Nuclear power is so uneconomical that even Bill Gates, who is worth $90 billion, can’t make it work without massive taxpayer funding.
Gates has been going around Capitol Hill in recent weeks trying “to persuade Congress to spend billions of dollars over the next decade… for a pilot of his company’s never-before-used technology, according to congressional staffers,” the Washington Post reported.
“This plea for federal largesse from a decabillionaire illustrates why further nuclear subsidies make no sense,” energy and finance expert Greg Kats writes in a forthcoming article for GreenBiz.com shared with ThinkProgress. Kats served as director of finance for the Department of Energy’s (DOE) Office of Energy Efficiency and Renewable Energy in the mid-1990s. (Disclosure: The author of this piece worked with Kats at the time as DOE acting assistant secretary.)
The reality is that nuclear power is so uneconomical that existing U.S. nuclear power plants are bleeding cash — and in many places it’s now cheaper to build and run new wind or solar farms than to simply run an existing nuclear power plant.
Saving the existing unprofitable nuclear plants would require a subsidy of at least $5 billion a year, according to an analysis last July by the Brattle Group.
So, given existing plants are so uneconomic, it’s no shock that building and financing an entire new fleet of nuclear plants is wildly unaffordable — especially since a new nuclear plant can cost $10 billion or more.
The nuclear industry has effectively priced itself out of the market for new power plants, at least in market-based economies. That’s why nuclear power’s share of global power generation has dropped to around 11 percent — its lowest level in decades.
The November “Cost of Energy Analysis 2018” by the financial firm Lazard Ltd makes clear just how untenable nuclear power is.
Even worse for nuclear, the price of electricity from new renewable plants and new nuclear plants have been headed in opposite directions for this entire decade.
Lazard reports that since 2010, the cost of wind power has dropped by 66 percent, the cost of solar power has dropped 83 percent, but the cost of nuclear power has increased by more than 50 percent.
The average lifecycle cost of electricity from new nuclear plants is now $151 per megawatt-hour, or 15.1 cents per kilowatt-hour (c/kWh). Meanwhile it is 4.3 c/kWh for utility scale solar and 4.2 c/kWh for wind. By comparison, the average price for electricity in the United States is under 11 cents per kWh.
Gates and his company, TerraPower, are working on so-called small modular reactors (SMRs), which use unproven next-generation technology and would be much smaller than current nuclear plants. Gates claims that this technology is needed in order to help drive down the price of nuclear power.
But the reality is that an SMR “worsens” the cost problem, as physicist M.V. Ramana explained in a December 2017 analysis.
“Larger reactors are cheaper on a per megawatt basis,” Ramana pointed out, “because their material and work requirements do not scale linearly with generation capacity.” In short, bigger reactors deliver cheaper power than smaller ones — that’s why the industry has kept scaling up the size over the years.
Yet in 2016, a major study by South Australia’s nuclear royal commission concluded that both large nukes and SMRs “consistently deliver strongly negative NPVs” (net present values) for both 2030 and 2050 — even for the strong climate action scenario. In other words, both large and small nuclear plants are projected to be unprofitable even in a future where carbon pollution has a high price.
Even the nuclear-friendly French — who get 70 percent of their power from nuclear — can’t build an affordable, on-schedule next generation power plant. Last summer, for instance, the French utility EDF announced another delay and cost over-run for what would be the country’s first “third-generation” pressurized water reactor. Power magazine reported the price tag has “ballooned to €10.9 billion (USD $12.75 billion), triple the original budget.”
As for Gates’ TerraPower, analysts looking at the company’s specific design approach say the technology is just not ready for primetime. Last year, a major Massachusetts Institute of Technology report by nuclear power experts concluded such designs “require advances in fuel and materials technology to meet performance objectives.”
The company itself told the Washington Post in an email that it “has been researching new steel alloys.” But such alloys would need to be tested for years if not decades to prove they can withstand the intense bombardment of neutrons over the lifetime of the reactor.
The reality is that next generation nuclear power is still at the research phase. It is far from ready for a pilot that would be so expensive that even the world’s second richest man (after Amazon’s Jeff Bezos) isn’t willing to finance it himself, but has to go begging for federal money.
Gates asserted in a year-end blog post that “Nuclear is ideal for dealing with climate change, because it is the only carbon-free, scalable energy source that’s available 24 hours a day,”
But in fact, battery storage costs have plummeted this decade some 80 percent, meaning that we can increasingly use wind power when it isn’t windy and solar power when it isn’t sunny.
In places like Colorado, both wind power with storage and solar power with storage are vastly cheaper than new nuclear plants. Indeed, new Colorado wind farms with batteries already provide power at the same price as just running existing nuclear power plants.
Certainly, the climate crisis demands that we pursue all practical and economical approaches to cutting carbon pollution. And even some environmental groups are in favor of keeping existing nuclear plants running longer.
But as Kats explained, right now, new nuclear power plants are just far too expensive. What’s more, major investments in multibillion-dollar pilots and reactors could actually take away funds from clean energy technologies that would reduce vastly more pollution for the same amount of money.
That’s not to say we shouldn’t keep investing in nuclear power research in the hope that someday it becomes affordable.
But given that we must make deep cuts in carbon pollution this decade to even have a chance of avoiding catastrophic climate change, we must focus the vast majority of our money today on vastly more affordable carbon-cutting technologies.