Forget Nuclear
By Amory B. Lovins, Imran Sheikh, and Alex Markevich
http://www.rmi.org/sitepages/pid467.php
Nuclear power, we're told, is a vibrant industry that's dramatically
reviving because it's proven, necessary, competitive, reliable, safe,
secure, widely used, increasingly popular, and carbon-freea perfect
replacement for carbon-spewing coal power. New nuclear plants thus sound
vital for climate protection, energy security, and powering a growing
economy.
There's a catch, though: the private capitalmarket isn't investing in
new nuclear plants, and without financing, capitalist utilities aren't
buying. The few purchases, nearly all in Asia, are all made by central
planners with a draw on the public purse. In the United States, even
government subsidies approaching or exceeding new nuclear power's total
cost have failed to entice Wall Street.
This non-technical summary article compares the cost, climate protection
potential, reliability, financial risk, market success, deployment speed,
and energy contribution of new nuclear power with those of its low- or
no-carbon competitors. It explains why soaring taxpayer subsidies aren't
attracting investors. Capitalists instead favor climate-protecting
competitors with less cost, construction time, and financial risk. The
nuclear industry claims it has no serious rivals, let alone those
competitorswhich, however, already outproduce nuclear power worldwide and
are growing enormously faster.
Most remarkably, comparing all options' ability to protect the earth's
climate and enhance energy security reveals why nuclear power could never
deliver these promised benefits even if it could find free-market
buyerswhile its carbon-free rivals, which won $71 billion of private
investment in 2007 alone, do offer highly effective climate and security
solutions, sooner, with greater confidence.
Uncompetitive Costs
The Economist observed in 2001 that Nuclear power, once claimed to be
too cheap to meter, is now too costly to matter cheap to run but very
expensive to build. Since then, it's become several-fold costlier to
build, and in a few years, as old fuel contracts expire, it is expected to
become several-fold costlier to run. Its total cost now markedly exceeds
that of other common power plants (coal, gas, big wind farms), let alone
the even cheaper competitors described below.
Construction costs worldwide have risen far faster for nuclear than
non-nuclear plants, due not just to sharply higher steel, copper, nickel,
and cement prices but also to an atrophied global infrastructure for
making, building, managing, and operating reactors. The industry's
flagship Finnish project, led by France's top builder, after 28 months
construction had gone at least 24 months behind schedule and $2 billion
over budget.
By 2007, as Figure 1 shows, nuclear was the costliest option among all
main competitors, whether using MIT's authoritative but now low 2003 cost
assessment1, the Keystone Center's mid-2007 update (see Figure 1, pink
bar), or later and even higher industry estimates (see Figure 1, pink
arrow)2.
Cogeneration and efficiency are distributed resources, located near
where energy is used. Therefore, they don't incur the capital costs and
energy losses of the electric grid, which links large power plants and
remote wind farms to customers3. Wind farms, like solar cells4, also
require firming to steady their variable output, and all types of
generators require some backup for when they inevitably break. The graph
reflects these costs.
Making electricity from fuel creates large amounts of byproduct heat
that's normally wasted. Combined-cycle industrial cogeneration and
buildingscale cogeneration recover most of that heat and use it to
displace the need for separate boilers to heat the industrial process or
the building, thus creating the economic credit shown in Figure 1.
Cogenerating electricity and some useful heat from currently discarded
industrial heat is even cheaper because no additional fuel is needed5.
End-use efficiency lets customers wring more service from each
kilowatthour by using smarter technologies. As RMI's work with many
leading firms has demonstrated, efficiency provides the same or better
services with less carbon, less operating cost, and often less up-front
investment. The investment required to save a kilowatt-hour averages about
two cents nationwide, but has been less than one cent in hundreds of
utility programs (mainly for businesses), and can even be less than zero
in new buildings and factoriesand in some retrofits that are coordinated
with routine renovations.
Wind, cogeneration, and end-use efficiency already provide electrical
services more cheaply than central thermal power plants, whether nuclear-
or fossil-fuelled. This cost gap will only widen, since central thermal
power plants are largely mature while their competitors continue to
improve rapidly. The high costs of conventional fossil-fuelled plants
would go even higher if their large carbon emissions had to be captured.
Uncompetitive CO2 Displacement
Nuclear plant operations emit almost no carbonjust a little to produce the
fuel under current conditions6. Nuclear power is therefore touted as the
key replacement for coal-fired power plants. But this seemingly
straightforward substitution could instead be done using non-nuclear
technologies that are cheaper and faster, so they yield more climate
solution per dollar and per year. As Figure 2 shows, various options emit
widely differing quantities of CO2 per delivered kilowatt-hour.
