Some of the most confounding problems of our day — global warming and the West’s energy dependence on Russia and the Middle East — appear to President Barack Obama and some of Europe’s leaders to have an obvious answer: more nuclear power. A May 2014 EU Commission study on Europe’s energy security after the Ukraine crisis insists it’s going to be a big part of the solution. Nuclear is also a central component of Obama’s “all of the above” energy strategy. After all, nuclear power plants are supposedly inexpensive to run, emit no CO2 and could lessen dependence on oil and gas imports from volatile regions of the world. A no-brainer, right?
Not by a long shot. Nuclear power is a nasty red herring that advocates will pay for dearly, should it figure into their response to the current challenges on the table.
In the past, critics of nuclear power went to great lengths to point out nuclear energy’s inherent danger. Consider the meltdowns at Three Mile Island in 1979, Chernobyl in 1986 and Fukushima in 2011, they said, on top of the untold number of smaller mishaps that never make the headlines. And then there’s the unsolvable dilemma of radioactive nuclear waste, which nobody wants anywhere near their backyards.
In Europe these two strands of argument were enough to convince Danes, Italians, Austrians, the Irish and the Portuguese, among others, never to gamble with nuclear. Germany, Switzerland and Spain caught on later and are in the process of exiting nuclear power now.
But these days the safety arguments pack less punch. Not because they’re any less valid but because the costs and financial risks of building new plants are so clearly prohibitive that nuclear power doesn’t make sense even if the safety risks were zero. In a nutshell: New nuclear power doesn’t pay. In fact, it’s dramatically more expensive than the newest generations of renewables (in particular, wind and solar).
It’s the huge initial investment, the inevitable construction delays and cost overruns and poor long-term market prospects that make nuclear power such a bad deal today — and why private-sector utility companies are so hesitant to invest in new nuclear. In order to finance new reactors, countries such as the United Kingdom and Finland have called for enormous government subsidies; while this is not new (nuclear power has long been subsidized), the amounts in question today far exceed those of decades past.
There are no better examples to underscore nuclear’s dismal prospects than in Europe. Take the U.K., where the government had to backtrack on its pledge never to subsidize nuclear power. The estimated construction cost of the two planned reactors at the Hinkley Point C plant in Somerset is a mind-boggling $27 billion, which will make it the most expensive power station ever built. Once in operation, the reactors should provide about 7 percent of Britain’s electricity — which sounds enticing. But in order to make this gigantic investment attractive, the British government had to guarantee the investors, the French state-owned EDF Energy Group and two Chinese state firms, a minimum per-kilowatt price for its electricity production for 35 years. The price finally settled on was almost twice the current wholesale market price for electricity.
The outcry in the UK was deafening. Paul Dorfman of the Energy Institute at University College London underlined who would be paying these subsidies. The fixed feed-in tariff, he said “is essentially a subsidy of between what we calculate to be £800m to £1bn [$1.3 billion to 1.7 billion] a year that the U.K. taxpayer and energy consumer will be putting into the deep pockets of Chinese and French corporations, which are essentially their governments.”
Even conservative financial analysts, such as those at the London stockbrokerage Liberum Capital, say the deal is foolhardy. In the aftermath of the transaction last year, it told The Guardian, “We are flabbergasted that the U.K. government has committed future generations of consumers to the costs that will flow from this deal … The U.K. government is taking a massive bet that fossil fuel prices will be extremely high in the future. If that bet proves to be wrong, then this contract will look economically insane.”
Another white elephant is in Finland, where the latest-generation European pressurized water reactor (EPR) was supposed to be the poster boy for nuclear energy’s comeback on the continent. Begun in 2005, the Olkiluoto 3 plant was the first new reactor to begin construction in Europe since 2000. Today it is four years behind schedule and still has no estimated start date. Its projected cost has tripled, to over $11 billion.
No one regrets the Olkiluoto 3 fiasco more than its French investor, Areva, whose 2013 losses on the plant were $553 million. At least this was less than in 2012, when the company’s losses and insurance indemnity due to delays and cost overruns tallied $910 billion.
Another EPR is under construction in France, along the coast of Normandy, where it’s not faring any better, beset by multiyear delays, billion-dollar cost overruns, financial mismanagement and worker deaths. No wonder President François Hollande is rethinking France’s nuclear power program.
Nuclear power, once the cutting edge of technological progress, is now a dinosaur, all the more anachronistic when one looks at the price of renewables, whose costs have plummeted over a decade and will, say experts, continue to decline as technology improves. The wunderkinder are solar photovoltaic, wind power and bioenergy. Solar and onshore wind prices are now at or quickly approaching market parity in many large electricity markets around the world. In other words, the cheapest renewables are now cost competitive with fossil fuels and nuclear, even without subsidies. This has been the case for some time now in regions with high electricity costs and abundant wind or sunshine.
A recent study by the German think tank Agora Energiewende shows that of the three low-carbon technologies currently on the table — renewables, nuclear and carbon capture and storage — by far the cheapest is renewables in the form of wind and solar photovoltaic. Today’s feed-in tariffs for wind and photovoltaic in Germany, argue the authors, are as much as 50 percent lower than those offered for new nuclear in the U.K. Cost estimates for power generation systems show that even with conservative assumptions, a generation mix consisting of solar photovoltaic, onshore wind and gas is roughly a fifth less costly than a mix consisting of new nuclear power (based on Hinkley Point C prices) and gas.
Such studies appear to make the nuclear option redundant — or so one might conclude. Despite the evidence, Europeans still haven’t given up on the atom, particularly in Central Europe. For example, Hungary, Slovakia and the Czech Republic want to expand their nuclear sectors. Poland, which has never had one, wants desperately to get into the market.
Tragically, by sticking to conventional energies, including nuclear power, the Central Europeans are putting energy independence ever further out of reach. In fact, this nuclear future will never happen because there’s nobody to pay for it. Potential investors for the planned Czech reactors have come and gone over the last four years because Prague simply isn’t willing to promise them exorbitant prices for decades to come. Without this, no investor will take the risk. Off the record, even pro-nuclear experts from the Czech Republic admit the new reactors are unlikely ever to materialize.
If new nuclear is a no-go, what about existing reactors, some of which have lifetimes into the 2040s? Europe could phase out nuclear power by 2030 without jeopardizing either energy security or EU climate-protection goals. A joint German-Austrian study attests to this as well as to the European economy’s remaining competitive at the same time.
Does it all sound a little too rosy? Well, this is what Germany is doing right now. It will be nonnuclear by 2022, when nearly 40 percent of its electricity will come from renewables.
If Germany can do it, so can the U.S., China and the rest of the world.