A lot of regulars are huge fans of nuclear energy. So I’m linking to this WSJ op-ed to spark some thoughtful debate.
So how has anyone been able to afford to build any plants at all? In short, government support. The business model for nuclear power generation relies primarily on extracting huge amounts of taxpayer subsidies.
This has been true since the industry’s early days. Nuclear power in the U.S. received subsidies of $15.30 per kilowatt hour between 1947 and 1961—the first 15 years during which nuclear technology was used for civilian power generation—compared to subsidies of $7.19 per kilowatt hour for solar power and 46 cents for wind power between 1975 and 1989, the first 15 years when those technologies came into more widespread use. Nuclear operators are often protected by laws limiting liability that shift most of the expense of serious accidents to the public, thus shielding operators from the costs of insuring a potentially more dangerous technology.
All of this ought to raise questions in a lot of minds in Asia, where nuclear increasingly has been viewed as the next big energy thing. Asian governments purport to have plans to build 110 nuclear power plants between 2010 and 2030. Achieving this build-out would necessitate hundreds of billions of dollars of continued subsidies. Conservatively estimating a per-plant cost of $5 billion, and very conservatively estimating subsidies equal to one-third of project costs (it’s closer to 70%-80% in the U.S.), that still works out to around $180 billion in subsidies simply to build the plants, let alone operate them. Can Asia afford that?
Nuclear-power proponents often argue that the market should decide whether nuclear makes sense. They’re right. The reality is that but for government support, nuclear is a terrible business proposition. Asian policy makers should take note.
To be clear, I’m not overly interested in the the safety implications of nuclear – people get as much safety as they are prepared to pay for, rather the basic business model seems flawed.