Is Nuclear Power Affordable?

by Peter Burstzyn

On March 7, 2008, then Energy Minister, Gerry Philips, announced a plan entitled: “Ontario Takes Next Step to Ensure Clean, Affordable and Reliable Energy Supply for Generations to Come”. The plan depends heavily on electricity generated by nuclear plants. Is this true? Is nuclear-generated electricity “affordable”?

Look back 30 years to the Darlington nuclear station. When construction began in 1979, this power plant was to cost $3.9 billion. At the time annual inflation was averaging 6%, which should have doubled the cost. However, in 1993 the final bill was $14.4 billion, doubling even an inflation-adjusted estimate.

More recently, generating unit #1 at Pickering A was refurbished. The original estimate was $213 million (August 1999), with completion set for January 2002. The job was actually done by Christmas 2005, but the price had soared to $1016 million. In case you are wondering, that was a period of low inflation . . .

Somebody must have noticed. In the “western world” construction of new nuclear power plants virtually halted 20 years ago. They continued to be built in China, India, and a few other countries, but none were commissioned in the “west” where accountants rule and a free press criticizes – not until recently!

In 1992, Finland called for bids to build a third reactor at a site north-west of Helsinki, on the Baltic Sea. Olkiluoto-3 was priced by Areva, a French nuclear giant, at €2.5 billion in 1992. (Areva is one hopeful, bidding on Ontario’s new nuclear plants.) When construction actually began (2004), their price had increased to €3.2 billion. By December 2006, it had ballooned to €3.7 billion. By March 2008, it had gone ballistic to about €5 billion.1,2

The project had been scheduled to take 4.5 years. This would have been equivalent to a 1 hour marathon, and the reactor would have been finished early in 2009. The timetable has now slipped to 2011-2012. Moreover, the Finnish Radiation and Nuclear Safety Authority (STUK) found serious construction and design problems, including: the concrete slab supporting the reactor, the pressure vessel, the steel liner of the containment vessel, the concrete containment vessel, the heat exchanger between the primary and secondary water circuits, plus others. STUK’s comments included sections entitled “Need for promoting safety culture”, and “Inexperienced subcontractors with insufficient guidance”.3 There can be little doubt that fixing these problems will cost more money and probably cause the (still ambitious) timetable to slip further.

One way to compare the cost of building a huge nuclear power plant with other generating stations is to express this as a cost per kilowatt of output. If the final cost for this 1600 megawatt plant turns out to be €5 billion (the latest estimate), its cost per kilowatt of output will be $5000. Of course, the final tally is likely to be higher . . . In fact, the French newspaper, “Capital”, worried that cost over-runs and timetable slippage could even bankrupt Areva.1

Actually the Finnish reactor’s cost is not out of line. Progress Energy estimated that two new reactors in south Florida would cost around $4500/kilowatt, but Florida Power & Light warned that the final price could reach $8000/kilowatt! In October 2007, Moody’s Investor Service put the cost of nuclear power plants at $5000-$6000/kilowatt.

For comparison, several estimates suggest that coal-fired power plants can be built for $1200-$1500/kilowatt, depending on design and emissions requirements. A 2 MW wind turbine can be up and running for $4 million ($2000/kilowatt). By those standards, nuclear power cannot be labeled cheap!

Such numbers are meaningless to most people. More to the point is the price of nuclear-generated electricity. Energy consultant Jim Harding (author of “Canada’s Deadly Secret: Saskatchewan Uranium and the Global Nuclear System”) estimates that nuclear power should cost $0.30 per kilowatt-hour for 12-13 years until the cost of construction is covered and $0.18 per kWh thereafter. The cost of long-distance transmission and local distribution would be on top of that! That makes Ontario’s “Standard Offer Contract’s” of $0.11 per kWh for wind energy look like a bargain!4

Why so expensive? After all, Ontarians now pay just $0.055/kWh. We have been told that power from our nuclear plants costs just $0.03 per kWh. However, Ontario’s nuclear reactors never paid off the debt incurred to build them. Successive governments failed to charge enough for electricity to retire the nuclear-build debt. When Mike Harris broke up Ontario Hydro and almost privatized it, he created a separate entity – Ontario Electricity Financial Corporation (OEFC) – to hold its $38 billion debt. This debt is meant to be retired gradually through the $0.007 per kWh “debt retirement charge”, which everyone pays on their electricity bill. 5

In fact, this has not been enough to actually reduce the debt, which is now pretty much the same as it was a decade ago, when OEFC was set up! In effect, we have enjoyed subsidized electricity for decades. I don’t know about you, but I prefer to pay for electricity on my utility bill, not my tax bill!

