To those who say “beaudy nuke”: why should taxpayers suffer?  

Posted by Big Gav in

Crikey's Bernard Keane has the next installment of his series on why nuclear power is unlikely to be seen in Australia - To those who say “beaudy nuke”: why should taxpayers suffer?

What would it cost Australia to go nuclear? Good question. Excellent question, in fact, because no one really knows.

Estimating the cost of building a nuclear power plant is difficult even in countries with established nuclear industries. For a start, not too many have been built in recent years. Further, very few  — in fact, not really any  — have been built in an open, competitive, private power-supply market where the plant would face competition from alternative electricity sources. Governments indirectly or indirectly play a huge role in offsetting costs, transferring risk from company balance sheets into governments programs, tax offsets and implicit guarantees.

Worst of all, the construction of nuclear power plants is notoriously prone to cost overruns. It wasn’t Three Mile Island and Chernobyl that smashed the US power industry in the 1980s  — it was the fact that from the 1960s to the end of the 1970s the final construction cost of US nuclear plants was on average twice to four times the original cost.

Regularly blowing out your costs by 400% is not a way to engender investor and government confidence.

Currently we’re seeing the same thing in Finland and France, where costs for new nuclear plants (initially €3.3 billion, or $A5.3 billion) are currently 50-70% over budget, years out from completion.

Overruns and delays are toxic to the balance sheets of nuclear plant builders and their customers because of the cost of capital, already high due to the extended construction period. That’s why so many nuclear power advocates say low-interest government loans are necessary to make building new reactors financially viable  — they want taxpayers, rather than capital markets, to provide their capital. ...

Wind and solar power have the advantage of much shorter construction times, and no decommissioning costs. Neither requires taxpayers to take on risk  — either through lending capital to nuclear reactor builders for the decade-plus construction and 200% budget blow-out history shows they require, or through requiring high electricity prices for consumers to guarantee a return on capital, or through the acceptance of safety and storage risks by the taxpayer into infinity, or at least the next 200,000 years.

Some of nuclear power’s construction costs will come down if reactor construction significantly expands globally. By the time Australia has developed the basic regulatory infrastructure and skills base required to seriously consider a nuclear power industry, we may be able to take advantage of it. But construction costs will have to fall a long, long way before nuclear power can be remotely considered a viable economic option compared to renewables or even gas-fired power.

So next time a nuclear proponent tells us we should be “having a debate” about nuclear power, ask them a simple question: why should taxpayers fund the most expensive and slowest energy option when so many alternatives are significantly cheaper and pose less financial risk?


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