Fukushima disaster lays bare the cost of nuclear power

Friday, March 25th, 2011 By

fukushima disaster

Rising construction costs, plus the potential cost of a nuclear accident make clean energy alternatives more attractive to investors. Image: CC The G-tastic 7/Flickr

Before the Fukushima disaster, nuclear power appeared on the verge of a comeback. But in the aftermath of the Japan earthquake and tsunami, nuclear reactors worldwide have been shut down and construction of nuclear plants has been put on hold. Expensive new safety measures that may be required as a result of the Fukushima disaster could make the cost of nuclear power prohibitive to investors as a primary energy source in the future.

The financial truth about nuclear power

Increasing the use of nuclear power as a clean, reliable source of energy won the support of 62 percent of the public in a 2010 Gallup poll. The Obama administration announced plans to provide $54.2 billion in loan guarantees for the construction of nuclear power plants. But even before the Fukushima disaster, it was doubtful that new nuclear reactors would be under construction in the U.S. anytime soon, according to Mark Cooper of the Vermont Law School’s Institute for Energy and the Environment. In a presentation before the House of Commons in Ottawa, Canada, Cooper said the U.S. nuclear industry was a bubble about to burst. The bubble began to inflate in 2001 when the Bush administration started heavily promoting nuclear energy with billions in loan guarantees. By 2008 it became evident that the nuclear industry couldn’t deliver on costs. The recession, cheap natural gas and growing sources for clean energy alternatives effectively finished it off.

The rising cost of nuclear power

In the wake of the Fukushima disaster, building new reactors could become even more cost prohibitive. After the 1979 Three Mile Island accident in Pennsylvania, construction costs for nuclear reactors rose 95 percent, according to Cooper’s research. As a result, households paid 40 percent more for electricity. After the 1986 Chernobyl disaster in Ukraine, construction costs rose another 89 percent, and electricity costs were 42 percent higher. Construction costs for nuclear reactors skyrocketed because of design changes required to address safety concerns. The Nuclear Regulatory Commission has already assembled a task force to investigate the design changes required for planned nuclear plants in the U.S., based on lessons learned from Fukushima.

An unacceptable risk to investors

Going forward from Fukushima, investors will view clean energy alternatives such as natural gas, wind and solar as more attractive than nuclear plants. Utilities may also pass on assuming the risk of nuclear plants. Financially, nuclear energy is no longer a cheap alternative to other sources of energy. Before taking into account the cleanup costs of a nuclear accident, onshore wind farms, for example, are up to 35 percent cheaper than nuclear plants. In the future, alternative sources will become increasingly capable of helping meet the world’s energy needs without the financial and ecological costs of nuclear power. For savvy investors, clean energy alternatives promise more lucrative opportunities.

Sources

Reuters

Fast Company

The National

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