Carbon-capping legislation and recent studies that conclude that a massive build-up of nuclear power is needed to minimize the negative economic impact of CO2 caps have spurred several high-profile articles on the costs of nuclear energy.
One such article notes that estimated construction costs for nuclear
power plants and the overall costs of nuclear power have increased
significantly since 2000 and espouses wind power, solar power, and
energy efficiency as alternatives to new nuclear plants.
these articles do not recognize is that energy prices are increasing
broadly. When considered properly, nuclear power is the only available
technology that is adequate, affordable, reliable, safe, and
environmentally clean. If the nation wants to limit CO2 emissions, then it must turn to nuclear power.
nuclear energy is expensive and lowering its real costs (as opposed to
artificial discounts through subsidies and mandates) should by a
primary goal of public policy—especially in light of its critical role
in meeting CO2 targets—those who criticize nuclear energy
based solely on costs do not fully appreciate the broader context of
energy policy, energy inflation, and rising construction costs in
Rising Costs Are Not Unique to Nuclear
problems are not specific to the nuclear industry. Energy and
construction prices are escalating across the board. Much of the
increase is a result of rising commodity prices for products like
cement, steel, and copper.
The truth is that coal, wind, and solar projects are all becoming
increasingly expensive. If those sources were inexpensive, few would
even consider building new nuclear plants, yet nearly 20 companies are
pursuing construction and operating licenses for up to 30 new reactors.
Renewable energy sources would not need mandates and subsidies to
survive if they were affordable.
Furthermore, assiging all of
the costs of the first few nuclear plants to future plants is
inaccurate. As more orders are placed, economies of scale will be
achieved. Today, it is very expensive to produce nuclear-qualified
components and materials because steep overhead costs are carried by
only a few products. Additional production will allow these costs to be
spread, thus lowering costs overall. Further savings should be achieved
by applying lessons learned from initial construction projects. Because
nuclear plants could have an operating life of 80 years, the benefit
could be well worth the cost.
To argue that nuclear power is not
viable based on cost alone while ignoring the many problems, including
costs, that are associated with wind, solar, and efficiency measures is
to present an inaccurate picture.
Wind and Solar Have Problems Too
and solar power do have a role in America's energy mix, but those
technologies alone are not ready or able to power the United States.
Despite efforts to portray these sources as viable alternatives to
nuclear power, they have their own problems. They are expensive,
intermittent, and inappropriate for broad swaths of the United States.
For example, wind turbines are virtually useless in the Southeast,
where there is little wind. Even environmental activists are beginning
to oppose wind projects because they kill birds, despoil landscapes,
and ruin scenic views.
The costs of wind power have been
increasing. The Department of Energy reports that the price of wind
turbines has gone up 85 percent from 2000–2007, citing the declining
value of the dollar and the increased input prices of steel and oil as
the primary reasons.
In fact, the cost of planned wind generation in the Rocky Mountain
region now exceeds $14.5 billion for about 8,000 megawatts of capacity.
This may seem like a bargain until two important points are taken into
First, wind is intermittent, producing
electricity only about a third of the time. This means that power
plants are needed to provide electricity when the wind is not blowing.
If one is going to rely on wind and the additional power-generating
capacity that is needed when the wind is not blowing, those additional
costs should be assigned to wind power as well.
Second, the life expectancy of windmills is projected to be 20 years. Nuclear power plants produce power for up to 80 years. This must be taken into account when considering costs.
energy projects are also running into trouble. Like wind, solar is
intermittent: It produces electricity only when the sun is shining. The
general economic problems of solar power were recently described in a
study by Severin Borenstein, a professor at the University of
California, Berkeley's Haas School of Business and director of the UC
Energy Institute. He looked at the costs of 26,522 photovoltaic solar
panel installations, equal to 103 megawatts of capacity, that have
received state support from California and found that their cost
($86,000–$91,000) far outweighed their value ($19,000–$51,000).
problems have arisen as well. For example, Solar, Inc., the world's
largest solar company, recently told investors that its largest market,
the European Union, may ban its solar panels because they contain toxic
cadmium telluride. To replace the cadmium model with a silicon-based model would quadruple the production costs.
intermittent nature of wind and solar energy is important to the
overall economics of energy and how these renewable sources relate to
nuclear power. Given the low cost needed to operate a nuclear plant,
lifetime costs are very low once the plant has been constructed. It is therefore difficult to conclude that wind or solar power should be built at all.
This could explain why many opponents of nuclear power are committed to renewable portfolio standards.
These standards dictate that a certain percentage of energy-production
capacity must come from wind and solar sources. This forces energy
producers to invest in wind and solar even though such investment may
not be economically rational.
Instead of mandating how energy is
produced, the government needs only to set the regulatory framework and
should allow the market to dictate how best to meet America's energy
needs. If wind and solar are competitive, they will succeed. The same
holds true for nuclear.
