Opinion

Did Fukushima kill the nuclear renaissance No, that renaissance died right here at home

CORRECTION TO THIS ARTICLE: This column incorrectly references the “Electrical Power Research Institute.” It is the “Electric Power Research Institute.”

In the aftermath of the Fukushima Daiichi nuclear disaster in Japan, many wondered what the event’s impact would be on the nuclear renaissance in the United States. Those who follow the nuclear industry didn’t need eight months of hindsight to give an answer: what nuclear renaissance?

The outlook for U.S. nuclear power has worsened considerably in the past five years. Where once there were plans for new reactors at more than 30 different sites, today there are only five, and even those planned reactors might disappear. Only one is actually under construction, and to credit the industry with breaking ground on a new reactor is overstating its prospects.

However, none of this gloom is the result of Japan’s tsunami. On the eve of the Tohoku earthquake, U.S. nuclear power looked just as moribund as it is today. The cause of this decline is not renewed concerns about safety, or even that old red herring, waste disposal — instead, it is simple economics. Other technologies, particularly natural gas, offer much cheaper power than nuclear both today and in the foreseeable future.

In 2009, the MIT Future of Nuclear Power study released an update to its 2003 estimate of the costs of nuclear power. Estimating a capital cost of $4,000/kW and a fuel cost of $0.67/MMBtu, the study’s authors projected a cost of new nuclear power of 6.6 cents/kWh. Using the same modeling approach, the cost of electricity from a natural gas plant with capital costs of $850/kW and fuel costs of $5.16/MMBtu would be 4.4 cents/kWh.

What’s worse, the estimate of 6.6 cents/kWh assumes that nuclear power is able to secure financing at the same interest rate as natural gas plants. In reality, credit markets assign a significant risk premium to nuclear power, bringing its total levelized cost of electricity to 8.4 cents/kWh, nearly twice the cost of natural gas power. Unless the capital costs of new nuclear power plants turn out to be significantly less than what experts expect, or natural gas prices rise considerably in the near future, there is little reason to believe that any new nuclear plants will be built without significant subsidies.

This is not to say that nuclear power could not make a comeback within the next 10 to 20 years. But before nuclear can once again be considered a credible competitor to fossil fuels, four changes must happen.

The first problem facing nuclear power is its high capital cost. It is possible, of course, that one of the new reactor designs put forward by General Electric, AREVA, Westinghouse, or elsewhere will prove to cost significantly less than the $4,000/kW estimate being circled about, but such chances are low, and it is just as likely that these reactors will come in at higher-than-expected costs. If AREVA’s recent forays in Finland and France are any indication, $4,000 might prove a rosy number. Assuming we don’t live in a world in which nuclear power costs less than what we expect, nuclear is going to need to lower its capital costs, ideally to somewhere in the area of $3,000/kW.

Reducing capital costs starts by ending the obsessive focus of universities on improving the fuel utilization of reactors. A significant fraction of nuclear engineers at MIT and other institutions across the world are spending their time researching new reactor types, developing enrichment and reprocessing technologies, or involving themselves in other areas in which the goal is to lower the cost of fueling a reactor. This is folly; fuel costs represent roughly 10 percent of nuclear power’s total cost, and only five percent is the uranium itself — even if nuclear fuel was free, it wouldn’t be enough to make nuclear cost-competitive with natural gas. Instead of funding yet another Generation IV reactor design or one more study of closed fuel cycles, the Department of Energy and Electrical Power Research Institute should put serious money into the development of technologies that offer potential improvements to capital costs — of the research at MIT, two good examples are high thermal efficiency fuels (fuel pins with geometric designs that make it easier to remove heat from the reactor), and nanofluid coolants, both of which could make it possible to get more power from the same reactor.

The second problem facing nuclear power is its high borrowing costs. To some extent, this problem is a natural consequence of nuclear power plants taking a longer time to build than natural gas plants and having a much higher construction risk (the capital cost of natural gas plants is well-established relative to that of nuclear power). And likewise, to some extent, this problem might resolve itself over time, both as the completion of nuclear plants helps nail down the true capital cost of nuclear power, and as vendors add smaller, modular reactor designs to their list of offerings. But much of the reason behind the high interest rates on loans to nuclear construction is that the industry is scoring an own-goal. In the current relationship between utilities and reactor vendors, utilities are asked to absorb all of the costs of a vendor’s overruns — if a reactor ends up costing a couple billion dollars more than the vendor quotes, it’s the utility that is expected to make up the difference.

This is terrifying for a utility’s creditors. The largest utilities in the United States have market capitalizations in the area of $30 billion, while most hover closer to $5 billion. If a nuclear project should fail, the utility might go completely bankrupt, leaving nothing to those foolish enough to lend them money. Accordingly, nuclear projects face higher borrowing costs than other electric projects. It doesn’t have to be this way — if reactor vendors and construction companies helped share the project risks posed by nuclear plants, borrowing costs would be lower. It is also possible for the U.S. government to shoulder some of the risk — but after Solyndra, few legislators have an appetite for letting energy companies push their risks onto the taxpayer.

