Submitted to Bloomberg Editor James Greiff :
I would like to respond to the following article : The Dream of Cheap Nuclear Power Is Over - Januari 31st.
Please see documents attached.With kind regards,
In the introductory paragraphs of The Dream of Cheap Nuclear Power Is Over, author Smith speaks about fantasies of futuristic and complicated nuclear power plants and how France and Finland are becoming better at storing spent fuel. However, he seems to have become disenthralled, partly because of the 2011 Fukushima accident. The cost of the subsequent evacuation and the progress of solar are considerations for Smith to convince himself that "a nuclear world won't come true anytime soon." Could anyone explain to me why the title is so definitive? Especially because the author concludes that this paradigm may not be true if certain conditions are met i.e. nuclear fusion & small cheap fission reactors.
I agree with Smith that nuclear energy is a far better option over fossil fuels, especially because it causes no detrimental effects to health and environment. So far so good.
Smith, however, decides to base his conclusion on a metric at which nuclear energy goes off on a tangent compared to fracking and solar power, namely CAPEX (Capital Expenditure). CAPEX is what it costs to build something like a fracking well or a solar power plant or a nuclear power plant. CAPEX however should be placed in a different context, and this is something practically everyone does before investing in said energy source. The question is : "How long can we reliably expect to profit from this investment?"
A fracking well lasts as long until it depletes; A solar power plant will be viable for Roughly 25 to 30 years; and we may contrast this with 60 to 80 years for a nuclear power plant.
Suppose that we're still on the low end of the spectrum in terms of longevity and we spend roughly $2.4 billion on 550 Megawatt similar to the Topaz PV plant in California. Note that we have to account for stranded assets in the form of capacity factor. Solar has a capacity factor of roughly 25.8% according to the EIA. If we account for capacity factor and a lifespan of 25 years we get the following figures : $676.5 thousand per effective Megawatt per year.
Let's compare this to the $9 billion nuclear power station. From the documentation shared by Smith we may account for a 2,000 Megawatt reactor facility. The capacity of nuclear, according to the EIA, is roughly 92.3%. This gives us the following figure for a 60 year lifespan : $81.3 thousand per effective Megawatt per year.
Now we have uncovered the actual capital costs of solar and nuclear. The discrepancy is telling. Solar is 8 times more expensive than nuclear energy in terms of capital costs. If we have to account for the backup which is required by solar we will probably end up in the double digits if a discrepancy between nuclear and solar is concerned. Also note that even if we would double Solar's longevity we would still reach $338.3 thousand per effective Megawatt per year. This means that this argument comes down to efficiency, and in terms of efficiency, nothing beats nuclear energy.
True costs are measured in Levelized Cost of electricity or LCOE. And LCOE comprises all costs associated to a plant, including decommissioning costs. LCOE is pretty much in flux. As of yet LCOE for solar, and wind are on par with nuclear. But this depends entirely on where the technology has been implemented.
There are two important metrics which are omitted and should be considered. The first being the ancillary benefits of nuclear in terms of the production of essential isotopes for medical and safety purposes. The second being the input of materials required per unit of energy produced. From my own analyses it turns out that nuclear, again, is vastly superior to any other power source when it comes to putting materials to effective use, which means that we are also minimizing the amount of materials required.
As it stands, the argument that Nuclear's capital costs are "gargantuan" is moot, as it has to be put into the correct context. In terms of CAPEX you buy more bang for your buck when you invest in nuclear rather than solar, and the disparity is quite large.
It is my contention, in contrast to Smith's, that nuclear energy is the power of tomorrow. Consider for instance Terrestrial Energy's licensing plans for a 400 MWth liquid fuel reactor, called the IMSR400, which can be used for industrial heat and electricity. And this is something solar cannot do, it cannot cogenerate, or provide the essential heat required for heavy industrial processes, which would otherwise be fuelled with gas and coal. There are dozens of startups just like Terrestrial Energy which are edging closer to commercializing their designs, most notably Bill Gates's Terrapower. And all of these startups aim to make nuclear significantly safer, cheaper and easier to build than contemporary reactors upon which Smith's argumentation rests. We may therefore conclude that the title should be "we may dream a little longer about cheap nuclear power."
It is entirely possible that this mail has been sucked into the void of e-mail filters, and therefore I will publish this letter on my blog as well.