Coal is by far the most carbonintensive source of electricity, so
displacing it is the yardstick of carbon displacement's effectiveness. A
kilowatthour of nuclear power does displace nearly all the 0.9-plus
kilograms of CO2 emitted by producing a kilowatt-hour from coal. But so
does a kilowatthour from wind, a kilowatt-hour from recovered-heat
industrial cogeneration, or a kilowatt-hour saved by end-use efficiency.
And all of these three carbonfree resources cost at least one-third less
than nuclear power per kilowatt-hour, so they save more carbon per dollar.
Combined-cycle industrial cogeneration and building-scale cogeneration
typically burn natural gas, which does emit carbon (though half as much as
coal), so they displace somewhat less net carbon than nuclear power could:
around 0.7 kilograms of CO2 per kilowatt-hour7. Even though cogeneration
displaces less carbon than nuclear does per kilowatt-hour, it displaces
more carbon than nuclear does per dollar spent on delivered electricity,
because it costs far less. With a net delivered cost per kilowatthour
approximately half of nuclear's, cogeneration delivers twice as many
kilowatt-hours per dollar, and therefore displaces around 1.4 kilograms of
CO2 for the same cost as displacing 0.9 kilograms of CO2 with nuclear
power.
Figure 3 compares different electricity options' cost-effectiveness in
reducing CO2 emissions. It counts both their cost-effectiveness, in
delivering kilowatthours per dollar, and their carbon emissions, if any.
Nuclear power, being the costliest option, delivers less electrical
service per dollar than its rivals, so, not surprisingly, it's also a
climate protection loser, surpassing in carbon emissions displaced per
dollar only centralized, non-cogenerating combined-cycle power plants
burning natural gas8. Firmed windpower and cogeneration are 1.5 times more
costeffective than nuclear at displacing CO2. So is efficiency at even an
almost unheard-of seven cents per kilowatthour. Efficiency at normally
observed costs beats nuclear by a wide margin for example, by about
ten-fold for efficiency costing one cent per kilowatthour.
New nuclear power is so costly that shifting a dollar of spending from
nuclear to efficiency protects the climate several-fold more than shifting
a dollar of spending from coal to nuclear. Indeed, under plausible
assumptions, spending a dollar on new nuclear power instead of on
efficient use of electricity has a worse climate effect than spending that
dollar on new coal power!
If we're serious about addressing climate change, we must invest
resources wisely to expand and accelerate climate protection. Because
nuclear power is costly and slow to build, buying more of it rather than
of its cheaper, swifter rivals will instead reduce and retard climate
protection.
Questionable Reliability
All sources of electricity sometimes fail, differing only in why, how
often, how much, for how long, and how predictably. Even the most reliable
giant power plants are intermittent: they fail unexpectedly in
billion-watt chunks, often for long periods. Of all 132 U.S. nuclear
plants built (52 percent of the 253 originally ordered), 21 percent were
permanently and prematurely closed due to reliability or cost problems,
while another 27 percent have completely failed for a year or more at
least once. Even reliably operating nuclear plants must shut down, on
average, for 39 days every 17 months for refueling and maintenance. To
cope with such intermittence in the operation of both nuclear and
centralized fossil-fuelled power plants, which typically fail about 8
percent of the time, utilities must install a roughly 15 percent reserve
margin of extra capacity, some of which must be continuously fuelled,
spinning ready for instant use. Heavily nuclear-dependent regions are
particularly at risk because drought, a serious safety problem, or a
terrorist incident could close many plants simultaneously.
Nuclear plants have an additional disadvantage: for safety, they must
instantly shut down in a power failure, but for nuclear-physics reasons,
they can't then be quickly restarted. During the August 2003 Northeast
blackout, nine perfectly operating U.S. nuclear units had to shut down.
Twelve days of painfully slow restart later, their average capacity loss
had exceeded 50 percent. For the first three days, just when they were
most needed, their output was below 3 percent of normal. The big
transmission lines that highly concentrated nuclear plants require are
also vulnerable to lightning, ice storms, rifle bullets, and other
interruptions. The bigger our power plants and power lines get, the more
frequent and widespread regional blackouts will become. Because 9899
percent of power failures start in the grid, it's more reliable to bypass
the grid by shifting to efficiently used, diverse, dispersed resources
sited at or near the customer. Also, a portfolio of many smaller units is
unlikely to fail all at once: its diversity makes it especially reliable
even if its individual units are not.
