Tag Archive | nuclear economics

A Nuclear Giant Stumbles

There has been a long history of state and rate payer handouts which have built the nuclear industry in the US.  By one analysis, the total value of the nuclear subsidies is in excess of the wholesale value of the all the electricity which these reactors have produced.  When states deregulated electricity production and distribution, the utilities requested and mostly received many billions in bail outs from rate payers or tax payers to pay for what were called its stranded assets.  Nuclear subsides started much earlier than this with the Price Anderson act which requires mostly the state or rate payers to pay for insurance claims in the event of a serious nuclear accident.

There is an illusion that nuclear power is economic, that illusion is fast fading.

There is an illusion that nuclear power is economic, that illusion is fast fading.

With the recent decommissioning of Vermont Yankee (which ran for more than 40 years, and thus its full design life) we discovered the decommissioning funds collected from the sale of electricity do not cover the decommissioning bill.  They actually don’t even come close to covering them.  The current estimated cost of decommission performed by the operating utility for this closed reactor is US$ 1.24 billion.   The problem is the amount raised is only US$665 million.

This problem is not unique to Vermont.  When the US Nuclear Regulatory Commission (NRC) looked at decommissioning funds in 2009, it found that 27 of the nations reactors did not have sufficient funding for decommissioning (this is about 1/4 of the entire US reactor fleet).  Then when the Government Accountability Office (GAO) reviewed the NRC’s work in 2012, it found the NRC’s decommissioning formulas were 30 years old and underestimated decommissioning costs in 3/4ths of the reactors studied.


The latest proposed boondoggle bailout comes from deep in the heart of reactor country.  Exelon is the largest nuclear utility in the country, with 22 reactors – almost 1/4 of the total US fleet.  With increased renewables investment, declining solar panel costs and cheap natural gas from fracking, nuclear economics are looking pretty grim.  When Exelon’s home state of Illinois announced last year what it was willing to pay for electricity, Exelon panicked because a number of their reactors can’t operate profitably at anything like these low costs per kWh.

Exelon is dependent on nuclear

Exelon is dependent on nuclear

Large utilities are powerful political players.  Exelon pushed on the state government to investigate how to keep these uneconomic reactors open, claiming that they were needed for reliability, tax revenue, local jobs and climate friendliness.  The Illinois state legislature sent instructions to 4 state agencies to investigate these claims and they have just reported back.  Exelon was very unhappy with their report.  What they found was:

  • Illinois does not need these reactors for grid reliability
  • Providing huge bail outs in the name of increasing tax revenue is silly
  • Closing the reactors would cost 2,500 jobs and it would likely create 10K new jobs in renewables and efficiency
  • Less expensive wind power is better for the climate than these reactors

The reason this is so important is that if Exelon with it’s tremendous political power can not get Illinois to bailout reactors, it might well be the case that no one can, with the likely exception of Virginia, where the legislature does everything Dominion wants, even when it makes no economic sense.

Killing bigger demons – Monju

Not all reactors are created equal.  In the global fight against nuclear power, there are some especially dangerous reactor types which clean energy activists take unusual pleasure in shutting down.  I remember the day (in June of 1997) i heard that the French SuperFenix breeder reactor was going to be shut down permanently.  I whooped so loud the folks in the WISE office all looked at me funny.

Monju - It took a fault line and 3 meltdowns to kill it

Monju – It took a fault line and 3 meltdowns to kill it

It looks like it will be time for another loud noise soon.  Japan’s Monju breeder reactor is sitting on top of an active fault line and this plus the countries new more strict nuclear regulator plus the unusually poor management of the plant, might just be enough to shut it down.

Monju has had a troubled life.  At a cost of US$12 billion, this advanced technology went critical for the first time in April 1994.  However in the following 19 years, the operators have only gotten it to run for a single hour, due to two major accidents.  In December of 1995 a leak in the sodium coolant pipes caused a leak of liquid sodium (which ignites in air and explodes in water) caused a fire of such great intensity it deformed hardened steel structures at the reactor.  The operator then tried to cover up the accident, which was discovered and created public outrage.

In 2010 the reactors was finally repaired.  Three months later a 3 ton crane was dropped into the reactor vessel, shutting the plant down again.  It remains closed today.

The confirmation that there is an active fault line under the reactor combined with the operators skipping over inspection of over 10,000 components, including critical safety ones has spurned the new Japanese nuclear regulator into action.  This inspection scandal forced the head of the Japanese Atomic Energy Agency (which operates Monju) to resign.

The reason breeders are especially nasty is that they perpetuate the especially toxic myth that there are accessible technologies which will take radioactive waste from existing reactors, burn this waste and create power.  This has long been the holy grail for pro-nuclear folks.  This makes great sense for the only problem with nuclear power besides the terrible economics, declining public acceptance world wide, terrible safety danger, captured and corrupt nuclear regulators, weapons proliferation risks,  that real renewables are cheaper, that it is vulnerable to climate change induced weather problems, destablizes grids because of its large size, requires tremendous idle back up redundancy is the waste problem.  So if you can solve the rad waste problem for power reactors, you can pretend that there are no other problems, and some people will believe you.

