Rapid Response: Article Mischaracterizes Nuclear As Not Cost-Competitive, Oct. 26, 2010
The article New Nuclear Is Not Cost Competitive (Oct. 26) by Mark Cooper appearing in The Energy Daily presents a biased view of the costs for new nuclear energy facilities.
Below, we examine some statements from the article.
Myth: Efficiency and renewable technologies can meet the need for electricity while hitting the aggressive carbon reduction targets contained in the House climate bill...
The Facts: All mainstream analyses of the climate change issue by independent organizations show that reducing carbon emissions will require a portfolio of technologies, that nuclear energy must be part of the portfolio, and that major expansion of nuclear energy capacity over the next 30-50 years is essential.
Analyses of H.R. 2454, the American Clean Energy and Security Act, by the Environmental Protection Agency (EPA) and the Energy Information Administration (EIA) demonstrate that substantial increases in nuclear generating capacity will be essential to meet the legislations carbon-reduction goals.
In the EPA analysis, nuclear energy increases by 150 percent, from 782 billion kilowatt-hours in 2005 to over 2 trillion in 2050. If all existing nuclear power plants retire after 60 years of operation, 187 new nuclear plants must be built by 2050. In the Basic scenario of EIAs analysis, the U.S. would need to build 96 gigawatts of new nuclear energy generation by 2030 (69 new nuclear plants). This would result in nuclear energys supplying 33 percent of U.S. electricity generation, more than any other source of electric power.
To the extent the United States cannot build new nuclear power plants in these numbers, the cost of electricity, natural gas and carbon allowances will be higher.
A program to expand reliance on nuclear energy to meet U.S. climate change goals, even if it only approaches this scale, will require a sustained partnership between federal and state governments and the private sector, including additional policy support from the federal government.
In sum, nuclear power is a safe, reliable, affordable and proven technology. Solar and wind technologies, while important as part of a complete portfolio of sources, are intermittent and are not reliable sources of 24/7 power.
Myth: Nuclear Is Not Cost Competitive
The Facts: Based on studies by energy companies contemplating building new nuclear power plants and independent analyses, new nuclear energy facilities will produce electricity at competitive prices. In fact, new nuclear plants in some markets will be among the most cost-effective ways of generating electricity in a carbon-constrained world.
The cost of electricity is based on more than the capital cost of the plant. Fuel, operations and maintenance costs are combined with the capital cost of the plant to determine the price of electricity to consumers.
Contrary to the articles claim that nuclear energy is not cost competitive, nuclear energy is expected to be among the most economic sources of electricity. An independent comparative study published in January 2008 by the Brattle Group for the state of Connecticut estimated that nuclear energy (at $4,038/kilowatt) may have the highest capital cost, but still produces the least expensive electricity, except for combined cycle natural gas with no carbon controls.
According to the report by the Energy Information Administration, Annual Energy Outlook, April 2009, the estimated levelized cost of new electric generation in 2016 from nuclear energy will be 107.3 dollars/megawatt-hour. This would make new nuclear energy generation cheaper than coal with carbon capture, biomass and hydropower (see report below) on a levelized basis.
New reactors have been affirmed as the lowest-cost option for new electric generation by the public service commissions in South Carolina, Florida, and Georgia. The analyses supporting the commissions reviews found nuclear to be cost competitive with other forms of baseload generation in addition to helping to mitigate greenhouse gases.
Various recently released academic studies provide a frank discussion of nuclear energy's economics and all conclude that nuclear energy is one of the most important tools to address climate change based on lifetime cost, reliable performance and carbon-free generation. Some of these studies include:
The Energy Information Administration, Annual Energy Outlook, updated April 2009.
The Brattle Group, Integrated Resource Plan for Connecticut, January 2008.
Electric Power Research Institute, Program on Technology Innovation: Integrated Generation Technology Options, November, 2008.
The Congressional Budget Office, Nuclear Powers Role in Generating Electricity, May 2008.
Put simply, credible estimates of the total cost of new nuclear energy facilities show that electricity from nuclear energy is competitive with other forms of electric generation.
For a detailed look at loan guarantees and other nuclear energy financing issues, see NEI's Financial Center.