Costs of Nuclear: Lies, Greed, and Misery

Now I can stand a lot of things that people don’t understand about nuclear. Radiation can be complicated, physics goes over a lot of peoples heads. But money is something that Everyone has to interact with every day of their lives once they stop living off their parents. So today I want to try to make a dent in the misinformation that nuclear is inherently expensive.

So lets do some basic math. Currently in Alberta, residential electricity rates are capped at 6.8 cents/kWh with any excess cost being covered by the funds garnered by the carbon levy we have in place.

Using carbon levy money to pay CO2 producers for excess costs for producing CO2 seems a bit self defeating to me but that’s not what I’m here to talk about.

Since Alberta has a free market for electricity pricing and the utilities are guaranteed to be paid any overage that their prices might have over the 6.8 cent residential limit you can easily guess that Every utility has base prices that are more than 6.8 cents but not so much that they would have to apply for tax revenue to cover their prices over what the carbon levy provides.

Now for the math. Lets say that Alberta got smart and built a 1 GW CANDU nuclear plant. And lets also assume that it was run by people who don’t actually believe in correct market pricing by keeping their prices as low as possible while still making a profit in order to undercut their competitors. So they sell their energy at 6.8 cents per kWh. In one year there are approximately 8760 hours, meaning that plant could potentially produce 8,760,000,000 kWh in one year. But you know what, lets take a less than optimal case. Give nuclear a handicap so that the fossil fuels have an actual chance at competing and say that the nuclear plant only runs at 70% capacity. This means that that plant will produce only 6132000000 kWh which at $0.068/kWh works out to $416,976,000 per year.

Since every anti-nuke out there likes to say that every nuclear plant costs $10 billion dollars lets humour them for a bit. A CANDU plant runs off of about 400 t/year of fuel which Ontario Power Generation (OPG) says claims approximately $0.0045/kWh of our capped $0.068/kWh. This leaves $389,382,000 to pay for all other operation costs. So even if all maintenance, payroll, and taxes comes out to say $100 million per year that still leaves almost $290 million to use to pay off the initial investment. At that rate, the initial $10B is paid off in 35 years. That’s basically the same time period as a mortgage where I live, and a house doesn’t produce $200 million in profit every year after you pay it off.

And nuclear plants don’t run for a mere 35 years. In fact most nuclear plants that aren’t defending themselves against people calling for them to be shut down and replaced by solar panels and wind turbines are expected to operate for 60 years. Some are even up-rated and talk is occuring of extending operation contracts to as long as 80 years. You know why I’m okay with them being extended that long? Because unlike so many other industries and facilities, the maintenance budget for the plants isn’t skived off to inflate profit margins to boost CEO bonuses.

But what about interest I hear you ask? This is where things get a bit sticky and troublesome for nuclear. A mere 5% interest on that initial $10B makes the whole thing unprofitable. 2% would be viable but there needs to be two very important things for that rate to happen. Security and Confidence. People who build reactors want to know that they are going to be able to finish building the thing and that it will be allowed to run its entire lifetime. if one or both of those are missing, investors get apathetic and demand those 5,6, 7%+ interest rates. Because they want to get their money back before something or someone kills the project.

Whoops! Did I accidentally kill our chances of fixing our CO2 problem by caving to people who weren’t educated about a very important topic?

But there’s a secret. Nuclear plants don’t need to cost $10B. When they aren’t: unique one shot plant designs, being sued during construction, have their governing regulations changed on them mid-construction, or have RPGs fired at their construction sites, they can actually be very reasonable. Like, $2.5 Billion reasonable. And I’m not even using China as that example, it is in fact the South Koreans that are at the current forefront of nuclear reactor construction efficiency while maintaining construction safety and quality.

We’ve known the secret to making nuclear energy inexpensive ever since France proved how to do it 40 years ago. You license one design for a generation and build copies of that, standardized across your grid. That way you have all the logistics for it and a workforce trained in it’s construction ready for every order that comes up. But, here’s where the greed comes in. No utility really wants to build a nuclear plant because they are Long term investments that are best for Stable, prosperous societies.

The kind of stability you need for nuclear to be successful requires cooperation at all levels of society. Stable government that looks beyond the next election cycle, an Educated populace that doesn’t give in to the whims of fear or fashion when deciding what is going to power their homes, and investors that understand that a rising tide lifts all boats. The lower interest rates for nuclear can get, and the longer that investors feel confident that the money will keep coming back in to them, the lower energy prices can get for everyone. And I’m not just talking “competitive with natural gas” low, I’m talking “low enough to make every other energy source uneconomical”

If you can build a $2.5 Billion dollar CANDU plant like South Korea at 2% then you could sell the energy for $0.024/kWh for 80 years…. or $0.068/kWh for 10 years and then $0.0165/kWh for the remaining 70 years and Still get that 2% return. But western society is far too chaotic right now with none of the groups who need to work together to make nuclear viable displaying the maturity and foresight necessary. And thus, nuclear is “too expensive”. Not because of it’s costs, but because We aren’t acting mature enough as a society to do what will benefit all of us.

Edited on Jan 19 2019 because I totally glossed over important aspects until Kian Conteh set me straight. Let this be a lesson kids, don’t drink and blog.

3 thoughts on “Costs of Nuclear: Lies, Greed, and Misery

Add yours

  1. “A CANDU plant runs off of about 400 t/year of fuel”
    I think a CANDU needs only 160 tonnes of natural uranium fuel. CANDU reactor is a very efficient existing reactor technology only after Russian BN-800 fast reactor.
    If you keep retubing and changing the steam generators a CANDU reactor can last as long as concrete structures last.

    Liked by 1 person

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