Nuclear costs for nuclear energy?

Economic viability is essential within the capitalist society of the modern day – therefore nuclear energy must be capable of fitting within this system. Wider acceptance and more positive support will inevitably arise if it is capable of providing a cheaper source compared to traditional fossils fuels. The amount of money needed for fossil fuel extraction is expanding as the extraction sites are increasingly positioned in complicated environments – along with the quality of the fuel declining (Brook 2014). Fossil fuels are therefore economically on the decline – could nuclear be seen to revitalise the affordable energy market?

The answer to this question is yes – France for example is seen to provide some of the cheapest electric in the world, with 75% of it generated from nuclear sources (Brook 2014). Costs were kept low in construction by utilising structures that were already in place– this can be seen as an answer to the main economic challenge of the construction costs. For example many would argue that the £24 billion+ spent on Hinkley Point C is excessive (Telegraph 2015). However, France has shown with sufficient foresight and planning even the construction costs can be minimalised. For this economic viability to be achieved there needs to be an open market, so that a variety of technologies can be tested rather than subsidies causing the domination of one particular type (Brook 2014). Furthermore long term policies are essential in order for the sustainability to be achieved, whilst the standardisation of plants across the country will enable a unity in terms of equipment and needs. This will therefore prevent additional costs being required for varying or specialised power plant requirements (Brook 2014).

When comparing nuclear to other energy sources it would appear far more attractive to the consumer as it is far less sensitive to fuel cost increases. Therefore, it is far more consistent through economic fluctuations and will provide a more sturdy cost to public electric consumers (Brook 2014). This is exemplified by the stability of low costs in the US for the last 20 years (Figure 1). This stability is based on the evidence that the uranium price increase in the early 21^st century caused only the generation costs to increase - whilst the conversion and fuel fabrication costs (the last stage of turning uranium to nuclear fuel rods) remained stable (WNA 2015).

Figure 1 - Production costs 1995-2012 of different energy sources (World Nuclear Association 2015).

Countering this potential are the severe economic costs that can arise with nuclear disaster – these have been previously noted in regard to the clean-up process in Eastern Europe following Chernobyl and the mass electricity cost increase in Japan as larger proportions of the national supply had to be reverted back to imported fossil fuels!

Further economic concerns are seen with Hinkley Point C and the imbalance in construction costs. These figures will likely be central to many anti-nuclear arguments. The Telegraph (2015) claims that Hinkley Point C may only produce 3.2GW of energy despite costing £24+ billion, compared to the 2GW energy produced from a gas-plant that costs only £1 billion. Clearly the initial costs are far higher – however if looked at over the long term it may be suggested that the savings in terms of fossil fuel extraction and climatic regulation costs may be positive. Nevertheless, it is debated as to whether nuclear energy is economically competitive against the traditional coal and gas (MIT 2012). As the sector develops, with reduced construction time and lessened operating costs then it may gain future competiveness. One particular policy that could push nuclear to the forefront of energy choice is the progression of global carbon credits, or emission taxes (MIT 2012) – the carbon-free uranium source would therefore gain an advantage. It may be seen that there is the need for government subsidies for those organizations that take the first steps of nuclear expansion (MIT 2012). This could provide a wider image of economic possibility, which would stimulate a wider growth. This will be dependable on the governmental and public stance in regard to nuclear energy – which as mentioned in the previous blog is contextually variable.

Artists' impression of Hinkley Point C, issued by EDF (Guardian 2015).

It is claimed by the World Nuclear Association (2015) that nuclear has now become economically competitive – unless it is placed in direct competition with new, low cost stores of fossil fuels. Therefore such competiveness is likely to enhance in the coming years as fossil fuel stores are continually depleted.

Despite a lowered sensitivity to resource costs, nuclear cannot be seen to be immune from cost alterations – especially with the well documented uranium supply questions. Current stores of uranium are thought to be available to provide energy for a further 80 years if current use levels continue (Kidd 2011), greater than the 53 years’ worth of oil known to remain (BP 2014). High costs also exist within the exploration procedure with costs increasing throughout the first decade of the century, with a total of $5.75 billion spent between 2003-2009 (Kidd 2011). If nuclear were to expand however then costs of uranium would need to increase initially – with it believed that if the cost was doubled then this would lead to a 10x increase in economically viable resources (Kidd 2011). This would be based upon increased exploration funds and greater resources reclassified as being economically viable. Therefore costs may have to increase in order for a longer term project to be realistic.

