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Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour

By Joe Romm on January 30, 2009 at 10:57 am

"Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour"

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New nuclear power is going to be very expensive — no matter where the plants are built. The most detailed and transparent recent cost study on the new generation of plants put the cost of power at 25 to 30 cents per kilowatt-hour — triple current U.S. electricity rates (see “Exclusive analysis, Part 1: The staggering cost of new nuclear power“).

Some have suggested that other countries will fare better — in spite of Finland’s nightmarish nuclear troubles (see “Satanic nukes? Finnish plant’s cost overruns to $6.66 billion” and below). They should read the story in today’s Today’s Zaman, Turkey’s largest English-language newspaper:

The only company bidding, the Russian-Turkish JSC Atomstroyexport-JSC Inter Rao Ues-Park Teknik joint venture, offered a price of 21.16 cents per kilowatt-hour (kWh). Current electricity prices in the country vary between 4 cents and 14 cents per kWh.

[Wholesale prices in Turkey are 7.9 cents per kWh.]

That gives new meaning to the word “turkey.”

The company apparently offered a revised price “Immediately after the envelope was opened … that better reflected current market prices” (i.e. the global recession and collapse in commodity prices). But another English language news source, Hurriyet Daily News, reports today:

The tender for Turkey’s first nuclear tender is likely to be cancelled due to the high price offer and a shift in the location of the plant from the south of the country to the northern Black Sea region, Vatan daily reported on Wednesday.

Turkey's first nuclear tender to be cancelled due to high price-reportTurkey‘s state-run power company, TETAS will submit a “negative” report for the price bid in the nuclear tender and submit it to cabinet for approval, the daily said.

The consortium, formed by Russia‘s state-run Atomstroyexport, Inter RAO and Turkish Park Teknik had offered 21.16 cents kWh for the construction and management of nuclear power plant on Monday. The consortium however revised its initial price offer in another letter, but it was returned as such a move is not allowed under tender law.

This should not really come as a shock to anyone. I detailed the escalating capital costs of nuclear power in my May 2008 report, “The Self-Limiting Future of Nuclear Power.” And in a December 31 story, Time buried in the penultimate paragraph :

Most efficiency improvements have been priced at 1¢ to 3¢ per kilowatt-hour, while new nuclear energy is on track to cost 15¢ to 20¢ per kilowatt-hour. And no nuclear plant has ever been completed on budget.

A Moody’s analysis from last May put the cost of power from new nukes at over 15 cents per kWh (see here).

 

To repeat, new nuclear power is going to be very expensive — no matter where the plants are built.

 

And that point is underscored by a lengthy article in the current Washington Monthly, “Bad Reactors” (don’t miss the sidebar on Sub-prime Nuclear Loans). The article details Finland’s nightmare experience with its nuclear plant, especially the containment building, which was “lined with a solid layer of steel that was crisscrossed with ropy welds

containment vessel” where someone had scrawled the word Titanic:

These marks are the last remaining hints of the problems that have plagued this thick outer shell, the last line of defense in case of a meltdown. The steel liner was hand forged using outdated plans by a Polish subcontractor, which had no prior nuclear experience. As a result, the holes for piping were cut in the wrong spots, and the gaps along the weld joints were too wide. Entire sections had to be ripped apart and rebuilt. And the containment liner is not unique. Virtually every stage of the construction process has been dogged by similar woes, from the nine-foot-thick foundation slab (the concrete was mixed with too much water, making it weaker than had been called for in the plans) to the stainless steel pipes that feed water through the reactor core (they had to be recast because the metal was the wrong consistency).

To date, more than 2,200 “quality deficiencies” have been detected, according to the Finnish nuclear authority, STUK. Largely as a result, the project, which was supposed to be completed in 2009, is three years behind schedule and is expected to cost $6.2 billion, 50 percent more than the original estimate. And the numbers could keep climbing. “There are still some very challenging phases ahead,” says Petteri Tiippana, STUK’s assistant director for projects and operational safety. “Things will have to go extremely well if those responsible for building the project are to hit the new targets.”

And what did this mean for Finland?

… the reactor won’t be completed before 2012, when the Kyoto treaty expires. To meet its targets, between now and then Finland will have to buy hundreds of millions of dollars’ worth of credits through the European Union’s emissions trading scheme. In the meantime, because the country expected the reactor to deliver a bounty of energy and didn’t pursue other options, it’s facing a severe electricity shortage and will have to import even more from abroad, which will drive up power bills. Elfi, a consortium of Finnish heavy industries, has calculated that the project delays will create $4 billion in indirect costs for electricity users.

