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NUCLEAR ECONOMICS: The nuclear lobby struggles desperately to resuscitate the industry
Nuclear Does Not Make Economic Sense Say Studies, By Julio Godoy, The enormous technical and financial risks involved in the construction and operation of new nuclear power plants make them prohibitive for private investors, rebutting the thesis of a renaissance in nuclear energy, say several independent European studies.
The risks include high construction costs, likely long delays in building, extended periods of depreciation of equipment inherent to the construction and operation of new power plants and the lack of guarantees for prices of electricity.
Adding to these is the global meltdown and the consequent cautious behaviour of investors as also fiscal and revenue difficulties of governments in the industrialised countries, say the studies
In the most recent analysis on the feasibility of new nuclear power plants, the Citibank group concludes that some of “the risks faced by developers … are so large and variable that individually they could each bring even the largest utility company to its knees financially.”
The Citibank paper, titled ‘New Nuclear – The Economics Say No’, lists five major risks developers and operators of new nuclear power plants must confront. These risks are planning, construction, power price, operational, and decommissioning. According to the study, most governments in industrialised countries today have only “sought to limit the planning risk” for investors.
But, while it is “important for encouraging developers to bring forward projects, [planning] is the least important risk financially,” the survey goes on. According to the Citibank group, the most important risks are construction, power price, and operational. The paper dubs these risks “the corporate killers.”
Environmental activists would add safety issues as another major risk – both the handling of highly radioactive nuclear waste and the likelihood of accidents at nuclear power stations.
The Citibank bases its conclusions on estimated costs of construction and operation and in the necessity of setting too high electricity prices for consumers, and which have seldom been reached in the past.
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