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Hannah Bullock, 18 May 2009
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Wise up to nuclear folly
Investing in nuclear power, says Amory Lovins, is the worst thing we can do for climate change. It’s all in the (bad) economics - and the opportunity costs.
Nuclear power is often described as a big, fast, and vital energy option - the only practical and proven source big and fast enough to do much to abate climate change. In this view, various ‘micropower’ and ‘negawatt’ (electricity saving) alternatives may be accepted as necessary and desirable within a balanced low-carbon electricity mix, but are seen as relatively small, slow, immature, uncertain, and futuristic.
A credulous press accepts this supposed new reality and creates an echo-box to amplify it. Some politicians and opinion leaders endorse it. Yet its vision of a vibrant nuclear power industry, poised for rapid growth and with no serious rivals in sight, is the opposite of the actual reality - that nuclear is a once-significant but now dying industry already fading from the marketplace, overtaken and humbled by swifter rivals.
“Every investment in nuclear expansion will worsen climate change by buying less solution per dollar.”
The more concerned you are about climate change, the more vital it is to invest judiciously, not indiscriminately, in cutting carbon emissions. It is essential to buy the fastest and most effective climate solutions. Nuclear power is just the opposite. Claimed broad ‘green’ support for nuclear expansion, if real (which it’s not), would therefore be unsound and counterproductive.
Efforts to ‘revive’ this moribund technology only waste time and money. You’d expect the City to appreciate all the warning signs - there’s not a penny of private money in the nuclear investments that are being made in countries such as China, Korea and France. As for public money, the UK industry has had two expensive bailouts already; making the same mistake a third time would astonish future historians.
The real competition
Standard studies, comparing new nuclear plants with central power plants burning coal or natural gas, conclude that their marked disadvantage in total cost might be overcome if their construction became far cheaper, or if their construction and operation were even more heavily subsidised, or if carbon were heavily taxed, or if (as nuclear advocates prefer) all of these changes occurred. But such efforts to make nuclear plants appear competitive are futile, because central thermal power plants are not their real competitors. None of them can compete with windpower (and some other renewables), let alone with two far cheaper resources: cogeneration (or combined heat and power - CHP), and efficient use of electricity (ie technologies for wringing more work from each kilowatt-hour).
Taken together, the low-carbon or no-carbon deployments actually occurring in the global marketplace are already bigger than nuclear power and are growing an order of magnitude faster. This is no accident. It simply reflects nuclear power’s fundamental uncompetitiveness. And all its meagre orders nowadays come from centrally planned electricity systems.
Despite official support and subsidies, its bad economics make it unfinanceable in the private capital market. What is more, energy efficiency and renewables are getting rapidly cheaper, for fundamental and durable reasons - new and improved technologies, offshore and high-volume manufacturing, competition, streamlined delivery, and (above all) integrative design. The speed of and further scope for all these competitors’ improvements far exceeds any plausible improvements for nuclear power.
Catastrophic opportunity cost
Fears of a looming energy gap should not stampede us into irrational decisions. There need be no gap if we adopt sensible strategies. But the sweeping claim that ‘we need every energy technology’ - as if we had infinite money and no need to choose - cannot withstand analysis. We must choose the best buys first, not last.
Nor can we afford all options. Investors appreciate that diversification is wise but must be intelligent. The strategic virtue of a diversified portfolio doesn’t justify buying every technology or financial asset on offer. And nuclear power is both unnecessary and uneconomic. In practice, keeping it alive means diverting private and public investment from the cheaper market winners - cogeneration, renewables, and efficiency - to the costlier market loser.
If it costs roughly one US dollar to generate ten kilowatt-hours of new nuclear energy, at its 2004 subsidy levels, then for the same money we could displace more of the carbon emissions from coal-fired electricity generation by:
- Wind power - a dollar buys 12-17kWh of dispatchable windpower;
- Gas-fired industrial cogeneration - a dollar buys 9-17kWh (adjusting for its carbon emissions);
- Cogeneration at residential building-scale - 20-65kWh (again, adjusting for carbon emissions);
- Heat from waste cogeneration - 24-89kWh;
- End-use efficiency - anything up to at least 100kWh of savings. Much, indeed most, of the carbon displacement should come from end-use efficiency, because that’s both profitable - cheaper than the energy it saves - and fast to deploy
The total portfolio of carbon displacements should be both fast in collective deployment, and effective in terms of carbon displaced per dollar. Expanding nuclear power, on the other hand, would both reduce and retard the desired decrease in CO2 emissions. Every dollar invested in it will worsen climate change by buying less solution per dollar. In this sense of ‘opportunity cost’ - any investment foregoes other outcomes that could have been bought with the same money - nuclear power is far more carbon-intensive than a coal plant.
A portfolio of least-cost investments in efficient use and in decentralised generation will beat nuclear power in cost and speed and size by a large and rising margin. This isn’t hypothetical; it’s what today’s market is proving decisively. Claims that more nuclear plants are needed to protect Earth’s climate cannot withstand documented analysis or be reconciled with actual market choices.
Not such a big shot Nuclear power worldwide already has less installed capacity and generates less electricity than renewables and CHP (combined heat and power) together. In 2004, these rivals added nearly three times as much output and six times as much capacity as did nuclear power.
On the demand side, end-use efficiency may well have saved even more electricity and carbon. Most countries don’t track it, so it can’t be rigorously plotted on the same graph, but clearly it’s a large and expanding resource.
These competing technologies are not only being deployed an order of magnitude faster than nuclear power; ultimately they can become far bigger.
Nuclear power plants must run steadily, rather than varying widely with loads, and the units are too big for many smaller countries or rural users.
Prudent investors favour micropower. The cheapest, most reliable power is typically produced at or near customers, in many small units, rather than in fewer, bigger units far away. In the US, local generation now costs less than the grid, and has become so reliable that 98-99% of power failures originate in the grid.
Nuclear is about the slowest option to deploy. Decentralised supply- and demand-side resources, by contrast, benefit from short lead times, modularity and economies of mass production (they’re more like cars than cathedrals). Siting is usually less controversial (except in some unusual windpower cases) and the technologies are inherently swifter to deploy, with many diverse market actors and without complex regulatory processes, ponderous enterprises, or unique institutions.
Amory Lovins, influential advocate of ‘soft energy’ options and CEO of the US-based Rocky Mountain Institute.
This article draws heavily on his September 2005 essay of the same name (available at www.rmi.org), supplemented in conversation with Roger East.
8 March 2006
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