New Study Shows Nuclear Economics Worse After Fukushima
March 24, 2011
SOUTH ROYALTON, VT -- Japan's nuclear crisis and other nuclear incidents make the construction of new nuclear reactors, which has been uneconomic in market economies, even less attractive, according to a new study at Vermont Law School.
Mark Cooper, a senior fellow for economic analysis at VLS's Institute for Energy and the Environment, discussed his findings in testimony Thursday before the Standing Committee on Natural Resources in the House of Commons in Ottawa, Canada.
Cooper's analysis of the history of nuclear accidents and their impact on the economics of nuclear reactor construction shows a clear correlation between major incidents and increases in costs.
The construction costs for reactors completed after Three Mile Island (TMI) but before Chernobyl were 95 percent higher than those completed before TMI, which resulted in electricity costs that were 40 percent higher, according to Cooper. The construction costs of the reactors completed after Chernobyl were 89 higher than those completed between TMI and Chernobyl, which resulted in electricity costs that were 42 percent higher. The cost escalation started with TMI and persisted. Its primary cause was the lengthening of the construction period. Contemporaneous accounts and analyses shortly after TMI point to design changes required by safety concerns. The trend remains the same after Chernobyl.
"The high risk, cost and long lead times of nuclear, combined with the rich portfolio of alternative resources available to meet electricity needs at much lower cost and risk for decades, means that the idea of a nuclear renaissance never made economic sense," Cooper said. "The idea that a renaissance would involve construction of large numbers of reactors in a short period of time was particularly problematic from both the economic and safety points of view. There was no reason for the government to put taxpayers and ratepayers at risk by overriding the judgment of the capital markets, and there is less reason today. The economic analysis that was used to create the myth of the ‘nuclear renaissance' vastly underestimated the economic cost of nuclear reactors and totally ignored the societal impacts of nuclear reactors. The economics of nuclear reactors was bad and economics will likely be dealt another blow by the Fukushima incident."
Cooper, who has testified more than 350 times before federal and state legislatures and regulatory bodies on energy, said policy makers, regulators and financial analysts would be irresponsible if they did not thoroughly re-examine energy policy, safety and the economics of nuclear reactors in light of Japan's nuclear crisis. "If they do what they are supposed to, nuclear reactor construction will be much more costly and much less inviting as a policy option as a result of the Fukusima accident."
Nuclear utilities have sought to secure massive subsidies that shift the risk of nuclear construction away from utility stockholders onto taxpayers, in the form of governmental loan guarantees, and ratepayers, in the form of advanced cost recovery, but plummeting natural gas prices, declining demand growth and stable costs for other low carbon alternatives have resulted in cancellations or postponements of nearly all of the almost two dozen projects that were talked about or proposed, Cooper said.
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