Nuclear power and crony capitalism

February 16, 2010

Give the POTUS some credit for proposing something, anything on domestic policy that is certain to irk his base. Reuters:

President Barack Obama announced $8.3 billion in loan guarantees on Tuesday to build the first U.S. nuclear power plant in nearly three decades in a move designed to help advance climate legislation in Congress. … The loan guarantee will go to help Southern Co. build two reactors at a plant in the state of Georgia. “Even though we’ve not broken ground on a … new nuclear power plant in thirty years, nuclear energy remains our largest source of fuel that produces no carbon emissions,” Obama said after touring a union education center in Lanham, Maryland. “To meet our growing energy needs and prevent the worst consequences of climate change, we’ll need to increase our supply of nuclear power. It’s that simple,” he said.

Yet how viable is Big Nuclear without the help of Big Government? An interesting analysis from Cato’s Jerry Taylor:

Tufts economist Gilbert Metcalf, for instance, has calculated that, under current law, the levelized cost of nuclear power in the United States is 4.31 cents per kilowatt hour (kWh). Coal-fired electricity, on the other hand, cost 3.53 cents per kWh and “clean” coal cost 3.55 cents. But even these nuclear estimates are almost certainly too low. That’s because Metcalf uses an “overnight cost” (construction costs minus financing costs) figure of $2,014 per installed kilowatt (kW) which is much too low. The Energy Information Administration (EIA) puts this cost at $2,475 per kW at present-although even this figure is suspicious because it relies on a worldwide average for nuclear power plant construction-including the grossly unreliable estimates from state-managed economies. The Standard & Poor’s overnight cost estimate of $4,000 is likely the most reliable because it is based on nuclear plant construction costs in economies where labor and material costs are very similar to those found in the United States. Industry analyst Jim Harding, who uses overnight cost figures similar to Standard & Poor’s, puts the levelized costs for new nuclear power generation at 12-15 cents per kWh right now.

Will conservatives who complain about government debt guarantees to Wall Street complain about guarantees to energy companies?

7 comments

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I’ve always thought the chief problem with nuclear power wasn’t the safety angle or inherent complexity (despite its simple concept), but the fact that it is an enormously expensive way of generating electricity. The ‘overnight’ figure you mention certainly quantifies what I’ve long believed about nuclear power – it just costs too much! A shame that, with all the coal reserves in North America, leftist ideologues can’t abandon their hostility to King Coal or their belief in ‘climate change’. More nukes coming, I guess.

Posted by gotthardbahn | Report as abusive

To add to the previous comment, these facilities are also unable to buy their own operating insurance because no private insurer is big enough to do so. They operate safely so it hasn’t been an issue but there is no doubt that nuke plants are not cost-competitive with fossil fuels.

However, they work. Solar panels, wave power, windmills, are all footnotes to the amount of energy we need and wasting money on them is like buying a BMW for your teenager. Great if you can afford it but don’t try to justify it based on her need for transportation.

On the other hand, nukes do provide something like 75% of the electricity in France. Once they are up and running you can actually get power from them, which for a non-carbon energy source, is unique.

There may actually be situations where it makes sense to use them but getting the government out of the way first is essential to making sure that sense is applied.

The nuclear plant was a concession to the republicans. He wasn’t all to keen on the idea when he was first campaigning. That money could have gone to spur clean technology investment.

Corporate interests have their hands so deep in our system that public officials can’t even do their jobs without corporate lobby interference. Remove corporate citizenship and bloated initiatives like this will be a thing of the past. Give the government of the people back to the people.

Ever wonder why so much of what goes on inside the nuclear industry comes wrapped in secrecy and obscene amounts of lobbying propaganda? Having been around it, I can tell you.

It’s because it never works the way it’s supposed to, and always to the detriment of taxpayer health and expense. No industry on earth creates more toxic waste with less of an exit strategy. On top of which there’s absolutely nothing safe about nuclear energy, other than being safe to say there are too many ties that bind – in this case – the Obama administration to Exelon and to the Nuclear Energy Institute. At which point, billions of dollars that should never change hands, change hands.

On all counts, this decision is wrong. If it takes conservatives to decipher its numerous flaws then – bring on the conservatism, stat!

Posted by The Bell | Report as abusive

Indeed it would be easier, and more cost effective to run a crude fossil boiler, or perhaps combined cycle turbines. The idea of energy diversity needs to be employed. What would’ve happened if the Federal Reserve Bank only owned debt from say Lehman Bros.? Creating a envelope of energy security by employing all available resources the country can better respond to highly volatile commodities. When studying the grid allowances need to be made for de-rating, and unplanned outages. If we look at adverse weather conditions, we see where gas supplies can be temporarily restricted. In creating a diverse portfolio an investor can weather most storms, and so the nations electric grid needs no less consideration. The actual costs associated with the construction per kwh will vary dependent on locations, reactor type, size and availability of materials. The basic economic fundamentals exist independently, and due to infrequent construction contain no average. Most recent construction work has been upgrades of previous sites, therefore new costs are not available. Indeed when we purchase a house do we look for a shanty on stilts, or an estate on a foundation?

purified gold in inflationary time , that is what it is alike . why? because the american centrifuge will deliver fuel at spot prices never being estimated possible , about 1/10 of the actual ones. because of the reduction in energy costs to stream down the fuel. nowadays techniques have been developed in the 30s of the last century. obvious that there is time for a change.
the step to give again loans guarantees into the program seems to be a good landmark decision .

Posted by putzki | Report as abusive

The move by the President to support development of nuclear power in the U.S. is necessary and long overdue. The rest of the world generates much of its electricity from nuclear power. We have lagged behind in nuclear power out of fear (since Three Mile Island) and intense lobbying by the coal and oil industries. If the rest of the world can supply electricity through safe, efficient nuclear generation then I think we can too!

Posted by Brian | Report as abusive