Nuclear Power Not Cost Competitive With Coal Or Natural Gas - But Would Benefit From Cap & Trade

Back in 2003, "An interdisciplinary MIT faculty group decided to study the future of nuclear power because of a belief that this technology is an important option for the United States and the world to meet future energy needs without emitting carbon dioxide and other atmospheric pollutants." The study was recently updated (2009 version can be downloaded here as a pdf file), renewing the earlier conclusion that "Carbon emission credits, if enacted by government, can give nuclear power a cost advantage." That's the good news for nuclear power: inferring, that the US nuclear power industry could stand to benefit, long term, by supporting US Cap & Trade legislation. The bad news...after the jump.(Report discussion of Table 1: Costs of Electric Generation Alternatives, as shown above.)

The 2003 report found that “In deregulated markets, nuclear power is not now cost competitive with coal and natural gas...The estimated cost of constructing a nuclear power plant has increased at a rate of 15% per year heading into the current economic downturn.

This is based both on the cost of actual builds in Japan and Korea and on the projected cost of new plants planned for in the United States. Capital costs for both coal and natural gas have increased as well, although not by as much. The cost of natural gas and coal that peaked sharply is now receding. Taken together, these escalating costs leave the situation close to where it was in 2003.

Walk a mile in his/her shoes, nuclear on the left, coal on the right.
Imagine for a moment that you are a senior executive for a large US electric with operations in coal, nuclear, hydro, etc. Knowing that capital costs for nuclear power station construction are very unlikely to go down, but that demand for electricity is likely to increase, what do you favor, strategically?

#1. - Do you hope for a Cap & Trade regime with a relatively "low " cap that favors the competitiveness of your existing and planned nuclear fleet (by increasing the costs of operating coal and gas fired plants)? If so, you are going to lobby for a strong cap and trade regime. This involves betting against the future profitability of your existing fossil fuel holdings. They better be paid off!

#2. - Or, do you go with the assumption that the era of nuclear power is, for a variety of reasons, basically over. That few or no new nuclear power plants will be built in the USA (implying that wind, solar, coal, and gas are the main fuels for expanding market share). If so, and if you serve predominantly areas with low renewable energy potential, you are going to do everything you can to oppose a stringent cap and trade regime.

End role play.

Reinforcing strategy #2, would be the widespread perception, among utilities, that the increasingly powerful voice of the "green" community is opposed to building more nuclear power stations and that the Obama Administration is listening actively to that voice. Yes, what I am arguing here is that strong public opposition to nuclear power by YOU amplifies private sector opposition to Cap and Trade legislation.

Think about it for a moment...

If this kind of thinking is of interest, check out a recent post by me that one commenter characterized as a "rant" - Debunking The French - US Nuclear Power Comparison. It meshes well with strategy #2.

Other recent TreeHugger posts on nuclear power.
Quote Of The Year: "We may not need any (new nuclear or coal ...
No Rush To Replace Yucca Mountain: Adding US Nuclear Generation ...
Russian Nuclear Power Station Takes an Axe to Santa's Workshop ...
Wind Power Beats Nuclear & Clean Coal, Other Renewables As US's ...

Tags: Coal | Nuclear Power


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