Nuclear energy has been seen to increase with economic growth – however it is a bidirectional relationship in which once the nuclear increases then the economic growth declines (Apergis 2010). It is thought that the economic growth may be hindered by large construction costs as well as the costs related to dealing with the waste which is produced – which will be detailed to a greater degree in a future post. This may suggest therefore that global expansion may not be possible, the extreme costs may mean only rich, developed nations could establish a nuclear network – as poorer nations would not be able to deal with the high costs and slowed economic progression. As mentioned in a previous post, global inequalities in historic fossil fuel use will likely be relocated in nuclear and renewable energy capacities.

The costs attributed to nuclear construction are globally variable, with China seen to have construction costs of $3,500/Kw energy (WorldNuclear Association 2015), this is 1/3 less compared to the EU costs for example. This variance in costs is likely to be attributed to labour costs, experience in the recent construction of reactors and evidence of quicker licensing of projects (World Nuclear Association 2015). It is believed however that over time the Asian cost will stabilise and the EU and US costs will lower to similar levels as greater experience and efficiency is gained.

Uranium has multiple cost benefits compared to fossil fuels such as coal – for example, cheaper transportation costs due to the fact that within the same weight of resource (1kg), uranium can provide 20,000x the amount of energy than coal (World Nuclear Association 2015)! Therefore the energy potential is far greater and less is needed to be transported to supply for the same number of needs – adding onto the benefit of uranium being carbon-free. 10% of the costs per Kw however are attributed to dealing with waste (World Nuclear Association 2015), which is an obvious issue due to the half-life of uranium sources – possible development to recycle waste however may increase the economic viability of nuclear energy.

The Nuclear Energy Institute displayed in 2015 that nuclear had the lowest average costs of electricity for operating facilities, in particular new, more efficient plants had $90/Mwh compared to $100 for coal (World Nuclear Association 2015). It is likely that this cost competiveness will further develop in future years.

Many may fear that the new nuclear plants may have to be publically funded – however evidence of economic profitability may lead to private investment as was seen with EDF and Hinkley Point C. Profitability has been achieved already, for example the “Indian Point Energy Centre” which is located near New York City. It is shown to generate $1.6 billion to the state economy and over $2.5 billion to the nation as a whole (World Nuclear Association 2015). Therefore such profitability is going to be privately engaged with to a greater degree based on the neoliberal desire for accumulation. Add onto this the fact that it generated over 10,000 jobs then it is clear that nuclear energy can be economically positive. Therefore from an economic standpoint alone a wider global expansion is likely to be supported. However, Indian Point was recently shutdown due to a fire in a non-radioactive area of the plant and a mass oil spill to the Hudson River (Guardian 2015). This provides a sobering image, that despite the economic benefits available there will always be the risks, which have the potential to make any economic benefit redundant.

Indian Point Energy Centre (Entergy 2015).

This evidence would suggest that in the long run nuclear energy is economically viable and more attractive than fossil fuels. There are the initial high costs, however the lower transportation costs and the greater energy produced per $ in many examples displays its capacity for expansion. For example in 2011 nuclear energy had the lowest production costs at 2.1c kw/h cost of production, in contrast to gas at 4.51c kw/h (IER 2012). The low and stable cost in the US for example displays its function to provide a desirable option for the wider public and business. Obviously there are the mass economic damages that can arise from post-disaster recoveries. However, if suitable investment is placed into the power plants to ensure safety and efficiency then only positives can be viewed. The stores are limited to provide for around the next 80 years – however with the urgency that is needed to combat climatic change, my opinion is that nuclear should be used now. Harness the high energy capability and reduce emissions, therefore providing time for more politically acceptable sources such as wind and solar to progress to levels where they can take over the energy needs when uranium depletes.