Next, the United States is going to have to adopt some form of carbon tax on electricity generation, or offer a comparable subsidy to the nuclear industry. An appropriately sized carbon tax of $20/ton CO2 would raise the cost of natural-gas-generated electricity by 0.7 cents/kWh, while having a negligible impact on nuclear power.

And finally, the nuclear industry is just going to have to catch some luck and see natural gas prices rise. That’s a tall order, given the new resources being opened up by hydraulic fracturing and the slowed consumption of natural gas brought about by the recession. But it’s not entirely outside of the realm of possibility — the futures market for natural gas has been wrong before.

Nuclear power is down, but not out. With a proper R&D focus, good business practices, appropriate policy, and a little luck, the gulf that separates nuclear power from its competitors may yet be bridged.

Still, it’d be best not to hold your breath.

12 Comments
1
american over 6 years ago

Wow. You sure wrote a bunch of baloney here. Japan is about one-third exclusion zone with irradiation, Tokyo may at some point no longer be the capital, fissioning corium continues to drill and spew, MIT and others continue to cover up the fallout here in the US, and you're breathing in hot particles. Who knows if an earthquake or solar flare may make the US northeast alot like Fukushima prefecture? Odds are it will happen. Then you can write about how safe it is to live there, and how the outlook for nuclear power is down, but not out.

2
Bob in Philly over 6 years ago

What would the cost of nuclear power be if the industry were required by US regulators to build a reactor core which could actually be contained and not a danger to mankind?

.25 cents per KWh? .50 cents per kWh? More likely a $1.00 per kWh.

3
Concerned Citizen over 6 years ago

There are so many other, less costly alternative ways to "boil water" that it boggles the mind why this enormously expensive nuclear industry industry even exists! I have learned by reading several articles online, is that the only reason it's still around is because the by-products of nuclear power plants feed the military industry their depleted uranium to fights their wars. I don't know if that is true, but I do know that radiation is harmful, even in low doses. We don't need nuclear power plants! We get enough radiation from the sun. Use the sun's power - go solar! People have lived without them for centuries before us, and we can do the same now.

4
Ed over 6 years ago

Nice article. I strongly support nuclear power as a no/low carbon emission technology - mostly because I've seen no demonstrated evidence indicating renewables alone can achieve the necessary reductions. Germany's performance over the next few decades will help tilt the scales one way or the other. But I would not advocate the world waits that long to act.

Regarding your comments on RD, I always thought advanced fuel cycle RD was more about helping address back-end / waste management issues. Put another way, what is the cost /kWh including the back-end? How can I seek demonstrated evidence of renewables performance when a comprehensive cost analysis of the COMPLETE nuclear fuel cycle is similarly unavailable?

Still, my own scale drifts toward nuclear. Remember that in Japan, at the most severely affected site - Daiichi, the discharged / spent fuel did not contribute to the release. This would indicate that there's time to solve nuclear's back-end challenges and no need for immediate action. If one believes the vast majority of peer reviewed experts, the same can not be said for fossil fuel emissions.

5
adrienrain over 6 years ago

How much territory will the human race end up ceding to these monsters over the many centuries they will remain dangerous? How much genetic integrity will be sacrificed to the holy grail of cheap nuclear. It's an illusion. At every stage, nuclear power is subsidized through taxes. And, as no insurance company will insure them, WE the taxpayers do, under the Price Anderson Act ..... and to the laughable liability limit of 11 billion. dollars! Already, cleanup and compensation of Fukushima is edging towards a trillion. That won't count the care of damaged children not yet born. People who have the means to move out of Japan, and understand the situation, are leaving already.

If nuclear energy is so viable, let the owners and builders buy insurance on the open market, without govt subsidies and guarantees ..........

That will put a stop to their gallop!

6
Dave over 6 years ago

All these nuclear plants use uranium or plutonium or a hybrid of these materials. These a great materials for making weapons and waste but not electrical production.

The other nuclear fuel is thorium, it has a higher energy density, it is more plentiful, it can use past and present nuclear waste as fuel and its final radioactive byproducts have shorter half-lives than current nuclear fuels.

Watch this educational video on the thorium fuel cycle:

http://www.youtube.com/watch?vAZR0UKxNPh8

7
Keith Yost over 6 years ago

1) You sound like a person who is worried about chemicals in airplane contrails. But congratulations, you've found me, a lowly foot soldier in the grand conspiracy to obscure the truth from the world on behalf of "Big Nuclear." Don't judge me too harshly, I was just following orders from my evil masterminds. And you're dead right on those solar flares-- I hear they'll make a nuclear plant spontaneously burst into an atomic fireball. That's just science.

2) Expert estimates of the risk of a nuclear meltdown in modern plants is estimated at 1 per 10000-100000 reactor years. The GE ESBWR has a risk of around 1 in 1000000 per reactor-year if you factor in the passive safety features. So our mean estimate is not $1 / kwh, it's about 6.6 cents / kwh, i.e. unchanged.

3) What you've read is wrong. Nuclear's revenue stream from depleted uranium is negative, not positive, and it accounts for a vanishingly small portion of its activities. Modern solar is roughly 4 times as expensive as nuclear, and around 6 times more expensive as coal/natural gas. If you're willing to pay 6x your current electricity bill, that's fine-- but you lack the right to force others to do the same.

