The cost of nuclear power

Fourth Nuclear Power Plant and Fulong Beach

Taiwan’s Fourth Nuclear Power Plant under construction in August 2009 with Fulong Beach in the foreground.

I had a letter in the Taipei Times today on the subject of nuclear power. It argues that the high cost and long lead times of nuclear power projects defers investment in cleaner and safer forms of electricity generation. The text of the letter is below followed by details about anti-nuclear protests in Taipei.

Nuclear power is again in the spotlight following a serious nuclear incident in Japan triggered by last Friday’s earthquake and tsunami. This has forced people in Taiwan and around the world to reconsider the risks of nuclear power plants.

Advocates of nuclear power frequently downplay these risks, while those who oppose nuclear power seek to emphasize them.

Instead of focusing on risk, I would like to present an argument against nuclear power based on financial considerations.

Construction of Taiwan’s Fourth Nuclear Power Plant began in 1997 and it was expected to begin operations in 2009. However, it has been delayed a number of times and is now expected to begin operating in 2013.

Several hundred billion New Taiwan dollars have been invested in the plant, which has yet to generate a single watt of electricity. What if that same amount of money had been invested in renewable energy projects beginning from 1997?

First, these projects would have begun to generate power in a much shorter time frame. Planning and construction of a wind or solar power plant should take no more than two years, compared with more than a decade for nuclear power. In the time frame of more than a decade Taiwan could have developed renewable energy capacity that would make a significant contribution to the nation’s energy needs.

Second, the development of wind and solar power plants would have stimulated the development of industry in Taiwan that could have manufactured these technologies for export. While these industries have developed in Taiwan in recent years, Taiwan could have become a world leader if it had promoted these industries earlier.

The key point is that nuclear power is a bad investment. Everyone would be better off if the money was invested elsewhere. This would avoid the risks associated with a nuclear accident. It would also spur the development [of] alternatives that are inherently safer.

* * * * *

Anti-nuclear protest in Taipei, 20 March 2011

Anti-nuclear activists protested outside the Executive Yuan in Taipei yesterday. They called on the government to halt construction of the Fourth Nuclear Power Plant in Gongliao. The Taipei Times has more details. There will be another anti-nuclear protest in Taipei on Sunday 20 March 2011. Meet at 1:30pm at the corner of Xinyi Road and Shaoxing South Street. More information here (中文).

19 thoughts on “The cost of nuclear power

  1. David,

    Your letter contains no financial calculations or comparisons, nor even any numbers. At best, the financial costs of a large scale solar plant using today’s tech (for ’97 tech the figures will be worse) are approximately equivalent to that of the Longmen plant once we account for the sevenfold difference in power output. Of course there are other economic costs to be taken into account for nuclear, but this is no less true of solar and other renewables. Your argument on financial aspect alone is weak – a brief rebuttal here, and follow-up comments here.

  2. Mike,

    I have not conducted any detailed analysis. I just want to put the idea out there for discussion and to encourage people to think about the issue from another perspective. Here are some more points to consider and further discuss.

    I admit that it is quite likely that the equivalent investment in wind and solar would result in less energy generating capacity than nuclear. However, there is still an urgent need to develop renewable energy on a larger scale. Some of the costs will come down as a result of this and there will also be improvements in the technology over time.

    Both nuclear and fossil fuels are finite resources. What happens several decades, or at best a century, down the track when there are no longer adequate reserves of fossil fuels or fissile materials available? Nuclear energy can only be considered a stop gap measure in the transition to a new energy future. We need to start investing in renewable sources now rather than waiting until the capacity of fossil fuel and nuclear power has gone into terminal decline.

    There are also fundamental differences in the safety and environmental impacts of renewables and nuclear. Nuclear has significant upfront energy costs for building the plant and mining/processing the fuel. There is also the need to manage the waste that goes well beyond the life of the plant. There is a relatively small upfront energy and pollution cost in producing a wind turbine or solar plant. Once they are in place they operate on a fuel (wind or sunshine) that is free and inexhaustible.

    I hope you understand that I can’t fit all these issues into a 300 word letter to the Taipei Times. I am aware that this is a complex problem with no easy solution. I also acknowledge that some environmentalists are overly optimistic about the ease of developing renewable energy sources. I am a realist on this issue though.

  3. Of course there are other aspects to this debate, but the financial one which you raised is not going to be won by the renewables and the basic reason for that is their appalling inefficiency – even after taking into account the forecasted improvements over the next few years.

    On the costs of renewables: the only reason anybody has ever considered them financially viable is because of the availability of subsidies (stolen money). Although all energy industries receive subsidies to varying extents, nuclear is, and will continue to be far better placed to turn a profit and thus remain viable than any renewable source. The day the solar industry develops small, cheap and efficient batteries is the day I become a solar-power cheerleader because that, all by itself, will significantly change the market context for the development of solar energy.

    On finite resources: the future availability of both uranium, and in my view more to the point, thorium cannot be described as a simple function of known reserves + current tech alone. Demand for further discoveries, plant improvement and the efficiency of re-use tech such as thermo-radioisotope batteries are all things that must be considered. By the time the first polywell fusion reactors come online, the availability of different kinds of nuclear fuels will need to be rethought again. More generally, the finite economic nature of energy resources – apart from being politically created – would be best dealt with by the removal of State subsidies from the energy industries thus allowing the market to establish more accurate prices and thus more effectively coordinate a shift to the most viable alternative sources of energy – which I agree will have to include solar to some extent.

    On environmental impacts and production costs: again you’re not thinking straight about the scale of costs David. Yes a wind turbine is cheaper and has less environmental impact than a nuclear plant – but in order to produce enough energy to compensate for the loss of a nuclear plant, how many wind turbines will need to built?!? It’s just completely out of the question.

    “I am a realist on this issue though.”

    You like to think you are, but I see little evidence that you grasp the economic dimension of industrial scale energy production.

  4. Mike,

    Can you define the “appalling inefficiency” of renewables? Perhaps the best measure of efficiency is EROEI or net energy.

    On this measure nuclear energy scores poorly. Estimates vary from 10:1 to negative and it is probably around 5:1. Even the more optimistic end of the range is not good.

    The EROEI for wind is typically around 18:1. This will vary according to the size of the turbine and the wind regime at the location. Also note, it’s much easier to calculate EROEI for wind as it’s a much simpler system.

    EROEI for solar PV is probably in a similar range to nuclear so not so great.

    I think you may be confusing efficiency with concentration. Nuclear provides a large amount of power from a small volume of material. Renewable energy is more diffuse in its nature.

    I will also add that I do grasp the economic dimension of this problem. The result of that is that I am extremely pessimistic about the possibility of continuing economic growth. This is probably where our viewpoints diverge most greatly. You are concerned with maintaining the present economic system based on the fallacy of infinite growth. I recognise the limits to growth and am thinking about how society can adapt to these limits.

  5. Mike,

    I will add some more to rebut your claims here. On the issue of subsidies the nuclear industry also relies on state subsidies. Nuclear power couldn’t exist in a free market.

    With regard to thorium nuclear power, the question you need to ask is what is stopping its development. If it really is such great technology then it would have been commercialised by now. The same can be said of other forms of power that are often said to be the next form of cheap, clean energy such as tidal or wave power.

  6. David,

    As a former employee in the refining industry and a current employee in the accessories for [fossil fuel] power generation, my knowledge in the details & comparisons of alternatives.

    However, I’d point you to a short commentary from Paul Krugman: “Later Marty Weitzman would formulate a law on this: the cost of alternatives to crude oil is 40% above the current price — whatever the current price is.”
    His commentary is mostly from economic research in the ’70s, but still interesting.

  7. Robert,

    Thanks for your comment and link to the interesting article by Krugman. The statement by Weitzman makes sense. Oil contributes to the cost of almost everything including nuclear power plants and wind turbines. I think it would also apply post-peak oil until some tipping point in reducing the dependence on oil was reached.

  8. David,

    On “efficiency” – the usual, non-envirocrypted sense of energy output relative to financial cost which is the salient category here since the context is that of a politico-economic decision. Your EROEI does not present a notion of efficiency with respect to human action.

    “You are concerned with maintaining the present economic system based on the fallacy of infinite growth.”

    You could hardly be less wrong. I’m in favour of a free market system, not the present system in which the State oughtistically presumes to involve itself at every level of the Market.

    “On the issue of subsidies the nuclear industry also relies on state subsidies.”

    Sure – I even said so in my second comment above.

    “Nuclear power couldn’t exist in a free market.”

    How would you know David?

    “..the question you need to ask is what is stopping its development. If it really is such great technology then it would have been commercialised by now.”

    It has already been, and continues to be, developed. You didn’t know?

    [In all probability I will not have time to respond until Sunday.]

  9. Mike,

    I think you will find there is a strong correlation between EROEI and the financial return on investment. We are talking about systems which are bound within certain physical and technical constraints. Where there is a disconnect between financial efficiency and energetic efficiency it would be because certain costs aren’t being accounted for. Examples of this in the real world are many. Coal fired power plants don’t account for the impacts of CO2 emmissions on the climate. Nuclear power plants don’t pay for the costs of long-term storage of nuclear waste.

  10. “I think you will find there is a strong correlation between EROEI and the financial return on investment.”

    David, please. Let’s suppose I have sufficient data available to me to compare a number of energy plants of different kinds. I run some basic stats and I find that, indeed, EROEI is strongly and positively correlated with financial return on investment after controlling for things like subsidies. What have I then shown? Bugger all, because such an exercise completely ignores the context in which an energy investment decision is to be made, and by whom (and with whose capital) it is to be made, and on whose property it is to be made. Example: you’re the government and you decide that, rather than build a nuclear plant on a relatively small area of land away from densely inhabited areas, you’re going to build wind farms, yet since windfarms require far more land to generate an energy output even remotely comparable to the nuke, you are forced to look elsewhere for land. Lots of lots of flat, wide open land on the planes where you can build wind turbines in sufficiently dense quantities to generate the requisite energy. So naturally you go to somewhere like Yunlin, and what do you then tell the farmers who “own” that land? If you were a private company operating without State-backing, you’d ask them to sell it to you (thus potentially ruining the nice little correlation between EROEI and financial return we saw earlier when the farmers hold out for the highest price they can get). But you’re not. You’re the government: so naturally you find a face-saving way to tell them to begone and then send the tractors round. But it’s OK because it’ll give you a strong correlation between EROEI and financial return.


    Your EROEI concept is at best, nothing more than a secondary guide. The common sense understanding of efficiency in terms of a product-$cost ratio is the primary guide to decision-making here, and this is necessarily the case because prices, and thus the very notion of “efficiency”, are embedded in a market system predicated on private property rights – which are a political application of an ethical premise (self-ownership). Your EROEI concept of “efficiency” can only be marginally relevant as a supplemental guide since it entirely ignores the broader economic and political context of investment decisions.

    “Where there is a disconnect between financial efficiency and energetic efficiency it would be because certain costs aren’t being accounted for.”

    Sometimes yes. Sometimes it could be because certain costs are politicized and thus over-priced (e.g. oil). Or alternatively, it could be because the financial return on say, wind turbine investment (if we’re going to be honest and minus the subsidies) is just poor. Simple dimples.

  11. I forgot to add that, you do of course have a way out of the scenario described above – which is to build only small numbers of wind turbines without the nuke.

    Perhaps a transitition to a less energy-intensive economy could be ‘massaged’ so as to occur gradually. But that’s a bit like saying perhaps a transition to a eugenically-managed population level could be ‘massaged’ so as to… – it would be a policy which, at the furthest logical reach of its’ consequences, would have to be measured in the frustration of human values, suffering and death for want of electricity and all the benefits that control of electricity bestows upon us.

    What you are wont to call “the fallacy of infinite growth” is actually a perverted implication drawn from your own (perhaps unconsciously held) fallacy: that wealth, or in this case the growth of wealth, is fixed, in this case by its falsely supposed dependence on economically finite resources. But wealth is not fixed by anything other than our own intellectual and moral weaknesses.

  12. Don’t waste your time debating with this guy, David. He likes to argue with everyone.

    Your point is taken, more effort should go into renewables. Realistically though, renewables can never produce the amount of energy that is demanded by mankind, especially give the rise of India and China (and the demise of many major oil fields).

    I hate to say it, but nuclear energy is the only way to meet the demands. Liquid Fluoride Thorium Reactors (LFTR) seem to be the proven solution. (Why hasn’t this been used in the past? Its because it doesn’t produce weapon’s grade plutonium) Pebble Bed (PBMR) has been around and the kinks are being worked out. (German’s tried it in S.A., but had trouble with fuel material/impurities, now the PRC is developing it)

    I have to add though, I think nuclear technology is not suited for Taiwan given what we know about plate tectonics and the geography of Taiwan (~hotsprings). Its just an accident waiting to happen.

    I think Taiwan needs to downsize and reduce consumption. It going to happen one way or another anyway given the financial crisis unfolding in the world today. I suggest much smaller cars that use motorcycle size, 100mpg engines, plus convert some of the train cars on the HSR for freight/produce. Taiwan can also upgrade the existing train lines and get rid of all the buses on the freeways. I’d also like to see smaller taxi’s on the streets. Carver Trike type vehicles I think would be perfect. Also, shared rides would be good such as the jeepney type of taxi’s used in the Philippines and Thailand. Yeah, I know Taiwanese think this is 3rd world transportation, but its needed because oil is going to be in short supply in the future.

    What Taiwan needs to think about as well is all the nuke plants across the straits in China and how any accident could effect our life here. For a start, the MRT systems should be setup as fall-out shelters and have food/water and expanded bathroom facilities.

    I have a lot more ideas on this, but that’s it for now.

  13. Mike, that’s the last comment I’ll publish from you on this post. You’ve had plenty of opportunity to put forward your arguments. When you veered off into discussing land acquisition and property rights you had me confused. They are barely related to the topic of this post.

  14. Marc,

    I will try to learn a bit more about thorium nuclear reactors (links for reference: The Oil Drum, Wikipedia). Another problem that needs to be considered is the issue of mining and processing the ore which is often overlooked in the nuclear debate. It is not just about nuclear reactors.

    Taiwan’s dense population does give it an advantage in that shifting to other transport modes or reducing travel shouldn’t have adverse effects on people’s welfare or lifestyles. I think upgrading Taiwan’s rail system to handle more freight would be a good idea. The main infrastructure that would be required would be rail freight depots and a few spur lines. The MRT systems could even be adapted to move freight within cities. Your other ideas are also good. The humble bicycle is still the best solution for personal transport in an energy-constrained world though.

  15. David, I think this Paul Krugman post and the papers he links would be pretty helpful to your discussions on this topic.

    “two papers cited by Brad Plumer, arguing that we can have a fully renewable-based, nuclear-free economy by 2050. And I’m sure that’s right — but I’m a bit skeptical about the cost estimates, for reasons having to do with personal career history.”

  16. Roy,

    Thanks for your comment. The two papers you refer to are Jacobson & Delucchi, “Providing all global energy with wind, water, and solar power, Part I: Technologies, energy resources, quantities and areas of infrastructure, and materials” and “Providing all global energy with wind, water, and solar power, Part II: Reliability, system and transmission costs, and policies” published in Energy Policy, 2010. I have both papers but haven’t had time to read them in full yet. Their conclusion is, “We conclude that barriers to a 100% conversion to WWS [wind, water & solar] power worldwide are primarily social and political, not technological or even economic.”

  17. Actually mike’s comments about land acquisition are very relevant. A large scale wind project needs a lot of land and in a place like Taiwan, that means the land you need is going to be already owned by someone. So … eminent domain.

  18. blobOfNeurons, the amount of suitable sites available for wind farms is a significant limitation in Taiwan. However, a key point is that the actual footprint of a wind farm is only about 1% of the nominal area that it occupies. Agriculture and wind farms can happily co-exist. Indeed they can provide a significant amount of income to farmers if a wind turbine is located on their land. This would be via royalty or lease payment. It is not necessary for the owner of the wind farm to acquire the land. It is unlikely that wind farms would be sited on residential land which would involve the acquisition of people’s homes.

    I think it is important that the government conduct a full audit of available sites for wind farms and their potential capacity. (I suspect such a study has already been conducted.) This data would help promote a more sensible discussion about how much power wind can practically supply in Taiwan.

  19. When President Ma is asked confronted with concerns about Taiwan’s nuclear plans (re: earthquake/tsunami), he simply says how much it would cost for them to back out of their nuclear plant contracts. He doesn’t exactly answer the question as to what such a disaster would mean to Taiwan.

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