The sun doesn't always shine on a given solar panel, nor does the wind
always spin a given turbine. Yet if properly firmed, both windpower, whose
global potential is 35 times world electricity use, and solar energy, as
much of which falls on the earth's surface every ~70 minutes as humankind
uses each year, can deliver reliable power without significant cost for
backup or storage. These variable renewable resources become collectively
reliable when diversified in type and location and when integrated with
three types of resources: steady renewables (geothermal, small hydro,
biomass, etc.), existing fuelled plants, and customer demand response.
Such integration uses weather forecasting to predict the output of
variable renewable resources, just as utilities now forecast demand
patterns and hydropower output. In general, keeping power supplies
reliable despite large wind and solar fractions will require less backup
or storage capacity than utilities have already bought to manage big
thermal stations' intermittence. The myth of renewable energy's
unreliability has been debunked both by theory and by practical
experience. For example, three north German states in 2007 got upwards of
30% of their electricity from windpower-39% in Schleswig-Holstein, whose
goal is 100% by 2020.
Large Subsidies to Off set High Financial Risk
The latest U.S. nuclear plant proposed is estimated to cost $1224 billion
(for 2.23.0 billion watts), many times industry's claims, and off the
chart in Figure 1 above. Th e utility's owner, a large holding company
active in 27 states, has annual revenues of only $15 billion. Such high,
and highly uncertain, costs now make financing prohibitively expensive for
free-market nuclear plants in the half of the U.S. that has restructured
its electricity system, and prone to politically challenging rate shock in
the rest: a new nuclear kilowatt-hour costing, say, 16 cents levelized
over decades implies that the utility must collect ~27 cents to fund its
first year of operation.
Lacking investors, nuclear promoters have turned back to taxpayers, who
already bear most nuclear accident risks and have no meaningful say in
licensing. In the United States, taxpayers also insure operators against
legal or regulatory delays and have long subsidized existing nuclear
plants by ~15Πper kilowatt-hour. In 2005, desperate for orders, the
politically potent nuclear industry got those subsidies raised to ~59Œ
per kilowatthour for new plants, or ~6090 percent of their entire
projected power cost. Wall Street still demurred. In 2007, the industry
won relaxed government rules that made its 100 percent loan guarantees
(for 80 percent-debt financing) even more valuableworth, one utilityTMfs
data revealed, about $13 billion for a single new plant. But rising costs
had meanwhile made the $4 billion of new 2005 loan guarantees scarcely
sufficient for a single reactor, so Congress raised taxpayers' guarantees
to $18.5 billion. Congress will be asked for another $30+ billion in loan
guarantees in 2008. Meanwhile, the nonpartisan Congressional Budget Office
has concluded that defaults are likely.
Wall Street is ever more skeptical that nuclear power is as robustly
competitive as claimed. Starting with Warren Buffet, who just abandoned a
nuclear project because it does not make economic sense, the smart
money is heading for the exits. The Nuclear Energy Institute is therefore
trying to damp down the rosy expectations it created. It now says U.S.
nuclear orders will come not in a tidal wave but in two little ripplesa
mere 58 units coming online in 201516, then more if those are on time and
within budget. Even that sounds dubious, as many senior energyindustry
figures privately agree. In today's capital market, governments can have
only about as many nuclear plants as they can force taxpayers to buy.
The Micropower Revolution
While nuclear power struggles in vain to attract private capital,
investors have switched to cheaper, faster, less risky alternatives that
The Economist calls micropower distributed turbines and generators in
factories or buildings (usually cogenerating useful heat), and all
renewable sources of electricity except big hydro dams (those over ten
megawatts). These alternatives surpassed nuclearTMfs global capacity in
2002 and its electric output in 2006. Nuclear power now accounts for about
2 percent of worldwide electric capacity additions, vs. 28 percent for
micropower (2004 07 average) and probably more in 200708.
An even cheaper competitor is enduse efficiency (negawatts)saving
electricity by using it more effi ciently or at smarter times. Despite
subsidies generally smaller than nuclear's, and many barriers to fair
market entry and competition, negawatts and micropower have lately turned
in a stunning global market performance. Micropower's actual and
industry-projected electricity production is running away from nuclear's,
not even counting the roughly comparable additional growth in negawatts,
nor any fossil-fuelled generators under a megawatt (see Figure 4)9.
