Are nuclear supporters setting nuclear power back by opposing a price on carbon emissions?

Exelon Corp. Chief Executive Officer John Rowe says that because natural gas is so cheap (partially due to a lack of a carbon price), "you can’t economically build a merchant nuclear plant."

"Rowe said that the price of natural gas would have to rise to per million British thermal units and permits for emitting a ton of carbon dioxide would have to be to make the power prices from new merchant reactors competitive with gas-fueled plants."

As one of many recent examples of failed nucler projects, Maryland’s Constellation Energy scrapped its attempt to build a new nuclear reactor in the state. The economics of the project had been in question for some time. The main sticking point was that the government loan required the borrower (Constellation) to reimburse the government for the risk that the government takes on (a.k.a. credit subsidy fee).

The credit subsidy fee depends on the default rate of new nuclear reactor construction projects, which according to both government and non-government sources, have about a 50% chance of defaulting on a loan. Thus the credit subsidy fee ends up being about 10% of the total size of the loan guarantee, which is a hefty sum. This makes it difficult for utilities to afford the government loans necessary to build new nuclear power plants.

And of course the economics of building a new nuclear power plant become even more difficult when building a new natural gas power plant is significantly cheaper. Which it likely will be for decades to come, unless we put a price on carbon emissions.

I find this interesting, because the strongest supporters of vastly expanding our use of nuclear power (mostly Republicans) also tend to be those who oppose putting a price on carbon emissions. Aren’t they therefore shooting themselves in the foot?
Sorry David, try nuclear – .8 million per MW

It’s called using real world numbers.

5 Responses to “Are nuclear supporters setting nuclear power back by opposing a price on carbon emissions?”

  1. Engineer-Poet Says:

    Heh.  David cites "installed" (nameplate) capacity, but doesn’t divide by CAPACITY FACTOR to get the actual $ per average kW generated.  Capacity factors for nuclear are usually > 0.9, but as low as 0.3 for wind (and ridiculously low for wind farms subsidized per nameplate kW than per kWh generated, as some in the UK; Texas usually hits 0.4 or so IIRC).

    Lack of emissions has always been a selling point of nuclear.  No sulfur, no NOx, no mercury, no fly ash, no ash dumps bursting their banks and inundating nearby towns and streams.  Lack of CO2 just goes along with that, and a recent analysis finds that nuclear power has the lowest impact at the point of generation of any major source of electricity.

    The irony is that coal interests have always been the major impetus behind the anti-nuclear bandwagon (financing the "concerned scientists" groups), so coming out as the "CO2-free solution" would just be fighting back with the truth.  Don’t ask me why it gets no major press.  Yes, of course a carbon tax would promote nuclear… as long as the anti-nukes don’t impose the same fees on nuclear just to put it at a disadvantage (which was proposed in Britain).

    Edit:  The CDN$26B cost is way out of line for projects elsewhere.  The "only qualified bidder" was Atomic Energy of Canada Ltd., which indicates that the specifications were very restrictive.  This shows serious political interference.  It’s not the first time, either; I was told that the nightmare maintenance issue at the Pickering reactor was due to the provincial government creating a new supervisory board after the reactor was shut down and would not allow any maintenance to be done until the board had written procedures to cover it!  This shows that the government intends to regulate nuclear to death.  Meanwhile, China is building AP-1000’s for $1500/kW.

    There’s a move to produce Small Modular Reactors (SMRs) which would eliminate most of the work performed on-site and shorten construction schedules by years.  This eliminates much of the investment uncertainty involved with 10-year projects.  The World Nuclear Association does not expect any of them to be in the USA, which indicates that the issue is more a matter of policy than technical feasibility.  Bad policy is easier to fix than physics.

    Waste isn’t an issue if properly handled.  The most troublesome isotopes are transuranics, which can be burned as fuel in fast-spectrum reactors.  Thorium-based reactors (which breed Th-232 to U-233 and burn it) produce almost no transuranics in the first place.  The USA had 2 successful experiments with thorium (the MSRE and the final run of the Shippingport reactor, which went 5 years without refueling and was finally shut down so that data could be obtained from the fuel).

  2. Paul B Says:

    Politics aside, in my experience the most difficult group to convince the reality of AGW are nuclear engineers, despite their economic interests

    I think this must be an emotional reaction to their own experience. They see themselves as irrationally hampered by environmentalists, and tend to think, therefore, that anyone expressing an environmental concern is an irrational nuisance.

    If only…

  3. David Says:

    It’s called arithmetic.

