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Solar and Nuclear Costs —The Historic Crossover

Solar photovoltaic system costs have fallen steadily for decades. They are projected to fall even farther over the next 10 years. Meanwhile, projected costs for construction of new nuclear plants have risen steadily over the last decade, and they continue to rise. In the past year, the lines have crossed in North Carolina. Electricity from new solar installations is now cheaper than electricity from proposed new nuclear plants. This new development has profound implications for North Carolina's energy and economic future. Each and every stakeholder in North Carolina's energy sector — citizens, elected officials, solar power installers and manufacturers, and electric utilities — should recognize this watershed moment.

Figure 1: The Historic Crossover — Solar photovoltaic costs are falling as new nuclear costs are rising.  The Solar PV least-squares trendline is fit to: 

  1. data points representing the actual cost of producing a kilowatt-hour in the year shown through 2010 in the US
  2. 2010 costs from North Carolina installers, and
  3. national cost projections from 2010 to 2020.

The nuclear trend-line is fit to national cost projections made in the year shown on the x-axis of eventual kilowatt-hour cost if projects reach completion.

State law requires that the development of the electricity system follow a “least-cost” path and that available resources be added as necessary. Less expensive resources are to be added first, followed by more expensive ones, provided that system reliability is maintained. Energy efficiency, wind power, solar hot water (displacing electric water heating) and cogeneration (combined heat and power), were already cheaper sources than new nuclear plants.

This report illustrates that solar photovoltaics (PV) have joined the ranks of lower-cost alternatives to new nuclear plants. When combined, these clean sources can provide the power that is needed, when it is needed.

The state’s largest utilities are holding on tenaciously to plans dominated by massive investments in new, risky and ever-more-costly nuclear plants, while they limit or reject offers of more solar electricity. Those utilities seem oblivious to the real trends in energy economics and technology that are occurring in competitive markets.

Everyone should understand that both new solar and new nuclear power will cost more than present electricity generation costs. That is, electricity costs will rise in any case for most customers, especially those who do not institute substantial energy efficiency upgrades. Power bills will rise much less with solar generation than with an increased reliance on new nuclear generation.

Commercial-scale solar developers in North Carolina are already offering utilities electricity at 14 cents or less per kWh. Duke Energy and Progress Energy are limiting or rejecting these offers and pushing ahead with plans for nuclear plants that, if ever completed, would generate electricity at much higher costs — 14–18 cents per kilowatt-hour according to present estimates. The delivered price to customers would be somewhat higher for both sources.

It is true that solar electricity enjoys tax benefits that, at the moment, help lower costs to customers. However, since the late 1990s the trend of cost decline in solar technology has been so great that solar electricity is fully expected to be cost-competitive without subsidies within the decade. Nuclear plants likewise benefit from various subsidies — and have so benefitted throughout their history.

Now the nuclear industry is pressing for more subsidies. This is inappropriate. Commercial nuclear power has been with us for more than forty years. If it is not a mature industry by

now, consumers of electricity should ask whether it ever will be competitive without public subsidies. There are no projections that nuclear electricity costs will decline. Very few other states are still seriously considering new nuclear plants. Some have cancelled projects, citing continually rising costs with little sign of progress toward commencing construction. Many states with competitive electricity markets are developing their clean energy systems as rapidly as possible. North Carolina should be leading, not lagging, in the clean energy transition.

We call on Governor Perdue, the General Assembly, the Energy Policy Council and the N. C. Utilities Commission to investigate these matters and see for themselves that a very important turning point has been reached.

This is a summary of a full report produced for clean energy nonprofit NC WARN.  To download the full report (PDF), click here.

John O. Blackburn, PhD is a professor Emeritus of Economics and former Chancellor at Duke University. Dr. Blackburn has conducted research into energy efficiency and renewable energy over a period of more than thirty years. He has authored two books and numerous articles on the future of energy, and has served on the Advisory Boards of the Florida Solar Energy Center and the Biomass Research Program at the University of Florida. He has testified before the NC Utilities Commission in several utility dockets on electricity supply and demand, energy efficiency, and renewable energy.

Sam Cunningham, Masters of Environmental Management candidate, Duke University. Mr. Cunningham's professional and academic interests are focused on policy applications of natural resource economics. He is an Economics and Environmental Studies graduate of Emory University.

NC WARN: Waste Awareness & Reduction Network is a member-based nonprofit tackling the accelerating crisis posed by climate change — along with the various risks of nuclear power — by watch-dogging utility practices and working for a swift North Carolina transition to energy efficiency and clean power generation. In partnership with other citizen groups, NC WARN uses sound scientific research to inform and involve the public in key decisions regarding their well-being. 

 

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