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  • 1.  Nuclear Does Not Make Economic Sense Say Studies

    Posted 03-02-2010 21:17
    Here's some info to add to the discussion of nuclear power costs.

    According to a recent article by Julio Godoy, construction costs for nuclear plants are very risky to finance, and can rise substantially over the long construction period needed. Construction delays present additional risk, as has happened with the Finland plant that Jon mentioned, with a projected delay of three years and cost to build increase of 2.3 billion Euros so far. Nuclear power plants take at least 60 months to build; wind plants 18 months. The costs of constructing a new nuclear power plant range between 2,500 to 3,500 euros (3,420 US dollars) per kilowatt hour; no comparison figure given for wind. Full life cycle costs were not presented.

    ENERGY: Nuclear Does Not Make Economic Sense Say Studies
    By Julio Godoy

    BERLIN, Feb 12, 2010 (IPS) - The enormous technical and financial risks involved in the construction and operation of new nuclear power plants make them prohibitive for private investors, rebutting the thesis of a renaissance in nuclear energy, say several independent European studies.
    http://www.ipsnews.net/news.asp?idnews=50308

    A direct link to the Citibank Group study mentioned in the article:
    https://www.citigroupgeo.com/pdf/SEU27102.pdf



    Michael T. Hernke, Ph.D.
    Research Fellow
    UW-Madison School of Business


  • 2.  Nuclear Does Not Make Economic Sense Say Studies

    Posted 03-03-2010 14:50

    Hi,

     

    We made a similar argument in our study a few years ago published in JPAM but we described the reason for these huge construction costs See http://www2.bren.ucsb.edu/~delmas/webpage/JPAMNUC.pdf

    (Delmas, M. and Heiman, B. 2001. "Government Credible Commitment in the French and American Nuclear Industry," Journal of Policy Analysis and Management. 20(3): 434-456.).

     

    The nuclear power industry in the U.S. built the largest number of nuclear power plants of any country in the world from the mid-fifties to the mid-seventies but stopped building them after 1977. The reason? Huge licensing and construction costs and delays caused by an increased number of rules and lawsuits. We argue that the US institutional environment (fragmented power, independent judiciary and opposing interest groups) greatly undermine the ability of the government to commit to the nuclear power industry.

     

    Investment decisions that require huge sunk costs have to be made several years before starting the plant. Utilities are very sensitive to a regulatory body which can ease or complicate the process. In the U.S., from 1966 to 1970, the time required to complete the regulatory process rose from 86 months (on average) to 122 months, an increase of 42% . This early escalation of delays resulted in substantially higher costs for utilities in the form of the cost of capital. The interest during construction has been rising continuously in the United States, from less than 10 % of the investment costs in 1973, to 30% in 1992. This trend was to continue well into the 1970s and become exacerbated by the effects of increased public doubt about the appropriateness of nuclear power.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     


    Magali Delmas

    Associate Professor of Management

    UCLA Institute of the Environment

    & Anderson School of Management

    La Kretz Hall, #300

    University of California,

    Los Angeles, CA 90095-1496

    Phone: 310-825-9310

    Email: delmas@ioe.ucla.edu

    http://www.ioe.ucla.edu/delmas

     

    -----Original Message-----
    From: Organizations and the Natural Environment Discussion [mailto:ONE-L@AOMLISTS.PACE.EDU] On Behalf Of Michael T. Hernke
    Sent: Tuesday, March 02, 2010 6:17 PM
    To: ONE-L@AOMLISTS.PACE.EDU
    Subject: Nuclear Does Not Make Economic Sense Say Studies

     

    Here's some info to add to the discussion of nuclear power costs.

     

    According to a recent article by Julio Godoy, construction costs for nuclear plants are very risky to finance, and can rise substantially over the long construction period needed. Construction delays present additional risk, as has happened with the Finland plant that Jon mentioned, with a projected delay of three years and cost to build increase of 2.3 billion Euros so far. Nuclear power plants take at least 60 months to build; wind plants 18 months. The costs of constructing a new nuclear power plant range between 2,500 to 3,500 euros (3,420 US dollars) per kilowatt hour; no comparison figure given for wind. Full life cycle costs were not presented.

     

    ENERGY:  Nuclear Does Not Make Economic Sense Say Studies

    By Julio Godoy

     

    BERLIN, Feb 12, 2010 (IPS) - The enormous technical and financial risks involved in the construction and operation of new nuclear power plants make them prohibitive for private investors, rebutting the thesis of a renaissance in nuclear energy, say several independent European studies.

    http://www.ipsnews.net/news.asp?idnews=50308

     

    A direct link to the Citibank Group study mentioned in the article:

    https://www.citigroupgeo.com/pdf/SEU27102.pdf

     

     

     

    Michael T. Hernke, Ph.D.

    Research Fellow

    UW-Madison School of Business



  • 3.  Nuclear Does Not Make Economic Sense Say Studies

    Posted 03-03-2010 20:25
    Construction delays speak more of bad project management than bad conceptualisation.

