Nuclear Energy: Skyrocketing Costs, Fruitless Subsidies

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Part II of a three-part series on U.S. energy policy and student activism

With coal under fire from climate activists, nuclear lobbyists and public relations teams are increasingly touting the low-carbon benefits of splitting the atom. What the nuclear industry carefully avoids discussing, though, are the direct and the indirect costs of its technology.

So just how expensive is nuclear power?

In our report, U.S. Electricity Policy 2009, Nick Allen and I took a closer look at the economics behind nuclear. The results are startling, and Congress will be hearing about them this week and next as 10,000 student activists, armed with our findings, hit the halls of Capitol Hill for Power Shift.

Here’s what students will be asking about nuclear power as Congress discovers that the youth of the nation take climate change seriously.

Skyrocketing Costs

How much does it cost to build a nuclear plant?

Well, given the rate at which estimates have been increasing, it’s hard to say what the answer will be a year from now. Recent estimates show a 50 percent increase in the cost in just the past year, from $4,000 per kW in 2007 to $6,000 per kW in 2008.

As energy experts Amory Lovins and Imran Sheikh explain, a $5,200 per kW construction cost for a new nuclear plant results in costs of about 16 cents per kWh, not including distribution costs. By contrast, the average cost of electricity today hovers around 10 cents per kWh, including distribution.

What makes nuclear’s cost estimates particularly worrisome is that they come in the context of years of federal subsidies to the industry in an effort to make the technology cost-competitive. Public Citizen documented $115 billion in direct subsidies to nuclear from 1947-1999.

The notorious Price-Anderson Act added indirect subsidies as well, and bumped the rate of total nuclear industry subsidies to around $145 billion. The act was intended to provide a sense of investment security for Wall Street, however its effect was to place the financial burden of insurance for nuclear power on U.S. citizens. If a nuclear accident or terrorist attack were to occur, reactor operators would be liable up to only about $10.5 billion. According to a federally funded study, the cost of a meltdown would run as high as $314 billion in 1982 dollars, or over $700 billion today.

Waste and Mining

Nuclear also has waste issues. Currently, dangerous nuclear waste is stored in temporary locations in 39 states. The government recently has been fighting to turn Yucca Mountain, in Nevada, into the nation’s first permanent nuclear waste repository.

The cost for this geologic repository?

In 2001, the Department of Energy estimated that a 0.1 cent per kWh excise tax would be enough. Of course, that estimate assumed the repository would cost about $41 billion, or about $51 billion in today’s dollars. The most recent (and steadily increasing) estimate for Yucca Mountain is $96.2 billion.

Does industry expect the taxpayers to cover the $46 billion difference? In 2006, the Government Accountability Office also politely pointed out “a long history of quality assurance” issues with the project as well as “confusion over roles and responsibilities” for managers at Yucca Mountain. Considering these problems, it’s not surprising that cost estimates are rising ever year.

Uranium mining represents another serious problem. Dangers posed to groundwater and other forms of contamination from mining are unclear, but certainly not to be ignored. Recent comments from Rep. Tom Davis (R-Va.) during a House Committee on Oversight and Government Reform hearing gives a clear sketch of the problem:

“Those looking to mine uranium to fuel future reactors face a desolate landscape littered with abandoned mines and mill sites, still generating unknown levels of health and environmental damage.”

Where Now?

Financially, nuclear power seems an uncertain gamble. The nuclear industry still needs to find a place to store its waste, and many Americans worry about the health implications of being downstream from a uranium mine.

Even more obvious are nuclear’s escalating and disturbing generation costs, despite the federal government throwing billions of dollars at the problem. Congress’ recent elimination of nuclear loan guarantees from the economic stimulus bill at least indicates that someone is paying attention to the hazards and the numbers. We hope they keep up the vigilance.

Our first two posts highlighted the often unspoken real costs of nuclear and coal for powering the country. What solutions exist? Tomorrow, we’ll take a look at some more environmentally friendly alternatives and what the government needs to do to make them work.


See also: 

Part I: Coal’s Hidden Costs Make it Anything but Cheap

Part III: Students Telling Congress: Bring Solar and Wind Home