(This series of blog posts examines the false and dangerous claims of the nuclear industry. The introduction to the series can be found here.)
If nuclear power is as cheap as the industry and its supporters claim, why is it so expensive?
Let’s be blunt. The economics of nuclear power are atrocious. The economic risks of nuclear power are carried by governments and taxpayers while urgently needed resources are diverted from renewable energy and energy efficiency programmes.
Nuclear construction costs consistently rocket above forecasts. Finland’s OL3 reactor - under construction since 2005 - is three years behind schedule and 1.5 billion euros over budget. The last ten reactors built in India have on average been 300% over budget. The Czech Republic’s Temelin reactor was finished ten years late and five times over budget. Across the world, the average construction time for nuclear plants has increased from five and half years in the 1970s to nearly ten years between 1995 and 2000.
The UK government’s Stern Report said the costs of energy production have ‘fallen systematically’ since the 1970s - except for those of nuclear power. As few new reactors have been built in recent years, there can be little confidence in the forecasts of future construction costs.
- Part one
- Part three
Nuclear power needs government money for construction costs, accident insurance and decommissioning. The industry relies on taxpayers for its very survival. Finland’s OL3 reactor is the first built in a liberalised electricity market yet it still relies on state funding. It received hundreds of millions of euros in loans from state banks and export credit guarantees (usually issued to projects in developing countries).
Finland purchased the reactor at a fixed cost making the builders, Areva, liable for the cost overruns (currently 50%). As Areva is owned by the French state, France’s taxpayers must pay the bill.
The US’s Energy Policy Act 2005 offers tax credits, loan guarantees and risk insurance to the nuclear industry after it suffered huge financial losses. It is unlikely companies would now invest in nuclear power without that assistance.
Nuclear power is also uninsurable in the normal sense. The costs of cleaning up a major nuclear accident are so huge they would bankrupt insurance companies. Relying on private insurance against the worst case scenario would see the cost of nuclear-generated electricity increase by around 300%.
Government liability continues when reactors close. The actual costs and who pays them are uncertain. The figure for decommissioning the UK’s first-generation reactors and disposing of the extremely dangerous waste, for example, has seen a six-fold increase in the last 15 years to £70 billion.
We face a choice: continue to invest in nuclear energy with its 50-year history of unreliability, huge risks, and cost overruns paid for by state subsidies, or invest in a growing renewable energy industry offering an environmentally and financially sustainable future.
(More information can be found in Greenpeace's The Economics of Nuclear Power briefing.)