New Centralized Nuclear Plants: Still an Investment Worth Making?


(Image credit: Getty Images Europe via @daylife)

Just a few years ago, the US nuclear renaissance seemed at hand.  It probably shouldn’t have been.  Cost overruns from Finland to France to the US were already becoming manifest, government guarantees were in doubt, and shale gas drillers were beginning to punch holes into the ground with abandon.

Then came Fukushima.  The latter proved a somewhat astonishing reminder of forgotten lessons about nuclear power risks, unique to that technology:  A failure of one power plant in an isolated location can create a contagion in countries far away, and even where somewhat different variants of that technology are in use. Just as Three Mile Island put the kaibosh on nuclear power in the US for decades, Fukushima appears to have done the same for Japan and Germany, at a minimum.  It certainly did not help public opinion, and at a minimum, the effect of Fukushima will likely be to increase permitting and associated regulatory costs.

By contrast, when a gas-fired plant in Connecticut exploded during construction a few years ago, it didn’t affect the public perception of other gas plants.  But Fukushima and nuclear power is another story.  The stakes are so much bigge

Even without Fukushima, the verdict on large centralized US nukes is probably in, for the following reasons:

1)     They take too long: In the ten years it can take to build a nuclear plant, the world can change considerably (look at what has happened with natural gas prices and the costs of solar since some of these investments were first proposed).  The energy world is changing very quickly, which poses a significant risk for thirty to forty year investments.

2)     They are among the most expensive and capital-intensive investments in the world; they cost many billions of dollars, and they are too frequently prone to crippling multi-billion dollar cost overruns and delays.  In May 2008, the US Congressional Budget Office found that the actual cost of building 75 of America’s earlier nuclear plants involved an average 207% overrun, soaring from $938 to $2,959 per kilowatt.

3)     And once the investments commence, they are all-or-nothing.  You can’t pull out without losing your entire investment.  For those with longer memories, WPPS and Shoreham represent  $2.25 bn (1983)  and $6 bn (1989) wasted investments in which nothing was gained and ratepayers and bondholders lost a good deal.

Some recent investments in centralized nuclear plants in other countries highlight and echo these lessons.

Electricite de France’s Flamanville plant has seen its budget explode from 3.3 to 6 bn (July 2011) to 8 bn Euros ($10.5 bn) as of last December, with a delay of four years over original targets.  EDF in part blames stricter post-Fukushima regulations for part of the overrun).  To the north, Finland’s Olkiluoto – being constructed by Areva – has seen delays of nearly five years, and enormous cost overruns.  The original turnkey cost of 3.0 bn Euros has skyrocketed beyond all fears, increasing at least 250%.  Just last month, Areva’s CEO conceded “We estimate that the costs of Olkiluoto are near those of Flamanville.”

In the US, recent experience doesn’t look much better:  Progress Energy (now Duke) first announced the 2,200 MW Levy nuclear project in 2006, with an estimated price tag of $4 to $6 bn and an online date of 2016.  The cost estimated increased to $17 bn in 2008.  This year, Progress announced the project would cost $24 billion and come online in 2024.  The Levy plant currently has a debt in excess of $1.1 bn for which customers had already paid $545 million through 2011.  As of now, the utility plans to proceed, with the Executive VP for Power Generation stating ”We’ve made a decision to build Levy…I’m confident in the schedule and numbers.”

In Georgia, Vogtle Units 3 and 4 (owned jointly by a number of utilities, including Georgia Power) appear in somewhat better shape, but issues have cropped up there as well.  Customers currently pay $10 per month in advance to cover financing associated with the two 1,117 MW units.  Georgia Power is allowed by legislation to recover $1.7 bn in financing costs of its estimated $6.1 bn portion of the $14 bn plant during the construction period.  However, there have already been some cost problems, and Georgia Power is disputing its responsibility to pay $425 million of overruns resulting from delays in licensing approvals.  Total cost excesses to all partners total $875 mn.  The two units were expected to come online in 2016 and 2017, but in a Georgia PSC meeting in December, an independent monitor noted that expected delays of fifteen months are largely as a result of poor paperwork related to stringent design rules and quality assurance.  Those delays will likely continue to cost more money.

