This is becoming the new mantra of the anti-nuclear crowd and has been a long-standing argument by Amory Lovins. It plays a central role in the scathing

denunciation of nuclear power in The Doomsday Machine. But is it true? Is nuclear power too expensive to be a good option for clean electrical power?

It is certainly true that a nuclear power plant costs a lot of money to build. The two new nuclear reactors being built in Georgia are expected to cost $14 billion combined. The capital costs are the largest expense of nuclear power, and they have to be committed for several years before any energy is being generated to pay for it. Building a new nuclear reactor on time and at cost is extremely important, but of course there is no modern record to depend on because all but two of our nuclear reactors were built over 20 years ago, and 60% were built over 30 years ago (26). Past history does not have to determine the future, however. The four new reactors being built in Georgia and South Carolina are being added to cur­rent sites where nuclear reactors already exist. There is a wealth of experience in running nuclear reactors at these sites, and they are accepted by the community.

This is a far cry from the 1970s and 1980s, when the existing reactors were built and there were huge protests at many of the sites. These protests and changes in reactor design led to construction times of up to 10 years or more in some cases, which greatly increased the cost. This was also a time when interest rates had skyrocketed because the OPEC oil cartel caused oil prices to soar, leading to very high inflation. This double whammy led to reactor costs that spiraled out of con­trol. The escalating costs, combined with the fears from Three Mile Island, led to a number of reactors being canceled.

Even so, 104 of those reactors did get built, and they now provide cheap electric­ity. The capital costs are paid for out of current electrical rates but prorated over many years, so current electricity rates are cheap. The cost of providing nuclear power, including the cost of uranium fuel and operating and maintenance costs average about 2 cents per kWh in the United States (27). Even with the capital cost of existing nuclear power plants built into the electrical rates, they are still cheaper than rates from coal-fired power plants.

The current very low prices of natural gas, combined with the relatively small capital cost of combined cycle natural gas plants, makes them the winner for the lowest levelized cost of a new power plant, about 6 to 7 cents per kWh (see Tables 5.1 and 5.2 in Chapter 5). Using a 30-year cost recovery period, the pro­jected cost of nuclear power is about 11 to 12 cents per kWh, but with a 40-year cost recovery, the cost drops to 8 cents per kWh. The cost of electricity from new coal plants is about 11 cents per kWh but is nearly 14 cents per kWh if carbon cap­ture and storage is used. Onshore wind power is about 10 cents per kWh, while offshore wind power is more than twice that, as is solar power. If the risk premium for nuclear power is removed by government loan guarantees, for example, then the cost of nuclear power plants is competitive with natural gas plants at about 7 cents per kWh. The cost of construction is the biggest factor for nuclear power, so if the Generation III plants can be built on time and at cost, with the current low interest rates, then nuclear power economics look good. Natural gas power plants, on the other hand, are not so expensive to build, but the cost of natural gas has historically been highly variable so the operating costs can change rapidly, causing volatility in electrical rates.

States with regulated rates set by public utility commissions, such as those in the Southeast, are far more likely to build more nuclear plants than deregulated states where rates are highly uncertain (28). The vagaries of unregulated power were brought to light by the energy crisis in California in 2000-2001. This deba­cle was caused by several factors, including a lack of electrical generation capac­ity, deregulation that required utilities to buy electricity from the market at spot prices, and fraudulent activities by Enron that led to extremely high prices (29, 30). It was an object lesson in how not to deregulate markets. Regulated states, which are in the majority, are not subject to such extremes in market prices, and the rates that utilities charge for electricity are far more stable. This is a climate in which the long-term costs of nuclear power plants can be amortized, resulting in low, stable rates. Since new nuclear power plants are designed for a 60-year lifetime, they will provide cheap electricity in future years, just as current reactors that were built 20 or more years ago provide cheap electricity now. Investments in nuclear power are truly long-term infrastructure investments that will pay off over a long time.

One other factor that is often raised concerning the cost of nuclear power is the cost of dealing with nuclear waste and with decommissioning reactors after their useful lifetime is over. Utilities that operate nuclear reactors have been paying a tenth of a cent per kWh into the Nuclear Waste Fund, which has accumulated $38.7 billion in Treasury certificates, so that cost is already paid for in the cost of electricity. The Nuclear Regulatory Commission (NRC) regulates the decom­missioning of reactors and requires utilities to set aside funds to pay for decom­missioning, which are estimated at 0.1 to 0.2 cents per kWh (31, 32). In reality, the extra costs for long-term disposal of nuclear waste and decommissioning of reactors add only a few tenths of a cent per kWh to the cost of electricity, so they are not big factors in the cost equation.

The advent of small modular reactors may also change the cost equation. A util­ity could add a 200 MWe modular reactor in a much shorter time frame and at a much smaller cost. As needs grow, additional modular units could be added to meet the capacity needs, but the capital cost outlay would be much more man­ageable. Missouri is evaluating that option to add to its current Callaway nuclear reactor at Fulton (33). The DOE awarded the first development money for an SMR to a consortium of Babcock & Wilcox, the Tennessee Valley Authority and Bechtel International. The cost-sharing award is to facilitate the building of a pro­totype SMR and enable licensing by the NRC (34).

The capital cost of nuclear power plants is a huge factor in the decision to build a nuclear reactor. The cost becomes far clearer if the true cost of CO2 production is realized through a carbon tax of some sort. In that case, coal and natural gas lose their advantage and nuclear becomes compelling. So, yes, it is true that the capital cost of nuclear reactors is a big factor in the decision, and it is unlikely that the market alone will be able to fund these. But the long-term cost is very favorable, so it requires stable utilities that have a long horizon to make the decision to build nuclear power plants.