Czech project shows why nuclear power is fading away

Nuclear power plants generates clean, baseline-quality energy, advocates like to claim.

It’s too bad that nuclear is also about the most expensive form of power you can buy. A recent report and statement from CEZ-AS, the country’s largest utility, once again highlight why the economics of nuclear don’t work. In short, CEZ has been pushing to add two new nuclear reactors to the Temerlin plant that would come online around 2025.

The utility has made the usual argument—that nuclear will create employment, help the country gain energy independence and even let the Czechs export power to neighboring European countries—but it has also said it can’t build the plan without government guarantees on the price of power.

We won’t build without state guarantees,” Pavel Cyrani, chief of strategy at CEZ told Bloomberg in an interview. “It’s simply impossible.”

How high would those guarantees have to be? A pair of studies from Candole Partners predicts that the price would have to be 115 Euros a megawatt hour, or $157 per megawatt hour, in 2013 dollars for the full lifetime operation of the Temerlin reactors for it to break even.

It’s high. Spot prices in the country are now around 40 Euros, or $55, per megawatt hour.  Peak prices in New England grazed $230 per megawatt hour during a hot afternoon this past July, but generally the forward process are comfortably below $100. As I write, the wholesale price ticker at PJM pegs U.S. power at $62 per megawatt hour.

The subsidies required to make power from the plant competitive with today’s prices would cost taxpayers around a billion Euros a year, wrote Georgi Vukov at Candole.

“If the state wishes to pursue an expansionary fiscal policy and promote industrial growth through higher taxes, we would suggest it invest the extra revenue in areas of lasting value, such as education and vocational training, rather than in a wasteful project such as Temelin 3&4, which would burden Czech taxpayers for a generation or more,” he wrote.

Granted, solar is costly too. Various analysts peg the cost of residential solar in Europe at around 150 Euros per megawatt, but wholesale prices in many parts of the world are lower. Brazil just set up a solar auction where the price ceiling will be $109 per megawatt hour. A First Solar project in New Mexico is contracted for $57.90 per megawatt hour. And the price of solar is going down–not up as in the case of nuclear—and there are  number of ways to reduce the costs. Research firm IHS says that the lifetime cost of solar for an industrial plant actually fell below conventional prices last year if the industrial consumer bypasses the utility and builds the solar array itself. Coupling solar with storage can let companies bypass peak demand charges too, which can account for 30% of a bill.

Vukov also noted that Czech law limits liability for power plant owners to 310 million Euros; thus, in the event of a large disaster, taxpayers would be on the hook. Disposal would also have to be subsidized. (In a 2011 study the firm noted that 50 of the 64 “planned” nuclear projects do not have a start date or have been delayed.)

You see a similar situation in other countries. Britain earlier this year said it plans to build two reactors for $26 billion with the help of two state-controlled corporations from China and Areva , a corporation largely owned by the French government, will own another 10 percent. The cost of the power will be approximately double current wholesale prices. A nuclear project in Finland, originally due to come on line in 2009, has been postponed until 2016 and blown past its budget.

Meanwhile, renewables and energy efficiency continue to increase in performance and drop in price. Over 30 GW of solar will get installed this year.  99 percent—or 694 MW of the 699MW—of the capacity added in the U.S. in October consisted of renewable plants.  Solar accounted for 72 percent of the total, according to FERC. Last month, I noted that replacing light bulbs with LED fixtures could postpone the need for new mega power plants for a lot less money. And they would make your house more attractive.

Nuclear may not be completely dead as a concept. Some hope exists for modular reactors or even thorium. But the traditional reactors just don’t seem to add up anymore.

http://www.forbes.com/sites/michaelkanellos/2013/12/06/czech-project-shows-why-nuclear-power-is-fading-away/?ss=business%3Aenergy