Unfortunately, these experiences are not outliers.  From 2007 to 2010, the NRC received 18 nuclear applications ( of which only twelve are still active).  Of these, the consulting outfit Analysis Group reported that for eight plants where they were able to obtain two or more comparable cost estimate, 7 are over budget (including Levy and Vogtle), with updated numbers “often double or triple initial estimates.”  This is consistent with an MIT study estimating ‘overnight’ costs nearly doubling from 2002 to 2007.   As utilities management consultant Stephen Maloney was quoted in the Analysis Group study “No one has ever built a contemporary reactor to contemporary standards, so no one has the experience to state with confidence what it will cost.  We see cost escalations as companies coming up the learning curve.”

Last August, Exelon abandoned plans to construct two facilities in Texas, blaming low natural gas prices.  Two months later, Dominion Resources announced that it would shut down its existing Kewaunee station in Wisconsin as a consequence of low gas prices and a lack of buyers.  The latter move was particularly eye-opening: building a nuclear plant is supposed to be the expensive part, while operation is expected to be relatively cheap.

So it appears that the nuclear renaissance may be largely over before it started.  And yet, many projects have not yet been canceled, with utilities and ratepayers accepting ever more risk in order to rescue sunk costs. In many cases, these costs have soared or will soar into the billions. As risk management expert Russell Walker of the Kellogg School of Management is quoted as saying in the  Tampa Bay Times “When the stakes get higher, it gets harder for organizations to walk away…this happens a lot.  It’s the same problem a gambler has: If I play a little longer, it’ll come around.

With low natural gas prices, efficient combined cycled turbines, more efficient renewables and a host of more efficient end-use technologies, that’s a bet fewer and fewer seem wiling to take.   Unfortunately for ratepayers at some utilities, they are at the table whether they like it or not…


Cost of Jaitapur reactors could triple to nearly Rs. 35,500 crore


VAIJU NARAVANE, The Hindu, Dec 6,2012


English: Internationally recognized symbol. De...

English: Internationally recognized symbol. Deutsch: Gefahrensymbol für Radioaktivität. Image:Radioactive.svg (Photo credit: Wikipedia)


EDF, the French electricity giant that has built and operated the country’s 58 nuclear reactors, has announced that the bill for the 1,650-MW, third-generation pressurised reactor known as EPR has now gone up to AFP €8.5 billion. At its inception, the reactor, designed by Areva of France, was expected to cost €3.3 billion.

This is bad news for India which is slated to buy six EPR reactors for a site in Jaitapur, Maharashtra. Initially expected to cost some €20 billion, the six EPRs India intends to buy will now be in the region of €50 billion — nearly Rs. 35,500 crore.

Delays and cost over-runs have marked the construction of the EPR in Flamanville, Manche, France. In the aftermath of the Fukushima disaster, the French Nuclear Safety Authority (ASN) carried out an audit of the country’s nuclear installations and asked for several reinforcements and design changes. All these added to the price.

However, work on the reactor had been badly delayed and it is now expected to go on stream in 2016. Industry insiders predict that date will not be respected and there will be further cost overruns.

“The development of the boiler design, additional engineering studies, the integration of new regulatory requirements and everything learnt from Fukushima have also been taken into account,” EDF said in a statement.

There is not a single EPR that is working today. The reactor built in Olkilouto, Finland, by Siemens and Areva is also running four years behind schedule and has yet to begin operating. The reactor may start operating next year.

EDF has been rapped on the knuckles several times by the nuclear watchdog ASN for cutting corners, using shoddy materials, and employing workers who do not know their job. The Flamanville plant is the first reactor being built in France in nearly 20 years.



‘Areva reactor meets advanced safety requirements’

English: Internationally recognized symbol. De...