In 2003, the Globe and Mail’s Eric Reguly6 wrote: “The overhaul of the nuclear units is costing billions (original estimate: $800 million), and the first of four units was supposed to be back in action at the end of 2000. Without Pickering, combined with startup delays in the Bruce 4 nuclear reactor, the potential for electricity shortages this summer can only soar. First, Pickering and Bruce 4 were not supposed to break down so soon. They were supposed to last 40 years before major repairs. Secondly, the costs of repair are almost reaching the original cost of construction of the nuclear plants. Thirdly, the delays in start up mean that there are serious health concerns related to possible radioactive leaks from the newly-repaired nuclear power plant problems. “Ontario Hydro is importing electricity at a cost ranging from 6.15 to 15.4 cents per kilowatt-hour. This is much higher than the 4.3 cents per kWh Ontario Hydro is selling the same electricity to big industrial and commercial users. Normally, coal-fired power costs about 3.5 cents per kWh. Ontario Hydro reports that nuclear-fired power costs about 3.0 cents per Kwh to produce, though the real cost of nuclear power, including repair and long-term waste management, is closer to 6-8 cents per kWh. What is amazing is that high-priced lawyers and well-trained electrical engineers have made such poor decisions leading to hundreds of millions of dollars in additional costs plus environmental degradation. Environmentalists within the Ministry of the Environment and Energy Probe, had they been listened to, and their advice acted upon, would have saved Ontario taxpayers billions of dollars and cleaned up the air in the process.
John Proops, Keele University, U.K., argues that nuclear power receives three types of subsidy. If the reactor uses enriched fuel (Canadian CANDUs do not), enrichment is carried out in plants originally built for military purposes. Commercial reactors benefit from government funded research and development. Finally, nuclear reactors are exempt from the requirement to be fully insured as other generating plant must be. Proops actually states that such insurance would be impossible to find because of the huge potential liability. In effect, all commercial reactors are “insured” by the state.7, 8

We are not the only ones subsidising nuclear power. In the USA, some $100 billion was spent to bail out nuclear power plants whose electricity cost more than they could get for it for in the open market.8

But building a nuclear reactor and running it well are not the whole story. At the end of its life, a nuclear reactor must be “decommissioned”. Its radioactive parts must be dismantled, removed and buried or safely stored somewhere. This is very different from other types of generating plant which can simply be padlocked. In July 2008, an audit of Great Britain’s “Nuclear Decomissioning Authority” revealed that they had “plundered” £400 million from other budgets to continue their work. These other funds included “sustainable energy capital grants”, “regional selective assistance”and even the military budget! In other words, nuclear decomissioning work also tends to be optimistically costed.9

All this brings to mind part of a famous speech once made by Lewis L. Strauss, then Chairman of the US Atomic Energy Commission10: “It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter.”

1. “Areva: les pertes enflent en Finlande et joueraient en faveur d’une fusion avec Alstom”, May 22, 2008.
2. “Fact Sheet: Olkiluoto-3”, Greenpeace, March 3, 2008.
4. Nuclear Cost Estimates, EnergyBiz Insider, June 23, 2008.
5., and
6. “Ontario’s Dim Electricity Policy Will Shock Users Soon”, The Globe & Mail, Report on Business, May 3, 2003
7. “The (non-) economics of the nuclear fuel cycle: an historical and discourse analysis”, In Ecological Economics, 39, p13-19, 2001.
8. Gambling on nuclear power: How public money fuels the industry,
10. Speech to the National Association of Science Writers, New York City Sept. 16th, 1954.

Is Nuclear Power Affordable?