If Monju closes, then the US, UK, Germany, France and Japan will all have scraped their breeder program.  Leaving the only operating production breeders in unmonitored Russia military facilities.

You can't keep beating the reaper

You can’t keep beating the reaper

Small is Ugly – the case against Small Modular Reactors

[With apologies to E.F. Schumacher, who wrote the important book Small is Beautiful]

“Don’t bet against technology.” is the advice I give to people who are saying certain industrial developments won’t happen, or will not happen soon. There are breakthroughs every day and most of them are not forecasted much in advance.  So why am I not excited about the recent Department of Energy’s decision to fund the development of Small Modular Reactor (SMR) designs?

So the hype runs like this.  We want a reactor which is smaller because the big reactors are inflexible on the grid, often providing more power than an area (or even small countries) can use.  Small is flexible.  Small reactors can be built in factories and shipped to the site nearly complete – reversing the current ratio of 70% of the reactor built on site and 30% in the factory.  Mass production will help avoid cost overruns and delays which plague larger reactors.  Smaller reactors can be refueled less frequently and will require smaller staff to run them.  We need a mix of energy solutions, rather than depending on just fossil sources and renewables.  The navy has successfully used small reactors to power aircraft carriers and submarines successfully for years.  Let’s just take this technology to the private sector.

SMR reactor design

Sounds pretty compelling right?  It is no surprise these reactors have broad bi-partisan support in congress.

Small is flexible.  But it turns out that 180 to 250 MW of these new designs is not actually small.  The obstacle Germany and other countries face as they move to increasingly renewable solutions is that these big point source power producers interfere with grid distribution; basically renewable electricity has to be routed around them.  This is why the closure of reactors is so important in terms of building a real flexible renewables feed network of microgrids.  Big reactors are a big problem for the grid, these small reactors are still big enough to be a problem.

It is certainly possible that small reactors could be built in factories and shipped to sites nearly complete.  It is not a coincidence that large reactors have been built for so long and in so many places around the world by so many different engineering firms with some of the highest paid executives and engineers in the world.  I don’t like them, but these are not stupid people.

There are huge fixed costs associated with getting reactors running.  You need tremendous water supplies, large grid connections, waste and fuel handling facilities – there are favorable economies of scale to large reactors.  The reason dozens of engineering firms in over 30 countries around the globe have built big reactors (and multiple units wherever they could) is not because they all made the same mistake, it is because to make this huge investment even begin to make sense you need to do it in a big way.  It is unclear if the mass production savings of SMRs will offset the economy of scale advantages of current designs. what is clear is that attempts to use modular components in the four AP1000s currently under construction in the US have utterly failed to keep costs down, or even controlled.  And similarly this supposed benefit will not help the first handful of SMRs.  The non-partisan group Taxpayers for Common Sense gave SMR’s their Golden Fleece Award for using taxpayer money where business should be paying.

The small reactors we find in nuclear military vessels produce electricity at ridiculously high prices per kilowatt.  This is why no engineering firm is proposing these well understood designs for mass production.  There is a long history of failed efforts to build small reactors.  The cost of naval small reactor power never becomes competitive, even if mass produced.  And nuclear naval vessels don’t have to worry about cooling water, making them structurally cheaper than the proposed new SMRs.

SMR boondoggle

The energy mix argument is a throwaway.  We can generate energy by hooking teenagers with ipods up to stationary bicycles and running turbines.  We don’t do this because it makes no economic sense.  Neither do nukes, large or small.

What is really happening is that the nuclear industry is not only not looking at the much hyped Renaissance, it is in its death throes.   At what was perhaps the height of the so-called Nuclear Renaissance, October 2010, 17 companies and consortium were applying for licenses to build 30 reactors in US. But by the beginning of 2011 over half of these projects had been officially abandoned, with most of the rest quite unlikely to ever be built.  Five reactors are under construction in the US, 2 in Georgia (Vogtle), 2 in South Carolina (VC Summer)  and Watts Bar II in Tennessee which was started  in 1973.  All of these plants are delayed and overbudget, despite 4 of them having started construction in the last 18 months.

Add to this the lower price of natural gas, the continuing decreasing cost of renewables, Fukushima market jitters, the Obama administration cutting loan guarantees for new reactor construction and there is not much of a future for old style large reactors.  [It is worth noting in the first 10 months of 2012, renewable energy sources accounted for 46% of all new installed capacity in the US.]

natural gas prices US

Small reactors reduce costs by eliminating the secondary containment, increasing the chances nuclear accidents will not be contained.  There is still no rad-waste solution for these reactors.  Oh, and there are not even any finished designs for these reactors, much less prototypes.

Don’t bet against technology.  But don’t waste billions and decades researching unproven designs which will likely never be economical, when there are safer, cleaner, cheaper solutions at hand.

Union of Concerned Scientists updated critique of small reactors.