Image via Wikipedia

NEW DELHI, February 9, 2012

R. Ramachandran

There will be no additional cost to the EPR 1650 MWe Pressurised Water Reactor (PWR), a Generation III+ nuclear reactor developed by Areva of France, in complying with the additional safety requirements recommended by the French Nuclear Safety Authority (ASN) in its Complementary Safety Assessment (CSA) report submitted in January. This was stated by Dr. Bernard Bigot, Chairman of the French Alternative Energies and Atomic Energy Commission (CEA), at a press briefing on Wednesday.

The proposed NPP at Jaitapur in Maharashtra will be based on the EPR 1650 MWe nuclear reactor systems. The NPP at Jaitapur will be essentially the same as the EPR being built at Flamanville 3 in France. An application for authorisation of a similar reactor at Penly in France is pending.

These additional safety requirements recommended by ASN were based on the new ‘European Stress Tests’ on French nuclear power plants (NPPs) in the post-Fukushima context. These tests had been recommended by the European Council in March 2011. According to the European Nuclear Safety Regulatory Group (ENSREG), ‘stress test’ is a “targeted reassessment of the safety margins of NPPs in the light of events which occurred at Fukushima: extreme natural events challenging the plant safety functions and leading to a severe accident.”

The briefing by Dr. Bigot was following his presentation of the CSA to the Indian authorities and his interaction with officials of the Indian Department of Atomic Energy (DAE) in New Delhi, including Dr. Srikumar Banerjee, Chairman of the Atomic Energy Commission (AEC).

This CSA report of ASN will be studied by the Atomic Energy Regulatory Board (AERB) before the final contract with Areva is inked by the Nuclear Power Corporation of India Ltd. (NPCIL), the operator of the NPP.

“The EPR design is well suited to cope with the extra safety requirements and even in the worst case [scenario] the reactor will be safe,” Dr. Bigot said.

“For the Flamanville 3 EPR reactor,” says the CSA report, “ASN considers that the safety objectives and the strengthened design of this type of reactor already offer improved protection against severe accidents. Its design in particular takes account of and incorporates measures to deal with the possibility of accidents with a core melt and combinations of hazards. Furthermore, all the systems necessary for the management of accident situations, even severe, are designed to remain operational for an earthquake or a flood as defined in the baseline safety requirements.”

While submitting its report, ASN proposed a ‘hard-core’ of material and organisational measures for each facility, specifications and procedures, which have to be met by June 30. The ‘hard-core’ will comprise:

— crisis management premises and equipment;

— means of communication and alert;

— technical and environmental monitoring instrumentation;

— operational dosimetry resources for workers;

— strengthened equipment including an electricity generating set and water supply for emergency cooling down of each reactor.

These measures, according to an ASN statement of January 3, “will ensure ultimate protection of the facilities with three objectives:

— prevent a severe accident or limit its progression;

— limit large scale releases in the event of an accident which it was not possible to control;

— enable the licensee to perform its emergency management duties.”

“The design of the EPR reactor,” says the CSA report, “which already offers improved protection against severe accidents, should make it easier to create its ‘hard-core’.” According to the report, the French utility company Électricité de France (EDF) will be identifying the existing or additional systems to be included in the ‘hard-core,’ in particular to control the pressure in the containment in the event of a severe accident.

Towards this, ASN has recommended the creation and deployment of the ‘Nuclear Rapid Response Force (FARN)’, as proposed by EDF, by the end of 2012. FARN will comprise specialist crews and equipment able to take over from the personnel on a site affected by an accident and deploy additional emergency response resources in less than 24 hours, with operations beginning on the site within 12 hours. Dr. Bigot noted that Fukushima was not prepared in this respect and suffered from a lack of trained personnel on site. Finding appropriate workforce for FARN may itself pose a problem, he observed.


Kractivism-Gonaimate Videos

Protest to Arrest

Faking Democracy- Free Irom Sharmila Now

Faking Democracy- Repression Anti- Nuke activists


Kamayaninumerouno – Youtube Channel


Enter your email address to follow this blog and receive notifications of new posts by email.

Join 6,225 other followers

Top Rated

Blog Stats

  • 1,860,556 hits


September 2022
%d bloggers like this: