AEC cost-benefit analyses

The AEC prepared three remarkably optimistic cost-benefit analyses of the LMFBR program. The first was written in 1968 and released in 1969;56 the second was an updated (1970) analysis released in 1972,57 and the third, a 1973 analysis, was first released as part of the AEC’s 1974 Draft Environmental Impact Statement on the LMFBR Program.58

These analyses were extremely sensitive to changes in several important input variables, including the capital costs of LMFBRs relative to conventional nuclear reactors, electricity demand growth rates, uranium availability and the discount rate, which affects the relative weight given to near-term investments and long­term benefits. By making favorable but unrealistic assumptions, the AEC generated favorable benefit-to-cost ratios in each of these studies.

These assumptions included completely unrealistic nuclear power growth projections.59 For example, figure 7.5 shows the 1974 AEC projections of nuclear power in which a total U. S. nuclear capacity of approximately 2000 gigawatt electric (GWe) was projected for 2008. 2000 GWe would have supplied approximately four times the U. S. actual total consumption of electricity in 2008. In reality, total U. S. nuclear capacity in 2008 was approximately 100 GWe and supplied approximately 20 percent of U. S. electrical power.

The rise and fall of Clinch River Demonstration Breeder Reactor

In 1969, statutory authorization was obtained to proceed with the first LMFBR demonstration plant,60 financed in large part by the Federal Government.61 The CRBR was to be a joint project of several electric utilities and the AEC (subsequently DOE).62 The arrangements for financing, constructing, and managing the CRBR were spelled out in a 1972 Memorandum of Understanding and a subsequent series of detailed contracts among the AEC, Tennessee Valley Authority (TVA), Commonwealth Edison Co. (now Exelon), Project Management Corporation and


Figure 7.5 AEC’s 1974 estimate for the growth of nuclear power in the U. S.

LWR represents light-water reactors. The AEC believed that U. S. uranium resources could sustain less than 1000 GWe of light-water reactors. Source: U. S. Atomic Energy Commission, Proposed Environmental Statement on the Liquid Metal Fast Breeder Reactor WASH-1535 (1974).

the Breeder Reactor Corporation. Westinghouse Electric Corporation was selected as the reactor manufacturer. Construction of the CRBR was projected to begin in 1974 or 1975 (and power generation in 1981 or 1982).

The plant was to be located at a bend in the Clinch River on the AEC site at Oak Ridge, Tennessee, and to be operated by the TVA. It was to provide electricity to the TVA grid. The CRBR was to be a bridge between the FFTF and an eventual full-size prototype commercial breeder. Its design thermal power output was 975 MWt, approximately 2.5 times that of the FFTF, with an electrical generating capacity of 350 MWe. The reactor was a loop-type sodium-cooled, MOX-fueled plutonium breeder.

Starting in 1972, however, the LMFBR Program, and the CRBR project in particular began generating fierce public and political opposition due to economic, non­proliferation and safety concerns. On March 24, 1977, President Jimmy Carter, building on an October 28, 1976 decision by President Ford,63 directed the indefinite deferral of commercial reprocessing and plutonium recycle in the United States. In the same directive, President Carter suspended the licensing process geared toward obtaining a Limited Work Authorization for the CRBR.64

The decisions by Presidents Ford and Carter were primarily in response to India’s use of plutonium separated with U. S. assistance in an "Atoms for Peace" program to make a nuclear explosion in 1974. At the time, Brazil, Pakistan and South Korea had all contracted to buy reprocessing plants from France and Germany. The U. S. Government suspected that all three countries were interested in separating plutonium for weapons purpose.

Along with this concern about proliferation, the urgency of the breeder reactor began to fade. President Carter was advised that the AEC’s projections of U. S. nuclear power growth and hence its claims that the United States would soon run out of low-cost uranium were greatly exaggerated.65

Cost increases also played a significant part in broadening opposition to the project. In September 1972, during hearings before the Joint Committee on Atomic Energy, the AEC presented a cost estimate of $699 million for the CRBR demonstration plant. The Federal Government would provide $422 million through the AEC and the utilities would provide the balance. The project was scheduled to achieve initial operation in 1979.66 In the following year, the utilities committed themselves to pay $257 million plus interest, with a total utility commitment by September 1983 of $340 million. By the time detailed reference designs were completed in 1974, however, the estimated cost of the project had risen to $1.7 billion. By September 1983, approximately $1.7 billion had been spent and the estimated cost of the project had gone over $4 billion. According to the contract between the DOE and the utilities, virtually all of the additional funds would have had to be provided by the Government.67

A related issue was the high cost of building breeder reactors to produce electricity. Until late 1975, the AEC had been assuming that the capital costs of breeder reactors would decline to the same level as light-water reactors within 15 years. In 1977, this estimate was revised upward to a permanently higher cost of 25-75 percent. This meant that the cost of uranium would have to increase to $450-1350 per kg for the uranium savings to offset the additional capital charges of the breeder reactor.68 Figure 1.2 in the Overview, chapter 1, shows the history of uranium prices since 1970.

In a study done for the conservative Heritage Foundation in 1982, Henry Sokolski, referring to contract studies done for the U. S. Arms Control and Disarmament Agency, noted that, given the assumed capital cost disparities, the breakeven price for uranium would be nearly 18 times the then current price of uranium.69 Such cost studies led many conservative groups to oppose the CRBR. The economics of breeder reactors appear as dim today as they did in 1983.70

Despite the Carter Administration’s opposition, Congress continued to fund the CRBR. Although site construction could not proceed, the project continued to order and warehouse major components. In 1981, President Ronald Reagan restarted the process for licensing CRBR construction. By the end of 1982, the design was mostly complete and most components either were on hand or had been ordered.71 But on October 23, 1983, Congress eliminated FY-1984 funding for the CRBR and, on December 15, 1983, the Nuclear Regulatory Commission terminated the licensing process and vacated the Limited Work Authorization it had granted the previous year. With this action, breeder reactor development in the United States essentially ended.

Efforts in the United States to resuscitate fast reactors

Since the cancellation of the CRBR in 1983, ANL and the Nuclear Energy program office in the DOE have continued to seek ways to revive fast-neutron reactor development in the United States, first by promoting the Integral Fast Reactor concept,72 then through the Generation IV International Forum, and most recently the Global Nuclear Energy Partnership (GNEP).