Nuclear vs. Wind, Part II

Today, I'm posting the conclusion of my discussion with Dave Erickson from Re/Action on Climate Protection regarding the relative benefits of wind and nuclear energy. In my last post, I looked at why displacing all of America's coal generated electric capacity with wind wasn't practical or achieveable. To read Part I, click here.

Today, in Part II, I'm taking a closer look at the economics of wind and nuclear energy.

Cost of Wind vs Cost of Nuclear to Replace Coal
There are several points I would like to argue about Dave’s post: capacity factors, costs and new nuclear build. The sources Dave uses for his information are excellent. He cites the MIT Study on the Future of Nuclear Power and IEA’s Projected Costs of Generating Electricity.

Costs
Everyone who wants to pronounce nuclear as uneconomical always cites the MIT Study. The study, whose authors are in favor of nuclear, offered suggestions for how nuclear can overcome a number of well known challenges, including waste disposal, among others:

We decided to study the future of nuclear power because we believe this technology, despite the challenges it faces, is an important option for the United States and the world to meet future energy needs without emitting carbon dioxide (CO2) and other atmospheric pollutants. (first sentence in Forward and Acknowledgements)

In his own post, Dave cherry picks from the MIT study:

In deregulated markets, nuclear power is not now cost competitive with coal and natural gas.

That seems definitive enough, doesn't it? Unfortunately, the study assumed natural gas prices to be between $3.50 - $4.50 / MMBtu. Prices are twice that. And this doesn't even begin to take possible carbon caps into account -- something many utilities see as inevitable.

The IEA study provides cost data on generating technologies throughout the world. But once again, Dave cherry picks his data. He only focuses on costs in the U.S. while ignoring the cost figures from the rest of the world. The overall cost of nuclear in the U.S. falls in the more expensive range compared to other countries.

Wind, however, is the cheapest in the U.S. versus other wind facilities throughout the rest of the world. Yet when comparing the two at the same discount rate in the U.S., they are comparable.

Dave also assumes that nuclear’s investment costs are riskier than wind and will have a higher discount rate therefore concludes nuclear is “completely unnecessary and uneconomical.”

This claim has merit but after the industry and regulator get over the hurdles of building the first few plants, we believe the risk will be much lower and the construction and licensing of new plants will be far more routine and predictable.

I would like to point out that Germany’s costs, where wind is very popular, are twice the U.S. costs of wind (pg. 61 & 62 of the IEA study). What is the U.S. doing that its wind costs are so low compared to everyone else in the world? Subsidies?

In Dave’s “Replace Coal with Wind” blog, to replace the current generation of coal with wind would require 120,000, 5 megawatt wind turbines which would cost a total of $610 Billion.

Do you know how much it would cost for nuclear to replace coal? $502 Billion. If you assume a 1,000 MW nuke plant will cost $2 Billion (a very conservative estimate) and you would need about 250 nuke plants to replace all of the generation from coal.

It doesn’t appear wind power is more “cost-effective than using nuclear.”

Capacity Factors

It justifies the capacity factor by saying that the 90% CF cited by David (me) has only recently been achieved by U.S. plants, and represents a peak. 75%-85% is more in line with actual plants over their operating lifetime.

The 90% CF is not a peak, it’s not going to fall and in fact EIA projects in 2030 the CF will be 91%-92%. Most of the fleet has about a 75%-85% lifetime capacity factor like Dave noted. But the latest plant to come online in the U.S., Watts Bar 1 (1996), has a 91.3% lifetime CF. Any new nuclear plant built in the U.S. will have a CF that high. We've gained much experience running nuclear plants over the past 40 years.

New Nuclear Build

In fact, there are currently no new nuclear power plants being planned in the U.S., in spite of so-called “incentives” built into the 2005 EPACT.

Building a new nuclear plant is a 10 step process. Dave is talking about step 5 and right now we’re on step 2. Nine companies have announced intentions of submitting applications for a Combined Construction and Operating License to the Nuclear Regulatory Commission to build between 14 and 20 new nuclear plants. One COL allows up to two nuclear reactors to be built.

Building a nuclear plant is about a ten year process: 4-5 years for the licensing process and another 4-5 years for actual construction. It’s a long time but the benefits are worth it: 60 years of clean, affordable and reliable electricity.

In my mind, Dave makes the same mistake a number of environmentalists make when it comes to comparing power sources: They continually set up a false choice. Our energy options are continually cast as a fight between one source and another, when the plain fact remains that future electricity demand will be so great, that no one type of generating capacity would be able to provide all the electricity we'll need on its own.

Sure, we live in a competitive environment where generating capacity needs to be economical. But the world also needs a diverse fuel mix in order to support security of supply.

Technorati tags: Nuclear Energy, Nuclear Power, Energy, Electricity, Environment, Wind Power