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Energy
| 02/11/16

Rapid cost escalation not intrinsic to nuclear power

TCE

A new study that looks at the cost of building nuclear plants across seven countries including Canada suggests that contrary to many critics’ claims, there is no inherent rapid cost escalation associated with the clean energy source.

While debate rages over the safety of nuclear power—which today delivers one third of the world’s low-carbon electricity—one aspect that both supporters and opponents have long agreed upon is cost. While the fuel is cheap, nuclear plants are expensive propositions. This is primarily a result of construction costs, but many detractors have also charged that unlike other technologies that see costs decline over time, the very complexity of harnessing nuclear power drives sharp cost increases the more plants we build.

Such claims have been based on analyses of nuclear cost trends over time in two of the 31 countries that generate electricity from nuclear power—the United States and France—or 26 percent of the number of nuclear plants.

However, a paper appearing in the journal Energy Policy last week that compared cost trends in the above two but also Canada, West Germany, Japan, South Korea and India, covering 58 percent of the world’s reactors, tells a different story. It found that cost trajectories vary wildly across jurisdictions. The authors suggest that after an initial sharp drop in costs in the US, its rapid increase is an outlier because roughly a third of the US nuclear fleet was in the process of being built during the infamous Three Mile Island meltdown in 1979. The accident caused lengthy construction delays, which substantially pushed up costs, as did tightened safety standards. West Germany’s experience was similar to the US, with cost increases occurring over this same period, albeit shallower.

France for its part experienced an initial sharp drop in costs followed by moderate cost increases later on, a product of a changing regulatory regime as Europe liberalised its energy market. Canada’s experience was similar to that of France, the authors found, looking at 24 of the country’s 25 commercial reactors, enjoying significant cost reductions early on, albeit subsequent modest cost increases. The paper suggests that Canada’s cheaper experience compared to its southern neighbour may have been due to greater consistency in builders and manufacturers, smaller reactor size, and that multiple reactors were built at the same time.

Japan saw initial sharp cost declines followed by moderate increases, but has been relatively stable for almost three decades. In India, costs increase from a low level, peak and then enjoy moderate declines. South Korea meanwhile has enjoyed initially sharp and then steady cost declines over the lifetime of its nuclear programme, benefiting from joining the nuclear market much later in the game and other countries’ prior learning, as well as standardised design and a stable regulatory regime.

The authors conclude that with two states experiencing sharp cost increases, two states experiencing moderate increases, two states a decline and one state a stabilisation, it cannot be said there is any overall trend. Instead policy makers and analysts should focus on which factors are shared by those states with the lowest-cost experience. Here the researchers emphasise reactor standardisation, building multiple units at the same time, and regulatory stability.

The paper only considered construction costs and not those associated waste disposal, decommissioning or insurance.

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