Sowell's Law Blog: The Truth About Nuclear Power

Subtitle: Preposterous Power Pricing if Nuclear Power Proponents Prevail

This is number two in a series of articles on the truth about nuclear power. A link will be provided to each article as it is published.

Abstract

Comanche Peak Nuclear Power Plant, Texas
file photo from NRC

Nuclear power proponents assert that nuclear fission power is the only way forward, for various reasons. They fear a rise in fossil fuel prices, shortages of fossil fuels, unstoppable global warming from burning fossil fuels, poisoning the atmosphere with fossil fuel combustion products such as sulfur oxides, nitrogen oxides, fine ash and soot, radioactive particles in coal soot, and mercury from burning coal, among other issues. Their solution, then, is to ban all fossil fuel power plants and install instead nuclear fission power plants. This article explores the logical result of an electricity grid powered exclusively by nuclear fission power plants as currently designed and constructed. The end result is power prices that are many times higher than today, for example, residential price will be 5 times what it is today, while industrial power price will be more than 8 times what it is today. The impact on all aspects of society from such power prices will be economic ruin.

A modern electric utility grid.

A utility grid must, by law, have installed capacity in excess of the highest expected demand. Typically, the excess capacity amounts to a few percent, perhaps 5 percent. A grid must also, by law, provide power that is safe and reliable. Finally, a grid must provide power at a reasonable price to the customers. The reasonable price allows the regulated utility to obtain a modest return on capital that was spent to build the assets that provide the power. Typically, a utility has three primary asset groups: generation, transmission, and distribution. A utility also typically has three primary customer groups: residential, commercial, and industrial. In some states, a fourth requirement is included, that is, to provide power that achieves certain environmental goals. California has all four requirements: safe, reliable, reasonable cost, and environmental goals.

Current Power Pricing

Average power prices, per customer group, in December 2013 per EIA were:

11.7 (residential),
10.0 (commercial), and
6.6 (industrial) cents per kWh per the EIA website.

http://www.eia.gov/electricity/data/eia826/xls/sales_revenue.xls

All-Nuclear Grid Power Pricing

The levelized cost of power from a new, two-reactor nuclear fission power plant in the US is 30 cents per kWh, per Craig A. Severance’s 2009 paper, "Business Risks and Costs of New Nuclear Power." Severance’s costs were published before the Nuclear Regulatory Commission, NRC, added its requirement that all new nuclear power plants must be designed to withstand the impact from a large commercial aircraft. The areas that must remain in operation during and after such an impact include the reactor, cooling systems, and fuel storage area. The new NRC requirement will increase the levelized cost to 33 cents per kWh.

Severance's paper may be found at:

http://energyeconomyonline.com/uploads/Business_Risks_and_Costs_of_New_Nuclear_Power_Reprint_-_Jan_2__2009_Craig_A._Severance.pdf

Severance’s costs were also based on running the nuclear power plants as baseload, at approximately 85 percent of nameplate capacity. On an all-nuclear grid, however, the power plants must cycle up and down to meet the changing load. There will be substantial capital investment to enable a nuclear power plant to change output quickly and follow the load. One way to achieve load-following ability is to let the reactor and steam generator run at full capacity, but bypass some of the steam around the turbine to be cooled and condensed in the condenser. However, a larger condenser, cooling pumps, and cooling tower must be built to achieve this. Also, steam bypass lines, control valves, and a control system must be installed. An additional 4 cents per kWh is added to the 33 cents previously computed to account for load-following ability, for a total of 37 cents per kWh.

Next, generating plants on a grid do not run at 85 percent of capacity on average. The average rate for power plants on a grid is approximately 60 percent. Therefore, the 37 cents must be adjusted by multiplying by 85/60, yielding 52.4 cents per kWh.

The final cost of electricity for the all-nuclear grid is then found by replacing the current cost of generation, approximately 5 cents per kWh, with 52.4 cents, then adding back in the costs of transmission and distribution.