This would be the story of the tortoise and the hare, I think, with energy efficiency and renewables in the role of the tortoise:

Because residents believed the new reactor in Olkiluoto would drastically cut emissions, there was little effort to promote renewable energy or boost efficiency, with the result that the country is now lagging behind its neighbors. Despite its long, windswept coast, Finland has less wind power capacity than any central European state except the tiny, landlocked countries of Luxembourg and Switzerland. It also ranks near the bottom on energy efficiency, and its record on greenhouse gas emissions is dismal: between 1990 and 2006 (the most recent year for which data is available) the nation’s carbon output leapt by ten million tons a year, or 13 percent, one of the largest spikes in any developed nation. This means that to meet the European Union goals of cutting greenhouse gas emissions by 20 percent from 1990 levels by 2020, Finland will have to either resort to austerity measures or shell out hundreds of millions more dollars for emissions credits.

“We concentrated so much on nuclear that we lost sight of everything else,” says Oras Tynkynnen, a climate policy adviser in the Finnish prime minister’s office. “And nuclear has failed to deliver. It has turned out to be a costly gamble for Finland, and for the planet.”

Precisely.

First comes efficiency, efficiency, efficiency and then comes renewables, and once you’ve tried everything else twice as hard as you ever thought possible, then and only then should you consider the the really expensive options that need a lot of technological advances, like nuclear and coal with carbon capture and storage (see “An introduction to the core climate solutions“).

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11 Responses to Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour

  1. Kojiro Vance says:

    I like my house, or at least I don’t like the trouble it would take me to move out and buy something else. But if someone came to me and asked me in 5 minutes to come up with a number that I would sell my house for, I could. We call this the no-regret bid. The price at which I would be happy if I won, but wouldn’t care that much if I lost. It hardly reflects the price of either the real estate or homebuilding market. Rather it is the nature of the bid.

    The Turkish nuclear plant was a no-regret bid. The high price reflects the flaws in the bidding process (where 12 bidders dropped out), and the time at which the bid was made.

    August 2008 appears to be the recent peak for capital costs in the process industries. According to the American Institute of Chemical Engineers costs have come down 10% since then. Commodity prices for concrete and steel have come down 50% since their peaks in 2008.

    Were this to be a serious, competitive bid today it would likely be substantially lower.

  2. crf says:

    Competitive bidding on a cost basis is a poor way to pick a builder for a nuclear plant that takes so long to build, which usually require unique engineering challenges which cannot be cheaply ascertained prior to bidding, and whose costs have proven to be always difficult to pin down. For example, the cost of simply planning a large nuclear plant, necessary before one can clearly ascertain how much it will cost, itself will cost a large fraction, perhaps even 10%, of its total final cost. No company entering a competitive bid process will spend that much money just to prepare a proper bid with some cost certainty — if they lose, they have no way of getting the money back!

    There is no magic in the competitive bid process itself that will lower costs significantly from the actual costs of comparable past projects. Every time a nuclear project is built, for example, in the aftermath people will find many costly mistakes that could have been corrected at the time, and would be in the future. But every project is unique, and so seems to carry unique risks which cannot be quantified. You can’t predict shortages of labour. You can’t predict material prices. You can’t predict weather, politics, and the internal fortunes of your own bidding company over the long lifetime of a nuclear power-plant contract. You can’t predict what engineering challenges will appear. You can’t predict how costly inevitable errors will be. There will always be large uncertainties which thwart cost estimates that have small degrees of uncertainty on the overrun side.

    Every nuclear power company gets most of its expertise and engineering payed for by essentially a blank cheque from a sponsoring government — Canada, France, Japan, the US, Russia. Where those countries build plants outside their home markets, the projects may often be financed from loans from their home governments to the contracting government.

  3. Bob Wright says:

    Why only one bidder for Turkey’s nuke? France, Canada and American companies are looking for business. It sounds shady. Why did Finland design its own nuke? I thought it was a French GenIII design. If you want a passenger jet, you don’t build one yourself or buy a creaky Tupolev. You go with Boeing or Airbus.

    Westinghouse-Shaw-Toshiba is becoming the Boeing of GenIII passive nukes. They are building standardized, modular parts in the US and China, and lining up suppliers all over the world. The order book is something like 4 reactors underway in China of an eventual total of 100, and 14 planned in the US so far. Once this snowball gets rolling, costs are going to drop.

    http://nextbigfuture.com/2008/08/westinghouse-ap1000-nuclear-power-plant.html

  4. MikeB says:

    An interview with the head of EDF in today’s Guardian shows clearly the nuclear game, when he says that subsidies to solar and wind should be reviewed. Since nukes have been hugely subsidised (EDF is 80% state-owned), its clear that they don’t care about their own costs, only the relative costs of their rival technologies.

