Rapid Response: New Study Overlooks Cost-Competitive Nuclear Energy, June 18, 2009
A new study, “The Economics of Nuclear Power: Renaissance or Relapse?” by Mark Cooper, senior fellow for economic analysis with the Institute for Energy and Environment at the Vermont Law School presents a biased view of the costs for new nuclear energy facilities.
Below, we examine some statements from the study and the cost of nuclear energy in greater depth.
Myth: New “nuclear reactors are not economically competitive.”
The Facts: Based on studies by the energy companies contemplating building new reactors and independent analyses, new nuclear power plants are expected to produce electricity at competitive prices. In fact, new nuclear plants in some markets may be one of 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 from that facility to consumers.
Contrary to the study’s finding that “nuclear power cannot stand on its own two feet in the marketplace” nuclear energy is expected to be among the most economic sources of electricity. To cite one example, an independent comparative study published in January 2008 by the Brattle Group for the state of Connecticut estimated that nuclear energy (at $4,038/kW) may have the highest capital cost, but still produces the least expensive electricity, except for combined cycle natural gas with no carbon controls.
New nuclear reactors have been affirmed as the least cost option for new generation by the Public Service Commission (PSC) in South Carolina, Florida, and Georgia. The analyses supporting the PSC reviews found nuclear to be cost competitive with other forms of baseload generation in addition to helping to address climate change.
Various recently-released academic studies have also found the cost of nuclear energy to be competitive.
It’s useful to think of it like this:
• The cost of building advanced reactors is about the same as advanced coal plants with carbon storage, but nuclear energy has the lowest fuel cost over decades of electricity production.
• By comparison, natural gas plants are relatively cheap to build, but the supply and price volatility is a major drawback. The fuel cost for natural gas plants makes up 90 percent of the power cost.
The cost of power from coal and gas-fueled power plants would rise in a carbon-constrained world, further increasing their electricity costs.
A new licensing process, coupled with construction and project management experience from nuclear energy projects globally, will provide useful experience with new reactor designs in the United States.
Put simply, credible estimates of the total cost of new nuclear energy facilities show that electricity from nuclear energy will be competitive with other forms of baseload generation.
For additional information on the electricity costs of nuclear, coal, and gas, see page 12 in NEI's report: The Cost of New Generating Capacity in Perspective.