Efficiency Mandates Do Not Discount the Value of Nuclear Energy
critics of nuclear energy acknowledge that renewable sources alone will
likely not meet America's growing energy demand. These critics assert
that any shortfalls in supply will be met by increased efficiency, and
they want mandatory energy reductions to assure that it happens. Such
draconian measures are not needed and would not work without dire
economic consequences. Energy efficiency standards have run into their
own problems with higher costs and unintended consequences, such as
This is not to downplay the importance of
efficiency. Energy resources are precious, and society benefits by
their conservation. However, the value of efficiency mandates is
questionable. People's interests are served by efficiency, and they
will pursue it where it most benefits them. That is why consumers and
producers, not government, should drive the push for efficiency.
efficiency requirements often raise the price of consumer goods and
force engineering in directions that technology is not ready to
support. The result is often lower productivity and less efficient
technological innovation. This not only affects everyday lives (toilets
do not effectively flush, and washing machines do not effectively
wash), but also can have broader technological effects. For example, new CAFE (Corporate Average Fuel Economy)
standards will force automobile manufacturers to focus their research
and development resources on meeting new miles-per-gallon mandates
instead of on revolutionary transportation technologies.
The Market Should Decide
has no business making any decisions about nuclear power based on
costs. Its role should be to provide adequate oversight and fulfill its
legal obligations on nuclear waste. It is primarily private companies
that produce America's power, and consumers pay for it. Their interactions in the marketplace should determine the best way to meet America's energy needs.
irony of mandates is that wind and solar may well have a place in
meeting America's long-term energy needs. Massive wind farms that
attempt to duplicate the model of high-output centralized power
stations and individual photovoltaic solar installations on rooftops
may not be the appropriate models. It may be that a decentralized model
where households or neighborhoods have their own energy sources would
work better for some of these technologies while more centralized
models may work for others. But because the government attempts to
funnel investment in one direction rather than allow the market to
respond to peoples' needs, wind and solar many never get the
opportunity to succeed.
A Sustainable Approach to Nuclear Power
In comparison to other emissions-free energy sources, nuclear power is both competitive and critical to the success of CO2
reductions. Even without those goals, nuclear power's many advantages
make it an attractive energy source. The United States should allow
nuclear power to reemerge as a viable and robust American industry.
recent Heritage Foundation paper outlines ten market-oriented action
items to reduce the cost of nuclear energy and prepare for a nuclear
It recommends such policies as capping financial support at the level
provided by the Energy Policy Act of 2005, liberalizing commercial
nuclear trade, removing commodity tariffs, and resolving the impasse
over Yucca Mountain.
Nuclear power must be expanded if CO2
caps are to work. Despite claims of high costs, nuclear power is
competitive with renewable energy sources when all costs are factored
in. The time has come to acknowledge the critical role that nuclear
power will play in the United States.
W. Beach, David W. Kreutzer, Ph.D., Ben Lieberman, and Nicolas D.
Loris, "The Economic Costs of the Lieberman–Warner Climate Change
Legislation," Heritage Foundation Center for Data Analysis Report No. CDA08-02, May 12, 2008, at http://www.heritage.org/Research/EnergyandEnvironment/cda08-02.cfm; U.S. Environmental Protection Agency, EPA Analysis of the Lieberman–Warner Climate Change Security Act of 2008, March 14, 2008, at http://wwwepa.gov/climatechange/downloads/s2191_EPA_Analysis.pdf (May 22, 2008); U.S. Department of Energy, Office of Integrated Analysis and Forecasting, Energy Market and Economic Impacts of S. 2191, the Lieberman–Warner Climate Security Act of 2007, April 2008, at http://www.eia.doe.gov/oiaf/servicerpt/s2191/pdf/sroiaf(2008)01.pdf (May 22, 2008).
 Joseph Romm, "Nuclear bomb," Salon.com, June 2, 2008, at http://wwwsalon.com/news/feature/2008/06/02/nuclear_power_price/; Rebecca Smith, "New Wave of Nuclear Plants Faces High Costs," The Wall Street Journal, May 12, 2008, athttp://online.wsj.com/article/SB121055252677483933.html
 Ken Simonson, "Prices Surge for Imports, Steel, Copper, Oil, Gas," Purchasing Magazine, April 16, 2008, at http://www.pmmag.com/CDA/Articles/Economics_Week_in_Review/
BNP_GUID_9-5-2006_A_10000000000000311931 (June 5, 2008).
Borenstein, "The Market Value and Cost of Solar Photovoltaic
Electricity Production," University of California Energy Institute,
Center for the Study of Energy Markets Working Paper 176, January 8, 2008, at http://www.ucei.berkeley.edu/PDF/csemwp176.pdf (June 10, 2008).