Nuclear Bombshell: $26 Billion cost — $10,800 per kilowatt! — killed Ontario nuclear bid

We knew new nukes were absurdly expensive (see “Areva has acknowledged that the cost of a new reactor today would be as much as 6 billion euros, or $8 billion, double the price offered to the Finns.”).  Now we know they are literally unaffordable.

Our friend and fellow blogger, Tyler Hamilton — who actually has a real job as senior energy reporter for the Toronto Star — published this stunning news in Canada’s largest daily newspaper:

The Ontario government put its nuclear power plans on hold last month because the bid from Atomic Energy of Canada Ltd., the only “compliant” one received, was more than three times higher than what the province expected to pay, the Star has learned.

Sources close to the bidding, one involved directly in one of the bids, said that adding two next-generation Candu reactors at Darlington generating station would have cost around $26 billion.

It means a single project would have wiped out the province’s nuclear-power expansion budget for the next 20 years, leaving no money for at least two more multibillion-dollar refurbishment projects.

“It’s shockingly high,” said Wesley Stevens, an energy analyst at Navigant Consulting in Toronto.

So nuclear bombshells have now been dropped on Canada, Finland, Turkey (see “Turkey’s only bidder for first nuclear plant offers a price of 21 cents per kilowatt-hour“) and this country (see “What do you get when you buy a nuke? You get a lot of delays and rate increases”¦.“).

Now you may be saying, wait a minute, Joe, hasn’t Areva said it would deliver a single plant for $8 billion, so that should work out to a Walmart-style $16 billion price, rather than AECL’s Tiffany-style offer.  Hamilton has more juicy details:

AECL’s $26 billion bid was based on the construction of two 1,200-megawatt Advanced Candu Reactors, working out to $10,800 per kilowatt of power capacity.

By comparison, in 2007 the Ontario Power Authority had assumed for planning purposes a price of $2,900 per kilowatt, which works out to about $7 billion for the Darlington expansion. During Ontario Energy Board hearings last summer, the power authority indicated that anything higher than $3,600 per kilowatt would be uneconomical compared to alternatives, primarily natural gas.

Much of the dramatic price increase relates to the cost of labour and materials, which have skyrocketed over the past few years. Nuclear suppliers and their investors also have less tolerance for risk.

The bid from France’s Areva NP also blew past expectations, sources said. Areva’s bid came in at $23.6 billion, with two 1,600-megawatt reactors costing $7.8 billion and the rest of the plant costing $15.8 billion. It works out to $7,375 per kilowatt, and was based on a similar cost estimate Areva had submitted for a plant proposed in Maryland….

Stevens said Areva’s lower price makes sense because the French company wasn’t prepared to take on as much risk as the government had hoped. This made Areva’s bid non-compliant in the end. Crown-owned AECL, however, complied with Ontario’s risk-sharing requirement but was instructed by the federal government to price this risk into its bid. “Which is why it came out so high,” said Stevens.

Hamilton explains on his blog, Areva “was deemed non-compliant, however, likely because Areva wouldn’t guarantee the price.”

Yes, you can buy a terrific low-cost $8* billion nuke from Areva [* the fine print says that if the cost escalates, you swallow the risk, not Areva — a painful lesson Areva learned in Finland (see “Nuclear meltdown in Finland“)].

Hamilton adds:

I’ve yet to get any reply from the government or industry that denies or confirms these numbers. Premier Dalton McGuinty was scrummed by reporters earlier this morning and he didn’t refute the numbers, saying only that the process is confidential. McGuinty could have said something general like “The numbers are far off” or “Not even close” to dispute the article, but he didn’t.

So, until a major nuclear power provider is willing to sign a contract with a lower guaranteed price, we should assume that the true all in cost for a new nuclear plant is more than $10,000/kw — which may be a staggering sum to most, but shouldn’t be surprised to CP readers:

26 Responses to Nuclear Bombshell: $26 Billion cost — $10,800 per kilowatt! — killed Ontario nuclear bid

  1. Great article. It’s hard to pin down the true slippery cost of nuclear power, but this gives us a much better idea. Maybe it will help deflate the ‘alternative proposal’ for clean energy and global warming in Congress!

  2. Mark Shapiro says:

    OT, I just saw Sunil Paul’s “Gigaton Throwdown”, which you mentioned briefly in the July 8th news post. It might deserve a full post. It basically looks at 10 clean energy “wedges” and discusses how much investment is needed to bring them online in the next decade.

