Facts on the massive costs and subsidies for nuclear power

After 60 years of nuclear power, the industry survives only on stupendous subsidies, Ecologist, Pete Dolack 4th January 2016 It’s a global phenomenon

“………….Numerous research papers paint a fuller picture. A Congressional Research Service report found that nuclear power had received $74 billion for research and developmentby the US government for the period 1948 to 1998, more than all such money given for fossil fuels, renewables and energy efficiency combined.

A report by the venture-capital firm DBL Investors, Ask Saint Onofrio, reports that nuclear energy cumulatively has received four times more subsidies than solar energy in California, and that nuclear subsidies were higher than solar in 2011 and all previous years. Nuclear has received $8.2 billion in subsidies in California, while providing the state with 3% of its power in 2012.

The uneconomical state of nuclear power is a global phenomenon, not limited to any one place. A comprehensive study prepared for the Green Party of Germany’s Heinrich Böll Stiftung, The Economics of Nuclear Power: An Updatereports:

“Up to now, nuclear power plants have been funded by massive public subsidies. For Germany the calculations roughly add up to over €100 billion and this preferential treatment is still going on today. As a result the billions set aside for the disposal of nuclear waste and the dismantling of nuclear power plants represent a tax-free manoeuvre for the companies.

“In addition the liability of the operators is limited to €2.5 billion – a tiny proportion of the costs that would result from a medium-sized nuclear accident.”

The paper later says“Successive studies by the British government in 1989, 1995, and 2002 came to the conclusion that in a liberalised electricity market, electric utilities would not build nuclear power plants without government subsidies and government guarantees that cap costs. In most countries where the monopoly status of the generating companies has been removed, similar considerations would apply.”

Yet new plants are being built, with new subsidies

Significant cost overruns are the norm in building nuclear power plants, and it isn’t investors who are on the hook for them. Three nuclear projects are under construction in the United States and two in Western Europe, a group that features an assortment of cost overruns and generous guarantees:

  • The two new Vogtle reactors in Georgia are already $3 billion over budget although their completion date is three and a half years away. The largest owner, Southern Company, has received $8.3 billion in federal loan guarantees. Overruns at this plant are not unprecedented; the two existing reactors cost $8.7 billion instead of the promised $600 million, resulting in higher electricity rates.
  • The Watts Bar 2 nuclear reactor in Tennessee, which received its license to operate in October, has seen its cost rise to $6.1 billion from $2.5 billion. (This is technically a restart of a unit on which construction was suspended in 1985.) The existing reactor at this site has a history of safety problems.
  • The Summer 2 and 3 reactors being built in South Carolina have already caused rate payers there to endure a series of rate increases. Cost overruns just since 2012 havetotaled almost $2 billion.
  • In October 2013, British authorities approved a new nuclear reactor at Hinkley Point, England, that features subsidies designed to give the owner, Électricité de France, aguaranteed 10% rate of return on the project. Power from the plant will be sold at a fixed price, indexed to the consumer inflation rate.
    In other words, The Independent reports, “should the market price fall below that [agreed-upon] level the Government would make up the difference.” The agreed-upon fixed price set by the Cameron government at the time was double the wholesale pricefor electricity. Since then the gap has only widened.
  • Olkiluoto-3 in Finland was supposed to have cost €3 billion, but is 10 years behind schedule and €5 billion over budget.

High costs despite high subsidies

There would at least be a small silver lining in this dark picture if the electricity produced were cheap. But that’s not the case. From the mid-1970s to the mid-1990s, the cost of producing electricity from nuclear power in France tripled and in the United States the cost increased fivefold, according to the Vermont Law School paper [page 46].

Then there are the costs of nuclear that are not imposed by any other energy source: What to do with all the radioactive waste? Regardless of who ultimately shoulders these costs, the environmental dangers will last for tens of thousands of years.

In the United States, there is the fiasco of the Yucca Mountain nuclear waste dump in Nevada. The US government has collected $35 billion from energy companies to finance the dump, which is the subject of fierce local opposition and appears to have no chance of being built.

Presumably, the energy companies have passed on these costs to their consumers but nonetheless are demanding the government take the radioactive waste they are storing at their plants or compensate them. As part of this deal, the US government made itself legally responsible for finding a permanent nuclear waste storage facility.

And, eventually, plants come to the end of their lives and must be decommissioned, another big expense that energy companies would like to be borne by someone else.

As the Heinrich Böll Stiftung study says, [page 17], “there is a significant mismatch between the interests of commercial concerns and society in general. Huge costs that will only be incurred far in the future have little weight in commercial decisions because such costs are ‘discounted’. This means that waste disposal costs and decommissioning costs, which are at present no more than ill-supported guesses, are of little interest to commercial companies.

“From a moral point of view, the current generation should be extremely wary of leaving such an uncertain, expensive, and potentially dangerous legacy to a future generation to deal with when there are no ways of reliably ensuring that the current generation can bequeath the funds to deal with them, much less bear the physical risk. Similarly, the accident risk also plays no part in decision-making because the companies are absolved of this risk by international treaties that shift the risk to taxpayers.” http://www.theecologist.org/News/news_analysis/2986749/after_60_years_of_nuclear_power_the_industry_survives_only_on_stupendous_subsidies.html

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