Energy Minister Martin Ferguson’s long-awaited energy white paper — released yesterday in draft form — adopts a peculiar approach to domestic nuclear power....nuclear power will actually decline as a source of power in the overall global energy mix because most of the world’s 439 nuclear reactors were built decades ago and are now nearing the end of their life cycles. In January, there were 60 new reactors under construction worldwide — nowhere near enough to replace the reactors that will be shut down over the coming decade. Nuclear power is an ageing, shrinking energy source globally.
...That is, while the draft paper urges governments to get out of power generation and distribution, its “fallback” option of nuclear power requires a massive intervention by government in the power generation sector.
....Subsidies or loan guarantees aren’t the only form of state intervention when it coms to nuclear power. The costs of cleaning up the aftermath of a nuclear catastrophe are potentially huge and the subject of greater focus since Fukushima. “What is changing is our view of the sheer magnitude of liability associated with an event risk occurrence,” Moody’s concluded in April this year, while noting that the industry had an overall strong safety record. Moody’s had already issued a warning about the financial risks associated with nuclear power in 2008. Governments are ultimately the ones who will pick up the bill for cleaning up after nuclear accidents.
And none of that factors in the cost of storing nuclear waste securely for tens of thousands of years.
There’s one other flaw in the draft’s reasoning on nuclear power. Nuclear power has lower operating costs once it is built than many other forms of power generation — at least assuming the cost of uranium doesn’t get out of hand. That means the overall costs of nuclear power — combining construction and operation — are more competitive than would be the case based on construction alone.
But according to a 2008 US analysis by financial advisers Lazard, nuclear power overall is more expensive in megawatt-hour terms than wind, biomass, geothermal and gas combined-cycle, and about the same cost as solar thermal. Of these, geothermal and biomass are both baseload power sources, and baseload solar thermal (which also high construction costs, but even lower operating costs than nuclear) is already in operation in Spain. The draft’s carefully-constructed scenario in which renewable baseload capacity can’t be commercialised at a cost below that of nuclear power already looks highly improbable.
All of which begs the question of exactly why the draft makes such an effort to propose a backstop role for nuclear energy?