The nuclear industry nonetheless claims its only serious competitors are
big coal and gas plants. But the marketplace has already abandoned that
outmoded battleground for two others: central thermal plants vs.
micropower, and megawatts vs. negawatts. For example, the U.S. added more
windpower capacity in 2007 than it added coal-fired capacity in the past
five years combined. By beating all central thermal plants, micropower and
negawatts together provide about half the world's new electrical
services. Micropower alone now provides a sixth of the world's
electricity, and from a sixth to more than half of all electricity in
twelve industrial countries (the U.S. lags with 6 percent).
In this broader competitive landscape, high carbon prices or taxes can't
save nuclear power from its fate. If nuclear did compete only with coal,
then far above- market carbon prices might save it; but coal isn't the
competitor to beat. Higher carbon prices will advantage all other
zero-carbon resourcesrenewables, recoveredheat cogeneration, and
negawattsas much as nuclear, and will partly advantage fossil-fueled but
low-carbon cogeneration as well.
Small Is Fast, Low-Risk, and High in Total Potential
Small, quickly built units are faster to deploy for a given total effect
than a few big, slowly built units. Widely accessible choices that sell
like cellphones and PCs can add up to more, sooner, than ponderous plants
that get built like cathedrals. And small units are much easier to match
to the many small pieces of electrical demand. Even a multimegawatt wind
turbine can be built so quickly that the U.S. will probably have a hundred
billion watts of them installed before it gets its fi rst one billion
watts of new nuclear capacity, if any.
Small, quickly built units also have far lower financial risks than big,
slow ones. This gain in financial economics is the tip of a very large
iceberg: micropower's more than 200 different kinds of hidden financial
and technical benefits can make it about ten times more valuable
(http://www.smallisprofitable.org/) than implied by current prices or by the cost
comparisons above. Most of the same benefits apply to negawatts as well.
Despite their small individual size, micropower generators and electrical
savings are already adding up to huge totals. Indeed, over decades,
negawatts and micropower can shoulder the entire burden of powering the
economy.
The Electric Power Research Institute (EPRI), the utilities' think-tank,
has calculated the U.S. negawatt potential (cheaper than just running an
existing nuclear plant and delivering its output) to be two to three times
nuclear power's 19 percent share of the U.S. electricity market; RMI's
more detailed analysis found even more. Cogeneration in factories can make
as much U.S. electricity as nuclear does, plus more in buildings, which
use 69 percent of U.S. electricity. Windpower at acceptable U.S. sites can
cost-effectively produce at least twice the nation's total electricity
use, and other renewables can make even more without significant land-use,
variability, or other constraints. Thus just cogeneration, windpower, and
efficient useall profitablecan displace nuclear's current U.S. output
roughly 14 times over.
Nuclear power, with its decade-long project cycles, difficult siting, and
(above all) unattractiveness to private capital, simply cannot compete. In
2006, for example, it added less global capacity than photovoltaics did,
or a tenth as much as windpower added, or 3041 times less than micropower
added. Renewables other than big hydro dams won $56 billion of private
risk capital; nuclear, as usual, got zero. ChinaTMfs distributed renewable
capacity reached seven times its nuclear capacity and grew seven times
faster. And in 2007, China, Spain, and the U.S. each added more windpower
capacity than the world added nuclear capacity. The nuclear industry does
trumpet its growth, yet micropower is bigger and growing 18 times faster.
Security Risks
President Bush rightly identifies the spread of nuclear weapons as the
gravest threat to America. Yet that proliferation is largely driven and
greatly facilitated by nuclear powers flow of materials, equipment,
skills, and knowledge, all hidden behind its innocent-looking civilian
disguise. (Reprocessing nuclear fuel, which the President hopes to revive,
greatly complicates waste management, increases cost, and boosts
proliferation.) Yet acknowledging nuclear powers market failure and
moving on to secure, least-cost energy options for global development
would unmask and penalize proliferators by making bomb ingredients harder
to get, more conspicuous to try to get, and politically costlier to be
caught trying to get. This would make proliferation far more difficult,
and easier to detect in time by focusing scarce intelligence resources on
needles, not haystacks.
Nuclear power has other unique challenges too, such as long-lived
radioactive wastes, potential for catastrophic accidents, and
vulnerability to terrorist attacks. But in a market economy, the
technology couldn't proceed even if it lacked those issues, so we
needn't consider them here.
