered offshore, according to Wikipedia. This fault had a 7.1 magnitude quake 10 miles offshore on November 4, 1927.
PG&E then updated its plans and added structural supports designed to reinforce stability in case of earthquake. But in 1981, PG&E discovered that in using a single set of blueprints for these structural supports, workers were supposed to have reversed the plans when switching to the second reactor, but did not. One expert said the result of the error was that "many parts were needlessly reinforced, while others, which should have been strengthened, were left untouched." Nonetheless, on March 19, 1982, the Nuclear Regulatory Commission (NRC) decided not to review its 1978 decision approving the plant's safety, despite these and other design errors (Diablo_Canyon_Power_Plant).
San Onofre's first reactor, Unit 1, which was commissioned in 1968, was shut down in 1992 and has been dismantled. It is being used as a storage site for spent fuel from the other two reactors. In 1977, the Associated Press reported that the construction firm Bechtel installed a 420-ton nuclear-reactor vessel backwards at San Onofre, which Southern California Edison officials admitted.
The Energy Institute report said that even before Fukushima, the market conditions for nuclear energy had changed abruptly. For example, when U.S. natural gas prices fell sharply in 2009, legislation regulating carbon emissions stalled in the senate and the global recession, those developments served to slow the growth of electricity demand. This highlights the extreme sensitivity of the nuclear power sector to energy prices, economic downturns, national energy policy, and galvanizing events like Three Mile Island, Chernobyl, and Fukushima.
Several recent studies estimate that current construction costs (excluding financing) for a U.S. nuclear power reactor exceed $4000 per kilowatt, so a typical two-reactor 2000 megawatt plant would cost more than $8 billion.
"Following Fukushima, industry observers have called for expanded regulatory oversight for current and future nuclear power plants particularly with regard to seismic risks, containment issues and the storage of spent fuel," the report said. "This increased regulatory scrutiny will likely cause construction costs to increase further."
In addition, investments in nuclear power face considerable technological risk, it said. Over the 40-plus year lifetime of a nuclear power reactor, the available sources of electricity generation could change, and there is risk that an alternative, lower-cost technology could come along, not only from a technology
that is known today such as wind or solar that could quickly become more cost-effective but some other technology that is currently unknown.
Of 17 applications currently pending with the NRC for new nuclear power plants to be built in the United States, it is unlikely that more than a few will ever be built, the report predicted.
As of last April, most of the pending license applications are essentially stalled and pre-construction is proceeding only on a couple of projects in states where the regulatory environment is particularly favorable, the report said.
During the 1970s, it also became much more difficult to site nuclear power plants, it added. Communities became more active, challenging projects in federal and state courts leading to extended construction delays and changing public attitudes about nuclear power. (After Fukushima, that activism has been re- ignited.)
The long period of time since nuclear power plants were constructed in the United States means that the entire supply infrastructure will need to be started up again essentially from scratch, it said. For example, there is today only one facility in the world that can produce the nuclear-grade heavy-steel reactor vessel needed for a boiling water reactor, and there is currently a long waiting period for these and other key nuclear components.
Thus, there is a great deal of uncertainty about exactly how much it would cost to build a new nuclear power plant in the United States.
The report said the cost uncertainties hinged on the fact that:
(1) Nuclear is not competitive with either coal or natural gas. Cost for nuclear power is 8.7 cents per kilowatt hour, compared to 6.5 cents for coal, and 6.7 cents for natural gas.
(2) The prospects for nuclear depend critically on fuel prices. The lower price for natural gas makes it significantly more difficult to make a case for nuclear power.
(3) The cost of capital is extremely important, and studies find a higher cost of capital should be applied to nuclear power than to fossil-fuel based power. In addition, this higher cost of capital reflects the historically high risk of default and numerous forms of risk faced with nuclear projects.
(4) A modest carbon tax would probably improve the prospects for nuclear, but under most conditions this is not enough to make nuclear economic.
Therefore, "it seems unlikely that there will be much of a renaissance" for nuclear power. The report is at Berkeley - Working_Papers.
