nuclear-news

Reasons why nuclear power no longer makes economic sense

GE (NYSE:GE) Slams Economics of Nuclear Is GE Turning Cold on Nuclear? Green Chip Stocks, By Abhishek Shah , August 20th, 2012 As the whole world is fixated on the debate about on using and not using nuclear power for energy generation, the anti-nuclear protesters have got a new powerful argument about nuclear energy being not economically feasible.

General Electric which is among the world’s top 3 suppliers of nuclear energy equipment along with Toshiba and Areva, has said that it no longer makes economic sense to build nuclear reactors.

To readers of GWI, this is nothing new as we wrote more than a year ago about how nuclear energy has hit a virtual wall in the developed world. Expensive safety regulations, massive time overruns, increasing equipment prices had already made nuclear energy an expensive proposition in the West. On top of that came the Fukushima disaster which has made many countries like Germany, Japan ,Switzerland and Belgium to shut down their entire nuclear energy capacities.

Why has Nuclear Energy hit a Virtual Wall in the Developed World

The Finland Disaster highlights the problem facing the Industry. Despite using top of the line EPC contractors and equipment providers, Finland has found itself stranded on new nuclear reactor development. The safety policies have become more strident and waste disposal concerns have increased. Despite older nuclear plants having very low LCOE, newer plants don’t have such low costs. Concerns over radiation, waste disposal, safety from attacks etc. make Nuclear Energy particularly cumbersome in countries with high per capita incomes. This is because of higher individual freedom and value of human life. In developing countries, safety regulations are regularly bypassed. The other problems facing the industry are:

1) Low Natural Gas Costs – The price of Natural Gas has crashed by more than half from the peak 2008 prices making many plants nonviable. Since Energy Prices in many places are dependent on Gas Prices, this has become a big negative factor.

2) General Economic and Energy Decline – US has suffered from a contraction in Electricity Demand for the first time as Economy Declined in the aftermath of the Lehman Crisis. With prospects of future growth also lowered, the incentive for constructing new nuclear energy has  fallen

3) High Project Gestation Time and Capex Costs – Nuclear Energy requires a huge amount of capital and a long time to be built. There are huge project construction risks with frequent time and cost overruns. Government involvement is necessary due to these massive risks private capital is reluctant to invest in such high risk projects. Despite DOE guarantees, Constellation found the loan costs at 11.6%, too high to make the project worthwhile.

4) No  Climate Change Legislation Globally – USA has been a laggard in the Climate Change with partisan politics dooming any remote chance of Climate Mitigation efforts at the Federal Level. Despite efforts by US States and some support from US Government led by Obama, there has been no Carbon Tax or some form of Carbon Emission Caps. This has made long term investor support for Green Energy untenable. Even Globally there has been no progress on Climate Change, just lots of meetings and hot air. The top UN climate official sees no chance of an agreement in her lifetime……

At the same time, a 75 per cent fall in solar panel market prices in the past three years has made solar power competitive with daytime retail electricity prices in some countries, according to a recent report by Bloomberg New Energy Finance, while offshore wind turbine prices have steadily declined….. http://www.greenchipstocks.com/articles/ge-nysege-slams-economics-of-nuclear/2097

August 24, 2012 - Posted by Christina Macpherson | 2 WORLD, business and costs