Speaking to the nation about the energy crisis recently, President Bush proclaimed, "if there was a magic wand to wave, I'd be waving it". Bush then proceeded to wave the perpetual "magic wand" for energy, urging more nuclear power. Candidate John McCain followed suit in his speech on global warming, linking his carbon emissions cap-and-trade proposal to massive subsidies for the nuclear power industry.
We have seen this all before – a powerful lobby promoting itself as our energy solution, and receiving Federal billions. Corn ethanol has now received these subsidies for decades, though experts warned it would do little but divert food crops to fill our gas tanks. Today’s food price crisis is in part a fulfillment of these prophecies.
The nuclear industry has launched a major effort to convince Americans nuclear power is the solution to global warming. This public relations campaign can be traced directly to a 2003 MIT study, "The Future of Nuclear Power", which recommended it. Why would public opinion matter? The MIT authors noted, "Today, nuclear power is not an economically competitive choice. Moreover, unlike other energy technologies, nuclear power requires significant government involvement because of safety, proliferation, and waste concerns." They concluded nuclear power faced "stagnation and decline", without billions in new government subsidies.
The U.S. nuclear industry has in fact been in stagnation for 30 years. The last nuclear plant built in the United States was ordered in 1978. The industry blames environmentalists for its collapse, yet government policies have always favored nuclear power.
Utility executives, not environmentalists, halted nuclear power’s expansion decades ago, because of extremely high costs. According to the U.S. Energy Information Administration, cost overruns for nuclear plants for the years 1966 to 1977 ranged from 200 to 380 percent. The largest bond default in the history of the municipal bond market was a $2.25 billion bond used by the Washington Public Power Supply System to construct two nuclear power plants. Nuclear power failed because, in the end, it is just one of many ways to generate electricity. In comparison with other choices, nuclear power proved to be one of the most expensive ways to produce a kilowatt-hour.
Nuclear power lost its market primarily to coal-fired power plants decades ago. However, coal is one of the largest carbon dioxide emitters, and now recent actions by state regulators, environmentalists and Wall Street have resulted in a virtual moratorium on new U.S. coal-fired power plants. The nuclear industry seeks to exploit this, by promoting the message that nuclear power is our only choice left – regardless of cost.
Some U.S. utilities are now proposing a new wave of nuclear plants. However, recent cost estimates are causing "sticker shock" – at least $9-$12 billion per plant – roughly double the $5 billion per plant estimated just last year. Few private projects in the history of the world have been so costly.
Making a leap from economical coal-fired plants, straight into buying a nuclear power plant is akin to shopping for a Rolls Royce, because your good old Chevy died. Sure, the Rolls Royce will get you around – but can you afford the payments? Will utility customers be happy to pay so much more for electricity?
At $9 billion for an 1100 megawatt nuclear plant, nuclear generating capacity is more than 12 times the price of the same power capacity in gas turbines, and 2 to 3 times more costly than comparable power output from wind farms. In addition to costing far more, the nuclear plants would not come on line for at least 10 years, delaying reductions in greenhouse gases by at least a decade.
Faced with such bad numbers, the nuclear industry has admitted it cannot find backing from Wall Street. Instead, the industry is turning to taxpayers. Congress has authorized $18.5 billion in Federally guaranteed loans for new nuclear plants. This will only be enough to fund two plants, so the industry is pushing for hundreds of billions more. The Congressional Budget Office has estimated the risk of default on these nuclear loans to be at least 50 percent. This massive new outlay for nuclear power would eclipse all public funds for all other energy sources combined.
The nation is now reeling from the aftermath of people buying homes they could not afford, because someone was reckless enough to loan them the money. Do we want our utilities to buy power plants they can’t afford?
The taxpayer funded banquet for the nuclear industry would not end with power plants. This initial pork would be followed by taxpayer subsidies for fuel enrichment, plant decommissioning costs, and perpetual taxpayer funds for thousands of years to maintain the nuclear waste.
There is another way. Most utilities across the country have adopted a strategy of prudence, recognizing we are finding our way to a renewable energy economy. These utilities are using gas turbines as an inexpensive way to add generating capacity needed to assure reliability of power supply. They then minimize actual fuel consumption, by purchasing wind and solar power and funding improved efficiency. Midwestern utility Xcel Energy, a leader in this approach, plans to reduce greenhouse gas emissions by 20% by 2020, while increasing output and keeping rates affordable.
Large solar electric farms are now being installed in the desert Southwest, and wind farms chiefly on the Great Plains. This is already making a big impact. Latest figures from the American Wind Energy Association show new wind farms made up about 30% of new U.S. generating capacity in 2007. Wind energy is now cost competitive even with coal. The U.S. Department of Energy recently announced wind energy can provide 20% of our electricity by 2030, equal to nuclear energy’s current proportion.
The sun does not shine nor the wind blow all the time, so peak solar and wind power can be stored using simple compressed air technology, to provide a steady source of power. Mason, Fthenakis, and Zweibel (Scientific American, Jan. 08) show by 2050 these technologies, together with sporty new plug-in hybrid automobiles, can completely eliminate our need for imported oil, with renewables producing 69% of U.S. electricity. Additional technologies to provide even more clean energy include plasma generation plants that cleanly burn municipal waste, cellulosic or algal biofuels, geothermal, and ocean source generation. With no federal loan guarantees, billions in venture capital is flooding into renewable energy, a new growth industry.
We need not accept the message of fear that nuclear power is our only choice left. There are a lot of ways to generate a kilowatt-hour.
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Craig Severance, CPA, is the co-author of "The Economics of Nuclear and Coal Power" (Praeger, 1976). He is a practicing CPA in Grand Junction, CO, and has received the honor "Top 10 Scorer" on the CO CPA Exam. He and his wife Dr. Avis Severance, D.O., own a Net Zero Energy medical clinic that obtains all its energy from south-facing windows, tubular skylights, and a 10KW solar photopholtaic system.
Wednesday, June 18, 2008
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