Two weeks ago, I showed how the cost and risks of nuclear energy stack up against the competition. Last week I delved deeper into risk, examining past nuclear accidents to see what we can learn about the future of the technology and the industry. This week, we’ll look at the Achilles heel of the nuclear industry as it is currently constituted.
Nuclear energy suffers from a fundamental economic paradox, which follows inevitably from three facts. First, building a new plant takes a long time. Second, building a new plant takes a lot of money. Third, because of the time and money involved, such projects cannot proceed without financial support from the voting and taxpaying public. Finally, because the public is fickle by nature, it is inevitable that plans will change so that new plants take even longer and cost even more, resulting in even more of a financial burden on the public purse.
Just how long does it take to build a nuclear plant? The Vogtle Electric Generating Plant near Waynesboro, Georgia has two reactors, one of which took eleven years to build, the other thirteen. Last week, for the first time in 34 years, the United States’ Nuclear Regulatory Commission approved construction of two additional reactors; the build began in 2009, with one unit expected to take seven years and the other eight. Of the four reactors at the Darlington Nuclear Generating Station in Clarington, Ontario, one took nine years, another took eleven, and the last two took twelve. In France, construction of the Flamanville Unit 3 reactor is expected to be completed in 2016 after nine years.
What about the cost? Vogtle was originally supposed to cost US$660 million, but ended up with a US$8.87 billion price tag. The newly-approved reactors planned for that plant are estimated to cost US$15 billion, but how much they will actually cost is anybody’s guess. The initial estimate for Darlington was C$3.9 billion, but the final cost was C$14.4 billion. Flamanville estimates started at €3.3 billion but are now thought to reach €6 billion, and construction has barely passed the halfway mark.
And how does the taxpayer get involved? At first glance, Vogtle looks like a private venture. Georgia Power, the principal project shareholder, is a subsidiary of Southern Company, a literal powerhouse in the US electricity generation sector. Southern is listed on the New York Stock Exchange, is part of the S&P 500 index, and had revenues of US$17.46 billion in 2010. However, Georgia Power’s US$6.1 billion stake in the Vogtle project has a loan guarantee from the US Department of Energy in the amount of US$3.4 billion. Other project shareholders have loan guarantees totalling US$4.9 billion, meaning that more than half of the project cost is underwritten by the US taxpayer. Darlington is owned by Ontario Power Generation, a provincial crown corporation (meaning the Province of Ontario is the sole shareholder). Flamanville is wholly owned by EDF; while EDF is listed on the Paris Stock Exchange, 85% of its shares are owned by the French government.
When called to account for its history of astonishing construction cost overruns, the nuclear industry is quick to point the finger elsewhere – mainly at elected officials, and by extension the taxpayer. And they are justified in doing so. In response to nuclear disasters at Three Mile Island and Chernobyl, the public demanded stricter regulations on plant designs. This led to massive cost increases for all plants already under construction, to say nothing of any remediation measures at completed plants.
Here’s the rub. Nothing has changed. Nuclear plants aren’t getting any cheaper. Building them isn’t getting any faster. Taxpayers aren’t being relieved of the burden of underwriting the construction cost. Taxpayers have not suddenly acquired a blind faith that nuclear energy is the answer to all their prayers.
The industry will continue estimating costs assuming no change to regulations, and no revisions to electricity demand estimates – in spite of the clear evidence that such assumptions are a pipe dream. Politicians will continue taking industry estimates on faith, and moving ahead with new plant construction. The public will continue being as fickle as it always has been, moving the goalposts in the middle of the construction game. Construction costs for new plants will continue to be revised to multiples of the original estimates. And John Q. Public will be left with the bill.
Back in the days of the cold war, the so-called nuclear option was a terrifying one. It was a choice from which there was no turning back. The commander-in-chief would have to launch the entire arsenal at the enemy, or nothing at all.
In matters of national energy policy, the nuclear option is not that different. Once construction starts on a plant, the commitment is made. Few politicians have the stomach for cancelling a project once it is in progress, even when it is evident that the costs are spiralling out of control. And once the plant is built, few politicians would have the guts to shut it down.
In political terms, the ten years it takes to build a nuclear plant is an eternity. The typical term of public office is four years. An elected representative that decides to press the nuclear button is almost guaranteed to be long gone by the time the electorate realizes the enormity of their mistake.
Throughout its history, nuclear power has proven itself to be the greatest rip-off on Earth. The only way to avoid getting fleeced is for everyone to vote against it, and to kill it before it ever gets off the drawing board.
So vote early, and vote often.
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