2015-03-09

Nevermind. The Bottom Line on Nuclear Energy

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reprint Existing nuclear power plants are extremely valuable societal assets. Shutting them down in the absence of compelling economic or technical reasons is folly. It sometimes feels like this statement is so obvious that it shouldn’t need to be made and yet you don’t have to look far to see governments which appear not to care.
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In Europe, Germany and Belgium have implemented arbitrary caps on reactor lifespans as part of their phase-out policies. Green party pressure in Sweden may yet result in tax hikes which make the ongoing operation of nuclear plants there next to impossible. In Spain the GaroƱa plant closed due to the impact of a new tax law (the government is now in fact seeking to resurrect the plant). Even in France, that champion of nuclear technology, the Hollande government is introducing legislation that would cut the country’s reliance on nuclear energy to 50% of generation by 2025, down from 75% today. If enacted (and as of writing the senate has just rejected the 2025 time frame) this would surely result in early reactor closures.
In the USA, currently cheap natural gas is putting the squeeze on some plants with the retirement of at least two units in recent years being primarily due to ‘economic’ factors and with three others being negatively impacted by these. Ironically, this is happening just as the country has acknowledged the seriousness of climate change with the Environmental Protection Agency (EPA) in the process of finalising new rules for power plants to help the country meet carbon emissions targets. The USA, like many others, is heavily subsidising renewables while utilities are becoming increasingly concerned about the lack of diversification in dispatchable capacity. The idea then that reactor closures have taken place on economic grounds needs some qualifying.
Make no mistake. Closing well-performing nuclear plants before it is technically necessary costs society dearly. Anyone who has ever bought an expensive appliance will understand that you aim to squeeze every bit of useful work out of it before letting it go. You maximise the value of your investment. The economics of nuclear generation is dominated by construction and financing, with fuel and operating costs typically lower than fossil. As with renewables such as wind and solar, once you have gotten through the painful period of paying back the initial capital outlay you should have entered a golden period of low-cost power production.
Nuclear plants form the baseline of healthy power systems in countries lucky enough to have them. Their continuous reliable output helps to keep grids going largely irrespective of the weather and stable low production costs reduce consumer price volatility. Replacing them will almost certainly result in extra expense to consumers as adding new capacity incurs both a new capital and operating charge, while the existing nuclear plant need only cover any upgrades and ongoing production costs.
Many in the green movement like to characterise nuclear energy as ‘uneconomic’ but this is absurd when applied in relation to the vast majority of existing plants – not to mention overly-simplistic for new-build (to be the subject of another post). The existing nuclear fleets in Europe and the USA were built decades ago – and almost to a unit were built by the then regulated or state-controlled energy sectors which made this kind of public serving long-term investment possible. These plants are now in their prime, with the vast majority showing clear potential for decades of additional service. Read on ... // empowered by wolframscharnhorst.blogspot.com).


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