4) The cost of waste management is 0.1 cents per kilowatt hour. The industry pays that money to the government, and several studies have shown that it is a large enough amount to safely dispose of the waste.

5) The total volume of spent nuclear fuel can fit inside a football field, a few meters high. So if land use is your thing, don't worry, you wont notice it. Nuclear power has very low subsidization-- an exception is in the first 6,000 MW of new nuclear built in the U.S, but that's because the first movers are providing a positive externality. Price Anderson hasn't cost you a dime so far, so even if we agree that it isn't needed / shouldn't be there, it's a stretch to say that American taxpayers have paid anything. As for your assertion that the Fukushima clean-up is going to cost over a trillion dollars, you are grossly misinformed, so much so that I feel free to disregard your views entirely. Do you understand how much a trillion dollars is? It's an amount large enough to rebuild every nuclear power plant in Japan twice, with enough money left over to rebuild every single power plant in the United States twice. Finally, the population of Japan has suffered no ill consequences of Fukushima, and are not likely to in the future.

8
Keith Yost over 6 years ago

6) Thorium is a joke. And even if it weren't a joke, you're not going to lower the capital costs with it. Thorium is the gold standard for the type of pointless nuclear research that I criticized in the article.

9
Omri over 6 years ago

The author misses an important all-too-human factor at work in Fukushima: a nuclear reactor is such an enormous investment of capital and RD, that the people who invested it will be extremely reluctant to admit if their investment is a lemon. The culture of lies that sustained the Fukushima reactors has pervaded all of Japan, and was only revealed after this disaster. Do you want that kind of risk in your country?

10
Rod Adams over 6 years ago

Keith - you did a fine job of pointing out the economics associated with nuclear energy decision making using today's assumptions for natural gas prices and today's assumptions about the sovereign risk associated with obtaining permission from the US government to operate reactors - even reactors using long proven technology with exceptional safety records.

However, the error bars associated with natural gas price predictions should include the known case of gas prices inexorably rising to a level of $12-20 per million BTU instead of staying in the range of $5 per million BTU. Those prices are not far fetched; they existed before the economic collapse of 2008 in the US and they exist today in places like Japan and South Korea that depend on imported LNG. When gas prices are high, gas fired power plants are often idle, leading to very high per kilowatt hour capital charges.

For commenter #1 - please tell me exactly how many people have been injured by all of that measurable contamination associated with Fukushima? Then tell me how many people suffered injuries as a result of the spilled petroleum products and the explosions and sustained fires at the LNG receiving terminal at Chiba - which burned uncontrollably for 10 DAYS after the Great North East Japan earthquake and tsunami.

I'll answer the first question - zero injuries.

The answer to the second question has been completely unavailable despite a lot of search effort. I do know that the fact of the fire and explosion is real, but apparently that facility was completely unmanned and the black smoke was completely safe for everyone who breathed it. (NOT)

11
Anonymous over 6 years ago

Dear Rod: there have been, to my knowledge, at least 4 deaths and a number of serious injuries (radioactive burns) directly from the clean-up at Fukushima. There was a documented spike in infant mortality in west coast hospitals - Seattle and San Fancisco - just at the time that the radioactive cloud passed over. It's not been reported much in the US press but try Der Spiegel ( for those who can't read German, there's an English Language Edition.)

The wider damage will probably never be known - just like climate change or even cigaretts, we cant PROVE that it'S that particular smokestack that started the process of cancer that killed you 10 years later. Does it mean we shouldn't try to controll the smokestacks? Just imagine if all that money and brains had been spent on solar and wind? I understand the emotional and dramtic pull ( perhaps the need for atonement as well?) of "swords into plowshares" or the scientific attraction of " the life force of the universe" but let's face it: without massive government support (including insurance, subsidies, loan guarenties, rd etc.) there would be no nuclear power. Why not let the market speak in this case? - if sanity won't

12
Anonymous over 6 years ago

newest from the spiegel: Yummy!

Besonders wichtig sind die Csium-Messungen. Das radioaktive Element entsteht neben anderen radioaktiven Isotopen als Spaltprodukt bei der Kernspaltung von Uran. Im Gegensatz aber etwa zu Jod 131, das nach rund acht Tagen zur Hlfte zerfallen ist, hat Csium 137 eine Halbwertszeit von 30 Jahren. Deshalb ist es besonders gefhrlich, da es auf Jahrzehnte Auswirkungen auf die Landwirtschaft und das Leben der Menschen in den betroffenen Gebieten hat.

Nach einer Anfang der Woche verffentlichten Studie japanischer Forscher ist der Boden in weiten Teilen Ost- und Nordostjapans mit Csium 137 kontaminiert. In der Prfektur Fukushima liege die Belastung ber dem Grenzwert von 5000 Becquerel je Kilogramm Boden, in den Nachbarprovinzen Miyagi, Tochigi und Ibaraki nur knapp darunter. Dort seien unbedingt detaillierte Messungen ntig, da die Kontamination lokal stark schwanken knne, so die Forscher.

just do google translate, you'll be fine.