    Good analysis, he’s on the right side, and apparently Holdren and 3 other Obama people listened to his rollout on June 24. Worth a look?

  3. James Thomson the third says:

    I bought one of these and installed it in my garden shed at the bottom of the garden.

  4. Sasparilla says:

    Wow, just totally unafordable. I’m pulled in two directions on this. One is that its good since we won’t be making a lot more nuclear waste producing reactors in the future – I certainly won’t cry about that.

    The other direction is that I’d live with some new nukes just to add to our (relatively) CO2 free power supplies sooner – since I view global warming as a far greater threat than nuclear power (the lesser of the two evils). I’d rather have a few new nukes than brand new natural gas or coal plants (which is what will likely drop in their place).

    But with prices like this, nukes are just not on the menu.

  5. Kaj Luukko says:

    “It works out to $7,375 per kilowatt”

    Ok, so this is still less than the same amount of wind power. Now, if you calculate the operation and maintenance costs for the next 60 years, what will the life time costs be for these two power sources?

  6. Rockfish says:

    This just gets to the heart of the problem with nukes – the safety issues are so high that they have to be built “perfectly”. The problem is that there is nobody you can get to build them perfectly. The government can’t do it, and private industry can’t do it (or, more accurately, won’t even try) without massive profit motive, which we are now seeing priced into the equation.
    It’s actually a bit sad that we are now at the point in history where no amount of money can buy something done right, on time, on budget.

  7. paulm says:

    Good thing too, because nuks are unsustainable in so many ways!

  8. Jay Turner says:

    $26B would buy a whole lot of insulation, white roofs, window replacements, LED light bulbs, etc., and you could roll out the upgrades in a fraction of the time it would take to build a new nuclear plant. By the time the plant would be done, solar PV will be so ubiquitous and cheap that it wouldn’t make sense to turn the plant on.

  9. BBHY says:

    That is considerably higher than the cost of my solar PV installation. I guaran-double-damn-tee that my operational cost are less than 1% of the nuclear plant.

    Of course, the nuke works at night. But peak demand is during the day. A combination of solar, wind, and natural gas seems like the best answer. Maybe some geothermal as well, but I’m not sure how expensive that is.

  10. PeterW says:

    Hi Joe, You should ask Tyler what happen to Westinghouse. They were suppose to be bidding on this project as well.

  11. Somehow now perhaps my January 2009 estimate of $10,550/kW completed cost of a new nuclear plant seems more believable?

    Exclusive analysis, Part 1: The staggering cost of new nuclear power

  12. Shocking, but certainly not unprecedented. Looks like Ontario may have done us all a huge favor here – if they conducted a process where they literally pushed all of the risk back onto the supplier and asked them to price it, which is my interpretation of the post, then we’ve been given a true “market” valuation of the basket of risks that usually get squirreled away in the closet, shoved under the carpet, hidden behind the ficus tree, told to go to their room until the guests leave – you know, transferred to ratepayers and taxpayers! Great post.

  13. Jim Prall says:

    I’ll second Michael Hogan’s thought: if we finally got someone to give a true cost accounting of the projected risk of a nuclear plant, it’s some kind of a breakthrough. Up to now we’ve been getting partial costing since the big risks were socialized or nationalized — in effect the government has had to provide “free” insurance that the private sector would never pay for.
    I don’t think this is only the risk of nuclear accident, though that itself is so hard to price that private insurers have always refused to touch it. I think the other important risk here is the builder’s risk of project overruns, delays and other such costly “surprises”

  14. loiz says:

    This price only applies to the reactors offered by Canadian AECL and their new CANDUs, which were always more expensive than LWRs, therefore to use this price as cost for different kind of reactors offered by a different seller in a different country is an obvious fallacy.

    Note that for the two EPRs, only $7.8B is for the power plants, that is $2 4373 / kW capacity. The other 15B is for infrastructure upgrades in Maine. US has the same problem with nuclear or high speed trains – the trains are cheap, but your infrastructure is obsolete, and has to be invested in. Mr. Romm, why suddenly is the infrastructure investment not a stimulus, but a cost to taxpayer?

    On the other hand the price of this clean reliable power offered by AECL comes below what wind and solar costs are, certainly at Ontario. Maybe they were just trying to see how much profit can they make.

  15. paulm says:

    The true cost of nuclear is always hidden away for some reason.