Conclusion
So why do otherwise well-informed people still consider nuclear power a
key element of a sound climate strategy? Not because that belief can
withstand analytic scrutiny. Rather, it seems, because of a superficially
attractive story, an immensely powerful and effective lobby, a new
generation who forgot or never knew why nuclear power failed previously
(almost nothing has changed), sympathetic leaders of nearly all main
governments, deeply rooted habits and rules that favor giant power plants
over distributed solutions and enlarged supply over efficient use, the
market winners' absence from many official databases (which often count
only big plants owned by utilities), and lazy reporting by an unduly
credulous press.
Isn't it time we forgot about nuclear power? Informed capitalists have.
Politicians and pundits should too. After more than half a century of
devoted effort and a half-trillion dollars of public subsidies, nuclear
power still can't make its way in the market. If we accept that
unequivocal verdict, we can at last get on with the best buys first:
proven and ample ways to save more carbon per dollar, faster, more surely,
more securely, and with wider consensus. As often before, the biggest key
to a sound climate and security strategy is to take market economics
seriously.
Mr. Lovins, a physicist, is cofounder, Chairman, and Chief Scientist of
Rocky Mountain Institute, where Mr. Sheikh is a Research Analyst and Dr.
Markevich is a Vice President. Mr. Lovins has consulted for scores of
electric utilities, many of them nuclear operators. Th e authors are
grateful to their colleague Dr. Joel Swisher PE for insightful comments
and to many cited and uncited sources for research help. A technical paper
preprinted for the September 2008 Ambio (Royal Swedish Academy of
Sciences) supports this summary with full details and documentation
(www.rmi.org/sitepages/ pid257.php#E08-01). RMITMfs annual compilation of
global micropower data from industrial and governmental sources has been
updated through 2006, and in many cases through 2007, at
www.rmi.org/sitepages/pid256.php#E05-04
Notes:
1. This is conservatively used as the basis for all comparisons in this
article. The ~2-3TMŒ/kWh nuclear "production costs" often quoted are the
bare operating costs of old plants, excluding their construction and
delivery costs (which are higher today), and under cheap old fuel
contracts that are expected to rise by several-fold when most of them
expire around 2012.
2. All monetary values in this article are in 2007 U.S. dollars. All
values are approximate and representative of the respective U.S.
technologies in 2007. Capital and operating costs are levelized over the
lifespan of the capital investment.
3. Distributed generators may rely on the power grid for emergency backup
power, but such backup capacity, being rarely used, doesn't require a
marginal expansion of grid capacity, as does the construction of new
centralized power plants. Indeed, in ordinary operation, diversified
distributed generators free up grid capacity for other users.
4. Solar power is not included in Figure 1 because the delivered cost of
solar electricity varies greatly by installation type and financing
method. As shown in Figure 4, photovoltaics are currently one of the
smaller sources of renewable electricity, and solar thermal power
generation is even smaller.
5. A similar credit for displaced boiler fuel can even enable this
technology to produce electricity at negative net cost. The graph
conservatively omits such credit (which is very site-specific) and shows a
typical positive selling price.
6. We ignore here the modest and broadly comparable amounts of energy
needed to build any kind of electric generator, as well as possible
long-run energy use for nuclear waste management or for extracting uranium
from low-grade sources.
7. Since its recovered heat displaces boiler fuel, cogeneration displaces
more carbon emissions per kilowatt-hour than a large gas-TMETMÊTMETMETM¬ red
power plant does.
8. However, at long-run gas prices below those assumed here (a levelized
2007-$ cost of $7.72 per million BTU, equivalent to assuming that this
price escalates indefinitely by 5%/y beyond inflation-yielding prices far
above the $7-10 recently forecast by the Chairman of Chesapeake, the
leading independent U.S. gas producer) and at today's high nuclear costs,
the combined-cycle plants may save more carbon per dollar than nuclear
plants do. This may also be true even at the prices assumed here, if one
properly counts combined-cycle plants ability to load-follow, thus
complementing and enabling cleaner, cheaper variable renewable resources
like windpower. Natural gas could become scarce and costly only if its own
efficiency opportunities continue to be largely ignored. RMI's 2004 study
Winning the Oil Endgame (http://www.oilendgame.com/) found, and further in-house
research confirmed in detail, that the US could save at least half its
projected 2025 gas use at an average cost roughly one-tenth of the current
gas price. Two-thirds of the potential savings come from efficient use of
electricity and would be more than paid for by the capacity value of
reducing electric loads.
9. Data for decentralized gas turbines and diesel generators exclude
generators of less than 1 megawatt capacity.
Correction: April 28, 2008
Due to new data, footnote 1 and 8 have been edited to reflect this new
information.
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