Update July 2015:  The GAO report recently released sees many problems with SMRs and advanced reactor designs, including the likely inferior cost profile compared with real renewables.  More importantly, since this original writing Westinghouse has dropped out of SMR development citing that “there are no customers

cheaper sqfer cleaner faster pro wind graphic

The good news is finally we are.

Update January 2016 from the Ecologist Magazine: The US Government Accountability Office released a report in July 2015 on the status of small modular reactors (SMRs) and other ‘advanced’ reactor concepts in the US. The report concluded:

“While light water SMRs and advanced reactors may provide some benefits, their development and deployment face a number of challenges … Depending on how they are resolved, these technical challenges may result in higher-cost reactors than anticipated, making them less competitive with large LWRs [light water reactors] or power plants using other fuels …

“Both light water SMRs and advanced reactors face additional challenges related to the time, cost, and uncertainty associated with developing, certifying or licensing, and deploying new reactor technology, with advanced reactor designs generally facing greater challenges than light water SMR designs.

“It is a multi-decade process, with costs up to $1 billion to $2 billion, to design and certify or license the reactor design, and there is an additional construction cost of several billion dollars more per power plant.”

Update Feb 2017:  One of the darlings of the nuclear industry is Transatomic Power and it is easy to see why.  Telegenic founders from prestigious schools made some incredible promises.  Specifically, their claim that they could use spent nuclear reactor fuel to power their design and that they could get 75 times as much power per unit of uranium as a conventional reactor.  This resulted in tremendous venture capital funding and lots of media attention.  Turns out these clever MIT students got it wrong.  Their professors checked their math and found it lacking.  Spent fuel can not be used.  The efficiency of fuel use might be twice (not 75 times) conventional reactors.  This was reported in MIT’s own magazine Technology Review.

Update March 2017:  Bechtel has now quitely dropped out of the SMR market as well, as did Babcocks and Wilcox some time earlier.

Update May 2021:  CleanTechnica – Small Modular Reactors are mostly bad policy

[Edited by Judy Youngquest]

More Nails in Nuclears Coffin

I was quite pleased to find out today that the Kewaunee nuclear-power plant in Wisconsin will close next year.  Partly i was happy because the owner of this plant is Dominion Resources which is trying to decide if it wants to build another reactors near my home in Louisa County Virginia. Dominion stepping out of Kewaunee increases the chances they will never build North Anna 3 for several reasons:

  1. Their own nuclear staff and expertise is diminishing
  2. It means they can be convinced a reactor with lots of license life should be closed
  3. They bought this reactor in 2005, hoping to buy more reactors in the region
  4. Dominion tried to resell the plant and no one wanted it
  5. Because it will help highlight that insufficient funds are being saved for decommissioning costs.

If you cant make the economics of an already operating plant, which has a license to run until 2033, how is it going to make economic sense to build a brand new expensive plant, with all the new reactors running wildly over budget and years delayed?

Another one bites the dust

Dominion paid $220 million for the single small reactor (556 MW) in 2005 and has been trying to sell it since April of last years.  But there are no buyers for this white elephant.  The Washington Post article on the closure points out that fewer than 20 commercial reactors have been closed in the US and the last one was in 1998.  But nuclear power in the US is losing it’s race against time.  The fleet is aging far faster than new units are being built and while the NRC is granting life extensions to ever utility which asks for one, it can not beat the fundamental truth that these plants, even with sunk costs long covered are becoming greater liabilities than assets.

“i think he is to blame”

Separately, the World Nuclear Industry Status report for 2012 was released, here is part of the executive summary.

Reactor Status and Nuclear Programs

Startups and Shutdowns. Only seven reactors started up, while 19 were shut down in 20111
and to 1 July 2012, only two were started up, just compensating for two that were shut down
so far this year. As of end of June 2012 no reactor was operating in Japan and while two
units at Ohi have got restart permission, it remains highly uncertain, how many others will
receive permission to restart operations.

Nuclear Phase Out Decisions. Four countries announced that they will phase out nuclear
power within a given timeframe: Belgium, Germany, Switzerland and Taiwan.

Newcomer Program Cancellations. At least five countries have decided not to engage or reengage in nuclear programs, although they had previously planned to do so: Egypt, Italy,
Jordan, Kuwait, and Thailand.

New Nuclear Countries. Iran became the first country to start commercial operation of a new
nuclear power program since Romania in 1996.

Construction & New Build Issues

Construction Cancellation. In both Bulgaria and Japan two reactors under construction were abandoned.

Construction Starts. In 2011, construction began on four reactors and two so far in 2012.

New Build Project Cancellation. In Brazil, France, India and the United States new build
projects were officially cancelled. In the Netherlands, the U.K. and the U.S. key utilities
withdrew leaving projects in jeopardy.

Certification Delays. The certification of new reactor technologies has been delayed numerous times. The latest announcement concerns the certification in the U.S. of the Franco-German designed EPR2 that was pushed back by 18 months to the end of 2014.

Construction Start Delays. In various countries firmly planned construction starts were
delayed, most notably in China, where not a single new building site was opened, but also in
Armenia, Finland and the U.S.