    There is a track record of performance of nuclear power facilities. Ontario Hydro operated power plants seem to have performed very well for almost 50 years. There is the three mile island failure and the chernobul failure. However, these can both be traced to an instance of human carelessness or willful lack of adherence to specifications.

    There is no track record of performance of windmills. Thngs could go wrong with them. For example, how long do the mechanical components of each windmill last? That is, with the enormous and complex rotation stresses and associated residual magentic fields created in the metal components, how long will they continue to operate before cracks appear and catostrophic failure occurs. What would happen if an enormous wind propeller snapped off and flew through the air and how would the remaining components react to the imbalance should that occur? Would a propeller designed to operate with three blades become dangerously unstable if one of the blades became disoriented or dislodged?

    To understand where I am coming from, here are two scientific experiments you can conduct with simple and available items:

    1. Take the front wheel off your bicycle spin it fast and hold it by the axle (the part that bolts to the front forks of your bicycle); do you feel a force and strain in your arms? Stand in a canoe and do the same thing; did you get wet?

    2. Another experiment would be to stand next to your house and spin around in circles holding an extended hockey stick until you get dizzy and feel the grip of your hand slipping. Then let go of the stick and watch what it does to your windows. Compare the size and weight of the icehockey stick to that of a wind propeller blade.

    I would prefer having a properly built and operated nuclear power plant next door than a windmill farm. While the chance of radiation leak is zilch, the unknown instance of when a propeller blade may dislodge and fly through my house, bedroom, bed and me or if a destabilised tower might come crashing down would create a great deal of stress for me that would be about as dangerous to my health and wellbeing as a radiation leak. The stress is 100% likely and the radiation leak is 0.000000001% likely.

    Lionel Boxer CD PhD MBA BTech(IndEng) - 0411267256
    Associate of RMIT University - lionel.boxer@rmit.edu.au
    Graduate School of Business
    my "Assessment of Quality Systems with Positioning Theory"
    now in a googe book - see link at http://intergon.net
    >>> "Michael T. Hernke" <mthernke@WISC.EDU> 03/03/10 5:40 PM >>>
    Here's some info to add to the discussion of nuclear power costs.

    According to a recent article by Julio Godoy, construction costs for nuclear plants are very risky to finance, and can rise substantially over the long construction period needed. Construction delays present additional risk, as has happened with the Finland plant that Jon mentioned, with a projected delay of three years and cost to build increase of 2.3 billion Euros so far. Nuclear power plants take at least 60 months to build; wind plants 18 months. The costs of constructing a new nuclear power plant range between 2,500 to 3,500 euros (3,420 US dollars) per kilowatt hour; no comparison figure given for wind. Full life cycle costs were not presented.

    ENERGY: Nuclear Does Not Make Economic Sense Say Studies
    By Julio Godoy

    BERLIN, Feb 12, 2010 (IPS) - The enormous technical and financial risks involved in the construction and operation of new nuclear power plants make them prohibitive for private investors, rebutting the thesis of a renaissance in nuclear energy, say several independent European studies.
    http://www.ipsnews.net/news.asp?idnews=50308

    A direct link to the Citibank Group study mentioned in the article:
    https://www.citigroupgeo.com/pdf/SEU27102.pdf



    Michael T. Hernke, Ph.D.
    Research Fellow
    UW-Madison School of Business


  • 4.  Nuclear Does Not Make Economic Sense Say Studies

    Posted 03-04-2010 11:19
    Colleagues,

    I've always felt that a great contribution to the story of what killed nuclear power here came from Forbes, in a cover story on February 11, 1985.  I was in grad school by then, but had just put in three years for Pacific Gas and Electric Company commercializing wind and solar energy and watching the Diablo Canyon nuclear plant ever-so-slowly move forward.

    The article, entitled "Nuclear Follies," does not finger obstructionists and environmentalists, but rather primarily implicates the utility companies themselves and the nature of their relationships with contractors.  As Forbes put it (quoting from what may be a poor memory) "nuclear power was killed by its friends, not its enemies" through cost-plus contracting, weak contract  enforcement regimes, and purchasers (utilities) that still saw themselves as sole providers who could pass through costs as long as regulators permitted them.  The institutional environment, broadly defined, indeed was key to what took place.

    What is provocative is this question: As we move to a world where generation is increasingly separated from transmission and distribution, and much more competitive in nature, will there be the requisite pressure to bring these units on line in a cost effective manner?  Two countervailing pressures are the fact that we still have no long term solution for waste and that if decentralization of production really takes hold, centralized power plants may well be supplanted by site-based generation.  As I'm fond of saying, solar energy has been 5 years away for the last 30 years.  But the depth of commitment to this technology and the scale that it increasingly enjoys suggests that-particularly in a world where externalities are reflected in prices of conventional power production-its time may finally have come.  And that's before we take into account the fact that the Price-Anderson Act (renewed for 20 years in 2005) extends socialized insurance to nuclear plants because commercial insurers won't touch them.

    Mike

    Michael V. Russo
    Charles H. Lundquist Professor of Sustainable Management
    Head, Management Department
    Lundquist College of Business
    University of Oregon
    Eugene, OR  97403

    541-346-5182