$8.3 B: A Big Price Tag For a DOE Dice Roll
Energy Secretary Steven Chu said this month he expects to finalize an $8.3 billion DOE loan guarantee for Southern Company’s two new nuclear reactors. This announcement comes on the heels of the Nuclear Regulatory Commission’s recent decision to approve one of the projects in Waynesboro, Georgia—the first time the commission has approved construction of a new nuclear reactor since 1978.
As reported by the Associated Press, groups opposing the plants—which are not required to make design improvements based on lessons learned from Fukushima Daiichi—are preparing to sue to block construction. The groups say the plant should be blocked until federal regulators approve safety changes prompted by last year’s nuclear disaster in Japan.
Some argue that transitioning to a clean, affordable, and secure electric system should include an “all options on the table” approach, and that all available low-carbon technologies—nuclear, carbon capture and sequestration, natural gas, and renewables—should be pursued simultaneously and with equal rigor. RMI disagrees.
In a rapidly shifting industry facing dramatically changing demands and technology options, massive, capital-intensive projects that lock electricity providers into one option for 50 years or more are not a smart move. Despite the carbon benefits, pursuing nuclear does not address critical issues around security, financial stability, and competition.
Companies making multi-billion-dollar, multi-decade bets have the opportunity to place the right ones now. Reinventing Fire, RMI’s roadmap to a clean-energy future, points out that the greatest drivers of transformational change to our current electric system may not be carbon legislation, but rather disruptive technologies like low-cost solar power and increasing customer engagement and control.
“As electricity and information technology converge, the electricity system is evolving toward a transformed system that is interactive, dynamic, networked, renewable, and decentralized,” said RMI Electricity Principal Lena Hansen. “Over the past decade, U.S. wind capacity has grown 1,300 percent and solar capacity 8,800 percent. Those additions represent a quickly growing market for renewables, and a market that is open to a larger number of businesses than has historically been possible. An equally important trend is the shift toward smaller and more decentralized resources. These trends have big implications for businesses.”
Last year, RMI Chairman and Chief Scientist Amory Lovins blogged that cogeneration and renewable energy “made 18 percent of the world’s 2009 electricity (while nuclear made 13 percent, reversing their 2000 shares).”
“Those smarter choices are sweeping the global energy market,” Lovins wrote. “Half the world’s new generating capacity in 2008 and 2009 was renewable. In 2010, renewables, excluding big hydro dams, won $151 billion of private investment and added over 50 billion watts (70 percent the total capacity of all 23 Fukushima-style U.S. reactors) while nuclear got zero private investment and kept losing capacity.”
Why would investors lack confidence in nuclear? As detailed in Reinventing Fire, nuclear power plants have a history of major cost overruns and construction delays.
Of U.S. plants whose construction was started prior to 1977 (all ordered since 1973 were cancelled), the average actual construction costs were two to three times higher than the average projected real cost, amounting to almost $5,000/kilowatt. Only 12 nuclear plants have been built in the U.S. since, with the last of these coming online in 1993. Two large European projects under way—Finland’s Olkiluoto-3 and France’s Flamanville-3—are both at least three years behind schedule and dramatically over budget.
RMI outlines a 2050 U.S. electricity system that is efficient, renewable, largely distributed, and customer-centric. While this shift is transformative, business leaders have important opportunities now.
The question is, why spend $8.3 billion on an energy option unable to attract private capital?