Nuclear power, strike 2

Even Wall Street won't touch nuclear because it is too financially risky. At least 1 out of 2 nuclear plants will fail, leaving taxpayers with the burden of debt.

Sun, Feb 14 2010 at 10:38 PM

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If you think mortgage derivative assets were toxic, take a look at this factoid from the CBO (Congressional Budget Office) on financing new nuclear plants using federal loan guarantees:

CBO considers the risk of default on such a loan guarantee to be very high-well above 50 percent. The key factor accounting for this risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources.

Investors won't touch nuclear with a 10' spent fuel rod. It just costs too much and construction costs can get wildly out of control. Take the proposed NGR plant in San Antonio which was estimated at a modest $5.4 billion and set to receive one of Obama's nuclear loan guarantees... that was until the final construction estimates came in at $17 billion.

The current program, according to Daniel Weiss at Grist, will make the government responsible for 80% of a defaulted loan. With an $8 billion per plant price tag and 50% default rate, the program could stick taxpayers with billions in debt. As Weiss explains, Obama tripled the previous (2005) nuclear loan guarantee program which more than triples the risk to the American people:

Tripling of the loan guarantees is also dubious political strategy because it provides huge subsidies for nuclear power without securing the support of pro-nuclear senators for comprehensive, bipartisan global warming pollution reduction legislation...

During this time of trillion dollar deficits, this is a very imprudent use of taxpayers’ money.

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Comment: 1

davelv Feb 15 2010 at 12:44 PM

The CBO study erroneously concluded that the cost overruns of nuclear power plants started in the 70s was due to mismanagement. False. The costs increased because the economy growth slowed, thereby delaying the need for new power plants of any time. But more importantly, interest rates climbed by 1982 to over 20%. A 4 year delay therefore doubled the cost of the power plant, making most uneconomical to complete. To apply this unusual period of time to future nuclear power construction projections

.... More

is inaccurate to say the least. There is little reason to think the next generation of nuclear power plant construction will have huge overruns - many similar priced construction projects occur yearly around the world and come in on budget. Only if intervenors go to court and cause massive legal delays will any of these new plants not be completed on time and on budget. Rather than spend 1 trillion dollars fighting a war in the Middle East for oil, America needs to invest the same in 200 nuclear power plants for energy independence.

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