Nuclear Costs Are Going Up
The world has moved on to new technologies
February 3, 2012
When America stopped ordering new nuclear power plants in the 1970's, we had no long-term answer for what to do with radioactive waste that will remain deadly to humans for thousands of years. Today, we still don't have an answer.
At the time the last new nuclear power plant was ordered in the United States 36 years ago, there was a deep fear that countries pursuing nuclear power for "peaceful purposes" might actually use those secrets to develop nuclear weapons. Today, those fears have been realized in Pakistan and North Korea, and possibly soon in Iran.
But the real reason the nuclear industry was stopped cold decades ago is because Wall Street walked away. After getting burned by delays and cost overruns, the private sector decided that the financial risk of nuclear power was too great. For the more than 40 nuclear projects under development in 1979, construction cost overruns exceeded 250 percent. The Economist famously wrote in 2001: "Nuclear power, once claimed to be too cheap to meter, is now too costly to matter."
Unlike the costs of renewable technologies like solar, which dropped 50 percent last year alone, nuclear costs are going up. Private sector financiers have as much interest in building new nuclear power plants as communities have in hosting them: none. So where has the nuclear industry gone to solve this problem? The same place it's gone for 50 years: Washington. The industry's lobbyists have developed some ingenious schemes to shift the enormous risk of nuclear power off of corporate balance sheets and onto the U.S. taxpayer.
While it's well understood that nuclear accidents can be extremely costly—the meltdowns last year at the Fukushima facility caused an estimated $74 billion of financial losses in Japan—the U.S. nuclear industry's liability in the event of an accident is capped at $12.6 billion. It's a taxpayer bailout after that. And now, the nuclear industry has lobbied its way to $22.5 billion in taxpayer-backed loan guarantees to build new nuclear projects.
Rarely have Wall Street and Main Street come together as clearly as they have in rejecting nuclear power. But Washington is single-handedly trying to resuscitate the industry with a nuclear TARP program. Instead of taxpayers being on the hook for junk toxic assets, they'll be on the hook for junk toxic nuclear reactors if these projects default.
The first nuclear loan guarantee is an $8.3 billion gift to a nuclear project located near a fault line in Georgia. This project will use a reactor shield that a senior official at the Nuclear Regulatory Commission said could "shatter like a glass cup" during an earthquake.
Republican leaders in Washington have railed against using loan guarantees to support solar energy and went so far as to actually rescind $18 billion in loan guarantees for renewable energy. Yet they've turned a blind eye to risky nuclear projects that could generate taxpayer losses 15 times greater than Solyndra.
Meanwhile, the world has moved on to new technologies. In 2010, there were only 5,000 megawatts of new nuclear capacity installed worldwide. More than 10 times as much renewable power was installed. Renewable energy is cheaper, cleaner, and represents economic and job opportunities that nuclear can't touch. And when the wind isn't blowing and the sun isn't shining, we have abundant domestic natural gas supplies that can cheaply fill in the gaps.
Let's stop propping up a technology that still can't compete after more than a half century of subsidies.