  16. The truth is, all natural rocks contain most natural elements. Coal is a rock.
    The average concentration of uranium in coal is 1 or 2 parts per million. Illinois
    coal contains up to 103 parts per million uranium. A 1000 million watt coal
    fired power plant burns 4 million tons of coal each year. If you multiply 4
    million tons by 1 part per million, you get 4 tons of uranium. Most of that is
    U238. About .7% is U235. 4 tons = 8000 pounds. 8000 pounds times .7% =
    56 pounds of U235. An average 1000 million watt coal fired power plant puts
    out 56 to 112 pounds of U235 every year. There are only 2 places the uranium
    can go: Up the stack or into the cinders.

  17. Reference:
    by Alex Gabbard
    Oak Ridge National Laboratory
    Oak Ridge, TN
    Selections from the 19th Annual Conference
    March 14,15,16, 1996
    Nashville, Tennessee
    Published by the
    Edited by Jack D. Arters, Ed.D. Conference Director

    At a 1000 Megawatt COAL fired power plant:
    “Modern electrostatic precipitator plants are capable of operating at greater than 99.5% collection efficiency but can still release 35 lb/year of uranium as just one component in almost 3 million tons of ash vented through stacks. In addition to this radiological species, all the radon in coal is released during combustion. An estimate for average Rn-222 release is about 2 Curies/year for each 1000 MWe coal fired facility.”

  18. Coal contains: URANIUM, ARSENIC, LEAD, MERCURY, Antimony, Cobalt, Nickel, Copper, Selenium, Barium, Fluorine, Silver, Beryllium, Iron, Sulfur, Boron, Titanium, Cadmium, Magnesium, Thorium, Calcium, Manganese, Vanadium, Chlorine, Aluminum, Chromium, Molybdenum and Zinc. There is so much of these elements in coal that cinders and coal smoke are actually valuable ores. We should be able to get all the uranium and thorium we need to fuel nuclear power plants for centuries by using cinders and smoke as ore.

  19. Carl says:

    They should have put a RFQ out to Westinghouse and Shaw who will complete the construciton of Westinghouse’s new generation reactor in China on time and on budget.

  20. PeterW says:

    Carl Westinghouse was suppose to be in this process. It was originally three companies bidding. I’m not sure what happen but they were in at the beginning.

  21. djysrv says:

    Observers of the political turmoil now underway in Ontario over the media reports that AECL bid $26 billion to build two new ACR1000 reactors (2,220 MW) are in good company trying to make sense of these figures.

    The news media, notably the Toronto Star, had a field day with the numbers sticking provincial politicians like they were morsels on a shish-ka-bob skewer. The problem with all the fire, smoke, and spit from the grill is that the numbers are undoubtedly wrong and wrongly reported in the news media.

  22. James Newberry says:

    Atomic fission is a financial ponzi scheme that should not be funded by public treasuries and policies. Any nuclear subsidies in the climate bill, such as in the Clean Energy Bank, should be stricken.

    The president has received biased advise from his advisors and switched his position from what he campaigned on. Fission is not clean energy. It is not sustainable energy. It is not even affordable. It is more financial fraud. ($12.8 trillion and counting of new US taxpayer bailouts, ie. transfer of wealth to the rich)

  23. Craig says:

    $10,800 in capital cost per KWh sounds like a great job creation program.

    Just curious: if you factor in infrastructure to temporarily store the intermittent energy produced by wind or solar, how does the capital cost of those systems compare to nuclear?

  24. A.G. says:

    Yes, the initial capital cost numbers for Nuclear are large. But why are we comparing this against solar PV, wind or gas? Nuclear power is meant to replace base load coal (not an intermittent resource like wind/solar). If you compare nuclear to coal with carbon sequestration, I bet you over the life of the assets- 40-50 years, Nuclear beats coal hands down.

  25. Straight Up says:

    Compare that to the $0.80 /kWh that the new Ontario feed in tariff for residential rooftop PV Solar and these nukes look like a smashing bargain. Question: if we thought $0.20/ kWh was too much to pay for nukes why is it OK to pay 4x as much for solar? Especially when today I am paying $0.10/ kWh on my electric bill.

  26. rob says:

    Because the idea that building sunch a inherently dangerous nuclear plant is bad on several levels. Not to mention the mine tailings from radium mines is a source of untold grief now and for the future. Plus what do ya do with the spent rods? Send them into space? Gee that sounds cost-effective. Plus the unit will only run for 30-40 years tops? PV panels 50+years old are still working fine. I never heard of a way to build a dirty bomb with old wind-generator parts or broken PV components…