As one of Florida’s largest utilities prepared to unveil details about its nuclear plans in March 2008, its executives showed a noticeable wariness about one detail in particular: the price.
At Progress Energy Florida’s new St. Petersburg headquarters, the top brass carefully husbanded their latest estimates. As the date of their public filing neared, the utility’s executives arranged meetings with newspaper editors throughout its territory. Bill Johnson, chairman, president and CEO of the Florida utility’s parent company, flew down from North Carolina for a meeting with Governor Charlie Crist.
Progress Energy’s extraordinary care acknowledged that the “nuclear renaissance” perched delicately on the public’s goodwill. An erosion of public support could shake the political support that new nuclear has lately enjoyed. Florida wouldn’t be the only casualty; 21 other new nuclear projects have been announced throughout the U.S.
When the price was unveiled, the reason behind Progress Energy’s caution became clear: the price for two reactors topped $14 billion – more than double the original estimates proffered by Progress Energy and other utilities throughout the country.
The nuclear industry defends its expansion despite the surging costs. Nuclear power is cheaper to operate than natural gas, won’t exacerbate carbon dioxide emissions like adding new coal, and provides around-the-clock power, unlike weather-dependent solar and wind.
“We talk with the wind people all the time. We talk to solar folks all the time. They have a role to play,” says Mitch Singer, spokesman for the Nuclear Energy Institute, a trade group. “But there's no way that they can take the place of the base load power nuclear can provide. It's physics.”
But nuclear opponents worry that a massive investment in nuclear could come at the expense of renewables. They also worry that conservation efforts will obviate the need for a massive investment in nuclear, and consumers will be left holding the bag.
“Given the seriousness of global climate change, what’s required here is an honest look at the economics of power generation,” says Susan Glickman, a lobbyist for The Climate Group, a non-profit that pushes governments and businesses to take action on climate change. “We need to look first at the cost-effective options like energy efficiency, and balance that against the expense of nuclear.”
Throughout the U.S., plans have been announced for 33 new nuclear reactors; eighteen are slated for the Southeast, and as many as eight will be the same Westinghouse AP1000s that Progress Energy picked.
The new, higher estimates for nuclear – driven by the rising cost of labor, steel, cement and metals like copper – has the nuclear industry worried about giving the public sticker shock. Utilities around the nation will soon be asking state regulators for permission to spend billions on high-priced nuclear plants. When utility customers start seeing those enormous costs reflected in their monthly electric bill, politicians may start hearing from some very unhappy constituents.
As Progress Energy’s Johnson told a group of analysts in early April, “To do this, to build nuclear in this country, what we need to have is continuing regulatory and political support.”
The nuclear industry still suffers a credibility hangover from the huge cost overruns of the 1970s and 1980s, when nuclear power plants were taking 10 to 12 years to complete and costing up to $5-billion, according to the Nuclear Energy Institute. Much of the rising cost owed itself to delays -- delays often exacerbated by wavering political and regulatory support.
Those interminable battles, combined with the disasters at Chernobyl and Three Mile Island, led to a 30-year break in new nuclear plant orders. Despite the ballyhooed renaissance, the industry has girded itself against a repeat.
As if the words possess a talismanic power to make it so, the mavens of the nuclear renaissance have taken to repeating, with liturgical sameness, why this nuclear boom won’t be like the last. This time, the licensing has been streamlined. This time, the plants have been standardized.
The fact is no one really knows what the plants will cost because no utility has built one in nearly three decades. As Progress Energy noted in its public filing, its cost estimates remain non-binding. The price could go higher.
Progress Energy is one of few U.S. utilities that has offered a public estimate for new nuclear. Another is Florida Power Light, which estimates that it will spend $18 billion to $24 billion, depending on the technology it selects for its two reactors. Although other utilities have remained mum, Florida’s estimates appear in line with what other utilities can expect.
At those prices price – more than $6,300 per kilowatt – building nuclear costs three times more than building wind. So why would FPL Energy, parent of Florida Power & Light and one of the largest wind power producers in the world, invest in more than 2000-megawatts of nuclear? The reason is simple: weather.
“The biggest attribute, the biggest benefit of a nuclear plant, is that it's a baseload source of power,” says David Bradish, manager of energy information for the Nuclear Energy Institute. “It produces power all the time, all day.”
A cloud passing over a solar installation can substantially ding its output, as can a sudden drop in wind. The availability of power – known in utility jargon as “capacity factor” – dramatically alters the cost landscape. As Bradish put it, to get a wind farm to produce as much power in a year as a nuclear plant, you’d have to build 3,000 megawatts of wind to 1,000 megawatts of nuclear.
The utility’s use “levelized” costs that take capacity factor into account. By those estimates, fossil fuels like coal consistently number among the cheapest sources of power, according to the Energy Information Administration, the statistical arm of the U.S. Department of Energy.
By 2020, traditional pulverized coal will cost $59 per megawatt hour -- less than a quarter of the projected cost of solar photovoltaics. Of course, the estimates have a glaring weakness: they don't take into account the potential cost of carbon. Cap-and-trade programs, now in place in more than twenty states and favored by all three presidential candidates, could add considerable costs for high carbon fuels like coal, and make low-carbon alternatives more financially attractive.
But at the Energy Information Administration's estimated $66 per megawatt hour projected for 2020, no other low-carbon power source will beat the price of nuclear.
Story by Asjylyn Loder. This article originally appeared in "Plenty" in May 2008.