With the New Energy Bills in Congress, the U.S. Government May be the Biggest Thing Between Us and a Renewable Future

By Russell Lowes, February 11, 2010

It shouldn’t be this way. The Government should be part of the solution – not a handicap. However, this is how the landscape has been settling and it is becoming apparent that with the influence of special interests, nuclear energy is going to get a huge amount of our tax dollars, while other, much cheaper energy strategies, are shorted. With so much potential for energy efficiency, this would give us time to make the transition to renewables.

With the new bills in Congress EE by state Graphic2 DOWNSIZED

Some people say that nuclear energy has become outdated. I would go so far as to say it was never in vogue, in a valid way. It has always cost too much. It has always taken too much water. It has always had too many environmental impacts. And, it has always had too many security risks. I could go on.

Nuclear energy is so expensive compared to the realistic options, like a blend of renewables and  energy-saving efficiencies, that we do not need any more nukes anywhere in the world. I cannot emphasize this enough.Yet, the current energy bills in Congress promote nuclear energy to the tune of a 150% expansion.(1)

To fully appreciate the wrongheadedness of this policy, it is important to understand the actual cost of nuclear power per kilowatt generated. Here are the details:

Construction costs: Nuclear plants cost a lot to build. A nuclear plant in the last round of nuclear reactor construction cost $3100 per kilowatt to install in 1988, running out the inflation with an online inflation calculator (like the Bureau of Labor Standards’ http://data.bls.gov/cgi-bin/cpicalc.pl) yields $5642 in 2008 real (adjusted for inflation) dollars.

Any nuclear plant that is being planned today will not be finished until 2022 or so, which if a 4% inflation is run out from the $5642, it comes to $9003 per kilowatt installed. This figure is probably low, as many plants that were canceled in the late 1980s were going to be much higher than the average $3100, but let us use this figure.

The next step in projecting nuclear costs includes projecting capital payback, meaning what the annual capital payback is over 30 years, the interest associated, plus fees and taxes. To make this simple for analysis, this is put in terms of a capitalized payback or levelized fixed charge rate of 14% per year for 30 years. So $9000/kilowatt of capacity times 14% equals $1260 to be paid per year for 30 years, for a total capital payback of $37,800 for each kilowatt of capacity, plus some fees for the last 10 years which I will ignore here.

The next step is to project the lifespan and the average percentage that the plant will deliver energy at (or capacity factor). I have looked the literature over extensively and believe the best estimates are 40 years and an 85% capacity factor. So take that 1 KW capacity times the 40 years times 8766 hours per year times 85% and you get the number of kilowatt-hours (KWH) that you are likely to get from that 1 KW of capacity, or 298,044 KWH. Divide this KWH figure into the capital cost of $37,800 and you get 12.7 cents per KWH for construction and related payback costs alone.

Operation and maintenance: Nuclear power plants are expensive to operate. After the initial outlay to build the plant, there is the additional cost of fuel,operation and maintenance, which an inter- disciplinary industry report called the Keystone study(2) found to be at 4.3 cents per KWH for the future. To take the capital cost of 12.7 cents per KWH and add the operating cost of 4.3, you get 17 cents per KWH.

Transmission and Distribution: Finally, you have to add in a transmission and distribution cost, which should be about 7-9 cents per KWH in the future, which bring us to about 25 cents per KWH. When you compare that that 25 cents per KWH cost of generating nuclear energy to the cost of saving energy, there is an over 8:1 ratio.(3) Surveys of our nation’s states that have energy efficiency programs show it costs $0.03 to save energy per kilowatt-hour saved. This is one eighth the cost of nuclear energy’s $0.25/KWH, not counting the long-term or other hidden costs of nuclear energy.

Energy efficiency includes all sorts of things, for example:

• Compact florescent lights (CFLs) replacing incandescent light bulbs;

• Improved refrigerator efficiency for households;

• Improved air conditioning efficiency for businesses and households;

• Reduction of raw materials to be manufactured to make the same products; and

• Improved architectural design.

A number of U.S. states have statewide programs that promote the use of energy efficiency. The success hasbeen most pronounced in California. See the accompanying U.S. map that tells you how much energy could be saved if each state simply went to California’s current level of energy efficiency.(4) Note that California is still dramatically improving. So for Arizona as an example, we will be able to save more than the 52% listed.

With such a stark reduction in energy consumption, many of our current electrical plants could have their useful lives stretched out, until renewables and other technologies come into play. That is why it is so outrageous that Congress is supporting an expansion of nuclear energy as a “solution” to our energy problem. First, after so many of your tax dollars have been spent by our government on nukes, it is outrageous that nuclear energy is still so expensive. Second, it is outrageous in a good way that energy efficiency is so cheap. Third, it is outrageous that since this price differential is so high that we would even be considering new nuclear – or coal – plants as an option any more.

(1) EPA Analysis of the American Clean Energy and Security Act of 2009, 6/23/09

http://www.epa.gov/climatechange/economics/pdfs/HR2454_Analysis.pdf

(2) Nuclear Power Joint Fact-Finding, The Keystone Center, June 2007,

http://www.ne.doe.gov/pdfFiles/rpt_KeystoneReportNuclearPowerJointFactFinding_2007.pdf

(3)American Council for an Energy Efficient Economy,

http://www.aceee.org/press/u092pr.htm,

also Saving Energy Cost-Effectively: A National Review of the Cost of Energy SavedThrough Utility-Sector Energy Efficient Programs, Katherine Fiedrich, et al., Sept. 2009,

at http://aceee.org/pubs/u092.pdf?CFID=4417970&CFTOKEN=99602900

(4)New Rules Project, Energy Self-Reliant States, October 2009, p. 25.

http://www.newrules.org/sites/newrules.org/files/ESRS.pdf

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