    CapEx to build per MW installed capacity:

    Solar Photovoltaic Power Plant ~$7,000,000
    Conventional Nuclear: ~$2,000,000 (some sources put it at $5,000,000)
    Commercial Wind Turbine: $1,000,000 to $2,000,000
    Coal With Carbon Capture: ~$1,500,000
    Natural Gas: ~$900,000
    Conventional Coal: <$900,000

    You can’t magically reduce the construction CapEx. Over time, the cost of the solar equipment will probably deflate… But the rest of the construction costs won’t deflate.

    The only people who wind up paying for the construction of power plants are consumers and taxpayers… Who often happen to be one in the same.

    If you artificially double the cost of a gas-fired plant, you don’t make the nuclear plant cheaper. The taxpayer has to pay for the nuclear subsidies and gas penalties up front… Then the consumer gets to pay a ~40% higher kWh rate to cover the loans & bonds.

    The advantage that nuclear has over natural gas is in supply dependability. The supply of nuclear fuel isn’t nearly as subject to the vagaries of commodities markets. Wide-spread natural gas-fired generation is dependent on a steady supply of natural gas. The gas shale and other UNG plays can provide that dependable, steady supply of natural gas… But most of those plays become uneconomic when gas falls below $6/mcf (mmbtu). A period of low gas prices followed by a demand surge could lead to supply shortages.

    However, a sustained growth in natural gas usage for power plants and transportation ought to force gas prices up to the $8 to $14/mcf range… And this would help make nuclear and wind more competetive without the gov’t sanctioned larceny of carbon taxes.

    If we just replaced old coal-fired plants with new gas-fired plants, we could reduce site-specific CO2 emissions by 40% at no additional cost to the taxpayer or consumer relative to replacing the old coal plant with a new coal plant.

    >>> On Nuclear CapEx>>>
    <QUOTE>Cost of nuclear power plants [1]

    Westinghouse Advanced PWR reactor AP1000, will cost USD $1400 per KW for the first reactor and fall to USD $1000 per KW for subsequent reactors. However the first wave of new plants in the USA are expected to cost over $3500 per KW of capacity. Additional costs increase the price even more.The first two General Electric ABWR were commissioned in Japan in 1996 and 1997. These took just over 3 years to construct and were completed on budget. Their construction costs were around $2000 per KW. Two additional ABWR’s being constructed in Taiwan faced unexpected delays and are now at least 2 years behind schedule.

    The Chinese Nuclear Power Industry has won contracts to build new plants of their own design at capital costs reported to be $1500 per KW and $1300 per KW at sites in SouthEast and NorthEast China.

    Subsidies for nuclear power plants: The financial industry sees the construction of the new generation of reactors as a risky investment and demands a premium on capital lent for the purpose. The Energy Bill recently passed by the US Congress assumes this risk and provides production credits of 1.8 cents per KWHr for the first 3 years of operation. This subsidy is equivalent to what is paid to Wind Power companies and is designed to encourage new nuclear reactor construction in the USA.

    If the AP1000 lives up to its promises of $1000 per KW construction cost and 3 year construction time, it will provide cheaper electricity than any other Fossil Fuel based generating facility, including Australian Coal power, even with no sequestration charges. This promise appears to have been unfulfilled. The cost of the first AP1000 is expected to be over $3500 per KW.

    Factoring in subsidies, nuclear plant CapEx is running between $1,300 and $3,500 per KW installed capacity… That’s $1.3 to $3.5 million per MW installed capacity.

  4. David Says:

    reasons for building nuc plants. no carbon emissions. no fuel supply issues. no fly ash. no mining required. waste products can be recycled. the waste recycling technology has been around since the late 40,s. does not use a non renewable resource. can not "melt" down. unlike solar and wind; never stops working. coal is dirty, and has a lot of residual radiation. this issue is never brought up in the media. it is really clean energy. the facts are there.

  5. jim z Says:

    I think it is in our interest to diversify. We have lots of Uranium and Thorium available for use. It makes sense to me to have a good supply of nuclear power. We wouldn’t want all of our eggs in one basket. In order for nuclear power to be viable, we have to get the left’s thugs (environmentalists and lawyers) off the back of the nuclear industry, provide some incentives to the industry because they aren’t really viable without it, and we have to do a better job of getting rid of the waste.

    Instead of making natural gas more expensive, we need to make nuclear less expensive and if we are serious, we need to subsidize it. If we want wind and solar that too has to be subsidized. They simply can’t compete. Over time as technology advances it will probably become less of a problem IMO unless we can’t get the leftist thugs out of the way.