It must be rough to be a nuclear power advocate these days: clean renewable energy is cleaning nuclear's clock in the marketplace; energy efficiency programs are working and causing electricity demand to remain stable and even fall in some regions; despite decades of industry effort radioactive waste remains an intractable problem; and Fukushima's fallout − both literal and metaphoric − continues to cast a pall over the industry's future.
Where new reactors are being built, they are − predictably − behind schedule and over-budget; while even many existing reactors, although their capital costs were paid off years ago, can't compete and face potential shutdown because of operating and maintenance costs that are proving to be too high to manage.
Not surprisingly, the nuclear industry is fighting back. After all, what other choice does it have? But a major new report by established nuclear advocates indicate that the only ammunition left in their arsenal is wishful thinking. The study, 'Projected Costs of Generating Electricity', is jointly produced by the International Energy Agency (IEA) and its sister organization in the OECD, the Nuclear Energy Agency (NEA).1
It's an update of a study last produced in 2010 and despite the headlines being pushed by the industry, which claim nuclear power is economically competitive with other generating technologies, it doesn't actually say that at all. But perhaps that's to be expected by an organization now headed by former US Nuclear Regulatory Commissioner William Magwood and devoted to the promotion of nuclear power.
As Jan Haverkamp of Greenpeace International explains:
"You can see the NEA's bias very clearly in slide 112 (part of the public presentation on the report's release), where the title is: "Nuclear: an attractive low-carbon technology in the absence of cost overruns and with low financing costs" ... which shows clearly where the problem is. To call this "attractive" but then sidelining two of the inherent financial issues with the resource is tendentious to say the least. Apart from not including costs like those for clean-up after severe accidents, an insecure cost idea of waste management, and a preferential liability capping scheme with government back-up."
Exactly. If you assume there are no economic problems with nuclear power, then it looks just great. The problem is that in real life, nuclear power's financing costs are not low − they are extremely high because nuclear reactors are considered, for good reason, by investors to be very risky undertakings. One reason they are risky, and thus incur high financing costs, is that they are notorious for their cost overruns.
As if to slap its Paris-based companion the NEA in its face with cold reality, Electricite de France underscored new nuclear power's fundamental economic problems, announcing that the EPR reactor it is building in Flamanville, France, is another year behind schedule and its cost is now projected at triple its original 2007 estimate.3
The IEA/NEA study calculates the levelized lifetime cost of electricity for reactors based on a 60-year lifespan at an 85% capacity factor, even though the study itself admits the global capacity factor in 2013 was only 82.4% and has dropped a bit since the 2010's study reference point of 2008. So the study thus assumes a lifetime that no reactor has yet reached, and that many reactors globally will not even attempt to reach (see below), at a capacity factor higher than has been attained and when the trend is in the opposite direction. Even manipulating the numbers like that, however, only gets the IEA/NEA back to its starting point of needing both the unattainable low financing costs and absence of cost overruns to make new nuclear appear economic.
As for that 60-year lifespan, while most U.S. reactors already have received license extensions allowing their 60-year operation, that is not the case globally (nor is it at all clear that a piece of paper allowing operation will be sufficient on either an economic or safety basis to enable operation). And a new report from a company called Globaldata projects that the number of reactors expected to seek license extensions globally will decline until 2025 (at least).4 Globaldata senior analyst Reddy Nagatham said: "This will be most notable in Europe, where the capacity of NPPs starting PLEX operations is expected to drop almost sevenfold from approximately 8.3 GW this year to 1.2 GW by the end of 2025."
Of course, the shorter a reactor's lifetime, the higher its lifetime cost of electricity will be.
As Greenpeace's Jan Haverkamp points out, the IEA/NEA appears to have a specific endgame in mind: "This study clearly targets the Paris COP [UN climate conference in December 2015] and tries to instill the idea that nuclear needs to get subsidies in the form of credit guarantees and price guarantees and then that will be the silver bullet."
And that brings us back to that more familiar refrain from the nuclear industry: give us more ratepayer bailouts and more taxpayer subsidies and everything will be just fine. The problem for the industry is that fewer and fewer people are singing that song.
Small modular reactors and Generation IV reactors
Nor should the industry look for help from the trendy new kids on the block: small modular reactors (SMRs) and Generation IV technologies. The report predicts that electricity costs from SMRs will typically be 50−100% higher than for current large reactors, although it holds out some hope that large volume production of SMRs could help reduce costs − if that large volume production is comprised of "a sufficiently large number of identical SMR designs ... built and replicated in factory assembly workshops." Not very likely unless the industry accepts a socialist approach to reactor manufacturing, which is even less likely than that the approach would lead to any significant cost savings.
As for Generation IV reactors, the report at its most optimistic can only say: "In terms of generation costs, generation IV technologies aim to be at least as competitive as generation III technologies ... though the additional complexity of these designs, the need to develop a specific supply chain for these reactors and the development of the associated fuel cycles will make this a challenging task."
So, at best the Generation IV reactors are aiming to be as competitive as the current − and economically failing − Generation III reactors. And even realizing that inadequate goal will be "challenging." The report might as well have recommended to Generation IV developers not to bother.
Another problem with the report is that the IEA − perhaps at the urging of the NEA − simply assumes that the electrical grid of the future will be the same as it is today, despite the rapid pace of change across the world but especially in the IEA's European home base.
In fact, if there is a real takeaway from the report, it is from the headline on the IEA's website rather than any nuclear publication: 'Joint IEA-NEA report details plunge in costs of producing electricity from renewables.'5
Yes, while the nuclear industry has been attempting to frame the report as good news for nuclear power, the real findings of the report are in the stunning drop in renewables costs. Onshore wind, according to the report, is the cheapest power source of any examined. Solar power, except residential rooftop, is increasingly competitive and will drop further, unencumbered by the high financing charges and cost overruns experienced by nuclear.
It's good to see IEA say something favorable about renewables. As we reported last year, the organization has been notoriously wrong on the deployment of renewables over the years, greatly underprojecting their growth and compiling a simply embarrassing record.6
References:
1. International Energy Agency (IEA) and OECD Nuclear Energy Agency (NEA), 2015, 'Projected Costs of Generating Electricity':
Media release: www.iea.org/newsroomandevents/news/2015/august/joint-iea-nea-report-deta...
Executive Summary: www.iea.org/Textbase/npsum/ElecCost2015SUM.pdf
Purchase full report: www.iea.org/bookshop/711-Projected_Costs_of_Generating_Electricity
2. www.iea.org/media/presentations/150831_ProjectedCostsOfGeneratingElectri...
3. WNN, 3 Sept 2015, 'Flamanville EPR timetable and costs revised', www.world-nuclear-news.org/NN-Flamanville-EPR-timetable-and-costs-revise...
4. Phil Allan, 2 Sept 2015, 'Fukushima fallout leading to decline in nuclear generation', www.energyvoice.com/otherenergy/86661/fukishima-fallout-leading-to-decli...
5. IEA, 31 Aug 2015, 'Joint IEA-NEA report details plunge in costs of producing electricity from renewables', www.iea.org/newsroomandevents/news/2015/august/joint-iea-nea-report-deta...
6. Michael Mariotte, 17 July 2014, 'IEA "experts" not particularly expert', http://safeenergy.org/2014/07/17/iea-experts-not-particularly-expert/