Industry-Funded MIT Study on Nuclear Future Suffers from Unsupportable Reactor Construction Cost Estimate.
Recommendation for More High-Risk Taxpayer Subsidies to Nuclear Industry Doesn’t Hold Up Under Scrutiny.
An MIT study titled “The Future of the Nuclear Fuel Cycle” released today in Washington uses an unsupportable reactor construction cost estimate, undercutting its recommendation that taxpayer subsidies for new nuclear reactors should be increased and accelerated.
“Congress would be ill-advised to follow the MIT recommendation,” said Michael Mariotte, executive director of Nuclear Information and Resource Service (NIRS), “since the study relies on a construction cost estimate for new reactors that is 50% or more below current cost estimates. Reliance on such an estimate would turn a high-risk taxpayer loan into an exorbitant-risk taxpayer bailout for wealthy nuclear power companies. Congress needs real numbers when it considers spending taxpayer money, not nuclear industry fantasies.”
The MIT recommendation, which calls for an acceleration and expansion of taxpayer subsidies for the first 7-10 new reactors, is based on an estimated construction cost of $4,000/kilowatt, or about $4 billion for a 1,000 Megawatt reactor.
“This is a remarkable flaw from what is touted as an expert study,” said Mariotte. “Even a cursory review of the literature finds that no new U.S. nuclear reactor proposal is coming in at $4,000/kw,” said Mariotte. “The real-world estimates are ranging from $6,000-9,000/kw--or 50% to more than 100% higher than MIT’s study asserts. Based on those kinds of estimates, it would make no sense for taxpayers to support the nuclear industry at all. New reactors won’t be economic, and the taxpayer loans would be far too risky.”
Mariotte cited several examples to refute MIT’s cost figures:
*Calvert Cliffs-3 is estimated to cost “about $10 billion” according to testimony from Constellation Energy CEO Mayo Shattuck before the Maryland Public Service Commission in March 2009. That’s more than $6,000/kw for that 1600 MW reactor.
*PPL estimates, on its website, that a reactor identical to Calvert Cliffs-3, would cost $13-15 billion, or about $8,000-9,000/kw (including financing costs). http://www.bellbend.com/faqs.htm
*A September 2008 estimate filed with the Florida Public Service Commission put the proposed Turkey Point reactors at $8,200/kw.
*The Southern Company’s Vogtle reactors in Georgia—slated to be the first recipients of taxpayer loans to support their construction—are currently estimated at about $6,200/kw.
Wall Street appears not to accept the MIT figures either:
*An October 2007 report from Moody’s Investor Service predicted costs of $5-6,000/kw. Less than a year later, in May 2008, Moody’s predicted costs “…potentially reaching over $7,000/kw.”
*Standard & Poor’s, quoting the Federal Energy Regulatory Commission in October 2008, predicted costs ranging from $5-8,000/kw.
“The MIT study correctly notes that ‘nuclear electricity costs are driven by high up-front capital costs,’ whereas natural gas and coal costs are more dependent on fuel costs,” said Mariotte, “thus, it vastly underestimates nuclear capital costs and presents a grossly misleading picture of the costs of electricity to the consumer if nuclear reactors are built, as well as understating the risk of nuclear loans to the taxpayer.”
Mariotte noted that the study only compared nuclear costs to natural gas and coal, and not to alternatives like wind power, solar power, geothermal and energy efficiency technologies. Some of these alternatives, like wind and energy efficiency, are already much cheaper than nuclear power and solar is rapidly declining in price while increasing in its efficiency. Earlier this week, the Department of Energy’s National Renewable Energy Laboratory released a report detailing the potential of offshore wind resources for the U.S., finding that offshore wind alone could generate more than four times the entire current electrical demand in the U.S. http://www.nrel.gov/docs/fy10osti/45889.pdf
Mariotte pointed out that the MIT study acknowledges “generous financial support
from the Electric Power Research Institute (EPRI) and from Idaho National Laboratory,
the Nuclear Energy Institute, Areva, GEHitachi, Westinghouse, Energy Solutions, and Nuclear Assurance Corporation.”
“Areva, GEHitachi and Westinghouse are the three reactor vendors hoping for taxpayer money to pay for their products,” said Mariotte. “It is at least suspicious that the study would support their aims using a cost estimate that simply does not stand up to scrutiny.”
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