    It could well be that there are other bidders in the market, but even if they do come up with a more realistic figure, there is little chance (based on past experience) that it will either turn out to be that amount, or that the taxpayers of Turkey (as well as the US, France or whoever else is involved) will not be subsidising it to a large extent.

  5. There are two types of 21st century reactors that cannot melt down no matter how badly they are treated. Safety is guaranteed by laws of physics.
    In the pebble bed reactors, stopping coolant flow removes the space between fuel pellets. The space between fuel pellets must be filled with moving water. The water is the moderator to slow down the neutrons so that the reaction can take place. No coolant flow, no reaction. These pebble bed reactors will never experience a meltdown. It just can’t happen because of laws of nature. The US has 2 pebble bed reactors.
    In the recommended and newly invented helium cooled reactor, the core is made of high temperature [refractory] materials that simply will not melt if coolant flow ceases. The core is cooled from a higher temperature by heating the containment building, which also does not melt. The containment building heats its surroundings in the case of coolant flow loss. The helium cooled reactor uses helium as the working fluid to turn a turbine. Helium gas is the ideal fluid to turn a turbine because it can be made very pure so that the turbine blades will last a very long time.
    Safety is assured in all US built reactors by the containment building, which is a pressure vessel and which, as in the case of the now obsolete 3 mile island reactor, can and did contain the overheated core. There were ZERO casualties.

    American reactors are now too safe. Nuclear power is overpriced because of the excessive safety. 20,000 to 30,000 Americans die each year because of those poisons listed below that come out of coal fired power plants. It is C O A L fired power plants that kill 20,000 to 30,000 Americans each year. Nuclear power plants kill ZERO Americans each year. It is COAL burning that will make us go extinct in about 100 years if we keep doing it.

    The problem is that we OVERSHOT on safety design because of people who protest nuclear power. American reactors are TOO safe. It is C O A L fired power plants that give you 100 times as much radiation. Coal is almost pure carbon, except for the URANIUM, ARSENIC, LEAD, MERCURY, Antimony, Cobalt, Nickel, Copper, Selenium, Barium, Fluorine, Silver, Beryllium, Iron, Sulfur, Boron, Titanium, Cadmium, Magnesium, Calcium, Manganese, Vanadium, Chlorine, Aluminum, Chromium, Molybdenum, Thorium, Zinc and all of the decay chain of uranium that are coal’s impurities. We could fuel our nuclear plants from the uranium and thorium in the smoke and cinders from coal fired power plants. Coal cinders are an economically viable ore for several of the listed impurities.

    French reactors use American technology that is about 3 decades old. Nuclear power in France undercuts the cost of coal by 30% WITHOUT SUBSIDIES.

  6. So what you are saying Joe Romm, is that if you hire a BAD ENOUGH construction company, with engineers and workers who really want to screw up, you can get the price as high as you want it to be. No surprise there.

    Why would anybody hire a Russian company to build a reactor? The Soviet built reactors are all like Chernobyl: Generation 1 unstable kluges without proper containment buildings. The design is from 1944.

    A sensible person would look first at American reactors because American reactors are the best.

    Did they get a bid from http://www.hyperionpowergeneration.com ?

  7. I smell corruption in the Turkish deal. Are the coal companies paying somebody to make the nuclear bid as high as possible?

  8. I received email from the company that makes nuclear reactors in a factory. There is an ambiguity. I think they mean 5 to 6 cents per INSTALLED kilowatt. With no fuel to buy for 5 years, the electricity is practically free if I interpret it correctly.:

    From: Jim Jones
    To: Edward Greisch
    Date: Saturday, January 31, 2009 11:15 AM
    Subject: Re: $$$ per kilowatt hour from your reactors?

    5-6 cents per kW….including the balance of plant electrical generation.
    Jim

    From: Edward Greisch
    Date: Fri, 30 Jan 2009 23:32:01 -0600
    To: “HyperionPowerGeneration James Jones, VP BD”
    Subject: $$$ per kilowatt hour from your reactors?

    How much will electricity cost from your reactors?

  9. No, that can’t be right. It has to mean 5 to 6 cents per KwH.

  10. Joe says:

    Too cheap to meter!

  11. russ says:

    Hyperion? The company that plans to begin delivery in 2014? That company with so much experience and track record?

    Might work out OK but let somebody else show that it really works first.