The fundamental problem with the nuclear energy argument is not one of engineering or technology. A properly functioning nuclear plant emits no carbon and provides continuous baseload power. These are the two selling points of nuclear as opposed to fossil fuels. The problem is with the business case. Every nuclear power plant that has been constructed in the world today is grossly under insured. Insurance companies only cover minor accidents or issues that have a payout value between around US$300 million and $10 billion. The two major accidents in Chernobyl and Fukushima have and will costs over $200 billion each over thirty years. Chernobyl still accounts for around 5% of total government spending for both Belarus and Ukraine. The reason the governments have been left with the bill is that the government is the ‘insurer of last resort’. This means that if something goes catastrophically wrong with a nuclear power plant, the investors and operator let the government clean up the mess. The profits from operational years are left untouched. To put this another way, ‘Privatise the profits, socialize the losses’.
If this business case were given to private industry, they would laugh it at and choose another path. In fact, that’s exactly what they did when the first power plants were being proposed. They refused to bear any of the risk of a major accident, but governments were so set on having the plants that they agreed to this incredible burden. The US government was forced to introduce the Price Anderson Act that limited liability to provide certainty for nuclear business operators. Finland has already imposed unlimited liability on its operators, but this will be of limited use. When it becomes clear the operator has a $200 billion bill, they will simply fold and try to sell off assets to cover what they can and leave the government with the bill afterwards – which is exactly what TEPCO did after the Fukushima accident. Any argument that modern plants are safer needs to be made to the actuaries for global insurance companies; if they won’t back it, then why should we?
Given the proven costs of a major disaster today, it would seem reasonable to expect the nuclear industry to bear the same amount of risk as any other power generating solution. This means all of it. This would mean that the operator would need to be able to cover at least a $200 billion budget over 30 years and more likely a $300 billion budget over 50 years. This liability would need to be maintained as a combination of insurance, liquid capital for emergency response and other capital for long term support. The cost this adds to nuclear power operation makes it far and away the least commercially viable solution – with annual costs easily ten times any renewable solution.
Nuclear Plant Cost
Whilst the nuclear industry claims this is a low cost solution, the facts have always told a radically different story; the nuclear industry has never been viable without both insurance backing and massive subsidies from the government. The cost for a new plant is now approaching $10 billion per plant, with a generating capacity between one and two gigawatts per hour. This already puts it in price parity with Solar Thermal with salt storage solution for all plants currently under construction. It’s worth mentioning that all these reactors are considered Generation III+. They are not the Generation IV plants proposed by advocates for increased safety levels and efficiency. The reason those reactors aren’t being built yet is that they are largely theoretical and introduce new technology solutions. This means even higher build costs and extended build times that run over a decade. Nor are they implementing thorium reactors; there are no commercial plants in existence today, but some countries are exploring prototypes. These plants have never been economical, will take 40 – 70 years to develop to a deployable potential and are thus already superseded by renewable solutions before they get off the drawing board. The first commercial thorium plant was built and operated in Germany, feeding power to the grid for just over a year after a fifteen year construction period. It was shut down due to technical and financial troubles which saw the operator bailed out by the German government.