For each category of customer, the result is:

Residential All-Nuclear price: 11.7 – 5 + 52.4 = 59.1 cents per kWh
Commercial All-Nuclear price: 10.0 – 5 + 52.4 = 57.4 cents per kWh
Industrial All-Nuclear price: 6.6 – 5 + 52.4 = 54.0 cents per kWh.

The ratio of prices for an all-nuclear grid compared to today is then:

Residential 59.1 / 11.7 = 5.1
Commercial 57.4 / 10.0 = 5.7
Industrial 54.0 / 6.6 = 8.2

Implications

The implications for such power price increases are staggering. Consider a typical residential customer in the summer, with an electric bill of $180 for July (EIA data on monthly power). The all-nuclear grid would increase his bill by a factor of 5, to $900 per month. The poor, elderly and others on fixed incomes, and those who just barely manage from month to month would find such a power bill impossible to pay. It gets worse.

Commercial customers would find their bill increased by a factor of 5.7, and to remain in business, must increase their prices for goods and services sold. This, in turn, increases the retail prices for everyone who is a consumer. It gets worse.

Industrial customers would find their bill increased by a factor of 8.2, and they must also increase their sales prices for their products. Yet another layer of price increases will occur at the distributor and retail level. The final customer would find prices even higher, with their paycheck seeming smaller by comparison.

It is simply wrong to increase electric power prices that force low-income or fixed-income groups to choose between paying the electric bill and buying food, or paying the rent, or obtaining medical care. An all-nuclear grid would force those groups to do exactly that.

In addition, an all-nuclear grid would make the state, or even the entire nation, significantly less competitive in a world market. Jobs would therefore be lost to competition overseas.

Criticism

No doubt, there will be those who find fault with the above analysis. It will be improbable or impossible, they might say, for nuclear power plants to ever produce 100 percent of the power on a grid in the US. They may be right, too. There are, for example, many hydroelectric generating plants and it is unlikely that they will be eliminated any time soon.

They might also argue that there are also some forms of renewable energy already on the grid and those will likely increase in output, not decrease. That may be true, but the intermittent forms, solar and wind, require some backup system to produce power when the sun is not shining and the wind is not blowing. To the extent that intermittent renewables are on the grid, the nuclear power price must increase because the capital costs to build nuclear plants must be captured by a smaller quantity of electricity generated by the nuclear plants. If, for example, the entire US followed the example of California and requires 33 percent of all power sold to be from renewables, one can easily compute the impact on power prices. Note that, in California, some renewable energy is fairly constant, those being geothermal, small hydroelectric, and gas from biological sources. Not all states will have resources to produce geothermal and small hydroelectric power, though.

Therefore, if wind and solar are the renewable energy sources, and 33 percent is the production from them, the nuclear plants must reduce their ouput from the 60 percent used above, to approximately 30 percent. That, in effect, doubles the prices computed above for each customer category: 112, 110, and 106 cents per kWh for residential, commercial, and industrial.

Conclusion

These facts, alone, are sufficient to justify never building another nuclear power plant in the US. An all-nuclear grid would increase electric prices by 5 to 8 times current prices. If substantial renewables are included in the generation mix, prices would increase by 10 to 16 times. Economic ruin would result for any state, or the entire nation, if such a policy were adopted.

The Truth About Nuclear Power series may be found at the following links:

Part One -- Nuclear Power Plants Cannot Compete
Part Two -- this article
Part Three -- Nuclear Plants Cost Far Too Much to Construct
Part Four -- Nuclear Plants Use Far More Fresh Water
Part Five -- Cannot Simply Turn Off a Nuclear Power Plant

Part Six – Nuclear Plants are Huge to Reduce Costs

Part Seven -- All Nuclear Grid Will Sell Less Power

Part Eight – No Benefits from Smaller Modular Nuclear Plants

Part Nine -- Nuclear Plants Require Long Construction Schedules

Part Ten -- Nuclear Plants Require Costly Upgrades After 20 to 30 Years

Part Eleven - Following France in Nuclear Is Not The Way To Go

Part Twelve - Nuclear Plants Cannot Provide Cheap Power on Small Islands