Economics of nuclear energy

By Khurram Lalani - Dec 11th, 2012 

Nuclear power has always been touted as mankind’s finest invention to produce power at cheap prices without significantly harming the environment. However, a closer analysis reveals that it continues to remain one of the most expensive enterprises in the world, requiring constant subsidies and governmental support to ensure its continuous survival.

The most overwhelming concern for the nuclear power industry is its high capital cost. Although operating and maintenance expenses generally remain low, plant construction costs are exorbitantly high with construction timetables completely unpredictable. One of the recently made commissioned reactors in the US has been the nuclear power facility at Watts Bar, Tennessee, which started operations in 1996 but took 23 years to complete at a cost of $6.9 billion. In New York, a nuclear power plant was decommissioned in 1994 which took approximately 21 years for construction. The plant never got operational status due to stiff opposition from local communities. What was more disturbing was the cost estimate. The total costs of the nuclear power plant went up from an original $70 million estimate to $6 billion in actual and never generated a single watt of electricity. Other nuclear power stories are similar. According to one study, of the 75 plants that have come online in 1986 in the US, all of them exceeded initial cost estimates by a range of 209%-381%.

The decommissioning part of a nuclear power reactor is economically taxing too. The decommissioning of the Yankee Rowe reactor in Massachusetts, US had expected to cost $120 million, with the final price topping more than $450 million. Moreover, estimated decommissioning costs of all the commercial, mili­tary and research reactors in the US are estimated at around $33 billion. The United States recently approved a plan to build the first new nuclear power plant in more than 30 years, despite safety concerns raised by the Nuclear Regulatory Commission in the aftermath of Japan’s 2011 Fukushima disaster. To get the project up and running, the Obama administration offered project developers a staggering $8.3 billion in federal loan guarantees as an incentive.