Nuclear
Tuesday, 22 March 2011 14:30

Nuclear energy – viable without subsidies?

While we often read about the potential of nuclear energy to solve global warming and energy security problems, we rarely read about the nuclear industry’s expensive history of taxpayer subsidies and charges to utility ratepayers.

“These subsidies not only enabled the nation’s existing reactors to be built in the first place, but have also supported their operation for decades,” said a report by the Union of Concerned Scientists entitled Nuclear Subsidies: Still Not Viable Without Subsidies.

South Africa currently operates one nuclear plant – Koeberg – which has a 1 800 MW capacity, but the country has proposed to build six new nuclear plants by 2030 in the draft Integrated Resource Plan (IRP 2).

According to Business Report, the last attempt to build a nuclear plant, led by Eskom, was scratched because of funding difficulties (bidders for the project included Westinghouse and Areva). China Guagdong Nuclear Power Corp (CGNPC), China’s second-largest nuclear power developer, said they could build a second-generation reactor within ten years (instead of 13 years). “South Africa is keen to get private investors to help foot the bill for new plants and reduce the strain on Eskom, although the nuclear investment may need to be government-led,” said CGNPC (Business Report).

The Union of Concerned Scientists says that although industry and its allies continue to pressure governments for large new subsidies, the support for the industry rests largely on an uncritical acceptance of the nuclear industry’s economic claims and an incomplete understanding of the subsidies that made – and continue to make – the existing nuclear fleet possible.

“Such blind acceptance is an unwarranted, expensive leap of faith that could set back more cost-effective efforts to combat climate change,” says the union, before adding that shifting the coupled waste disposal and safety risks onto the public is the major goal of the new subsidies – not incorporating these costs into its estimates presents a skewed economic picture of nuclear power’s value compared to other low-carbon power sources.

According to the report, buying power on the open market and giving it away for free would have been less costly than subsidising the construction and operation of nuclear power plants.

Throughout its history, the industry has argued that subsidies were only temporary and a short-term stimulus so that the industry could work through early technical hurdles that prevented economical reactor operation. “A 1954 advertisement from General Electric stated that: ‘In five years – certainly within ten, civilian reactors would be privately financed, built without government subsidy.’ That day never arrived and, despite industry claims to the contrary, remains as elusive as ever,” says the union.

According to the report, the most important subsidies to the industry do not involve cash payments. They rather shift construction cost and operating risks from investors to taxpayers and ratepayers, burdening taxpayers with an array of risks ranging from cost overruns and defaults to accidents and nuclear waste management.

According to the IAEA, the world´s 441 nuclear power reactors create enough spent fuel to fill a football field to a depth of 1,5 metres – that’s about 10 500 tonnes of heavy metal. In South Africa, the 2008 National Radioactive Waste Disposal Institute Act provided for the establishment of a National Radioactive Waste Disposal Institute, which will manage radioactive waste disposal in South Africa. The responsibility for nuclear waste disposal has been discharged by Necsa until now (the company operates the national repository for low- and intermediate-level wastes at Vaalputs in the Northern Cape province). This was commissioned in 1986 for wastes from Koeberg and is financed by fees paid by Eskom.

Low cost or expensive?
According to the World Nuclear Association, substantial amounts have been invested in energy R&D over the past few years – much of this has been directed at developing nuclear energy. Today, however, about twice as much R&D investment is spent on renewables rather than nuclear (except in Japan and France), “but with rather less to show for it and with less potential for electricity supply” (www.world.nuclear.org).

“Nowhere in the world is nuclear power subsidised per unit of production. In some countries it is taxed because production costs are so low. Renewables receive heavy direct subsidies in the market and fossil fuels receive indirect subsidies in their waste disposal,” says a statement by the World Nuclear Association regarding energy subsidies and external costs.

However, the Union of Concerned Scientists disagrees. “The nuclear industry is only able to portray itself as a low-cost power supplier today because of past government subsidies as write-offs,” says the union when referring to the subsidies given during the inception of nuclear power plants as well as the subsidies to inputs, waste management and accident risks.

“These legacy subsidies are estimated to exceed seven cents per kilowatt-hour (c/kWh) – an amount equal to about 140% of the average wholesale price of power from 1960 to 2008, making the subsidies more valuable than the power produced by nuclear plants over that period. Without these subsidies, the industry would have faced a very different market reality – one in which many reac¬tors would never have been built, and utilities that did build reactors would have been forced to charge consumers even higher rates,” says the union.

To read the full report, visit http://earthtrack.net/files/uploaded_files/nuclear%20subsidies_report.pdf, to which full acknowledgement and thanks are given.