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WHY NUCLEAR POWER COSTS SO MUCH Matt Ridley October 27, 2013 Regulation has driven up the price The real problem with nuclear power is the scale of it. After decades of cost inflation, driven mostly by regulations to redouble safety, 1600 megawatt monsters cost so much and take so long to build that only governments can afford to borrow the money to build them. Since Britain borrowing £14 billion extra is not really an option, then we have to find somebody else’s nationalized industry to do it, and guarantee high returns, as if it were a big PFI contract.
Today’s?? announcement for Hinkley Point in Somerset is likely to be that we, the British public, are to guarantee for 35 years to pay nearly twice the current price of electricity to a consortium largely owned by the French government and a communist Chinese regime. That is to say, we lock in electricity price rises for British pensioners and employers while sending dividends to other governments. Liability, above a certain level, stays with us. And when the Chinese build nuclear stations in the future, can we be certain that if, say, the Dalai Lama called on the Queen for tea, the projects would not suffer from unexpected delays?
They say the European Pressurised Reactors at Hinkley will generate more electricity with the same amount of fuel and need less down time for maintenance than previous reactors, so why is the cost so much higher? I’ll explain.
There is, however, another way: to make nuclear reactors smaller, cheaper and quicker to build by assembling them in factories instead of fabricating them on site. That way we
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could put the technology back in the private sector and see costs come tumbling down. Nuclear power is a fabulous technology that could be solving all our problems – but not in its current big form.
Were it not for carbon policies shutting down coal and gas fired power stations, and the failure of wind to fill the gap, we would not touch this deal – but then without carbon alarm, nuclear power would never have become tolerable to our masters in the green movement. The worst of it is that the two reactors to be built by EDF at Hinkley are of a design that is not yet working anywhere. The two EPRs being built in Europe, at Flamanville in France and Olkiluoto in Finland are years behind schedule and billions over budget. True, the two Chinese EPRs at Taishan look like coming in within five years and on budget, but there’s a good reason that this might not be the experience in Somerset, whatever the ambitions of Chinese engineers.
This is because nuclear power in the west has been on a journey of relentless cost inflation for several decades. As the late great nuclear physicist Bernard Cohen explained in a book in 1990, the reason the west stopped building nuclear plants in the 1980s was not the fear of accidents, leaks or the proliferation of waste; it was the escalation of costs driven by regulation. Labour costs shot up as more and more professionals had to be employed signing off paperwork; and according to one study, during the 1970s alone new regulatory requirements increased the quantity of steel per megawatt by 41%, concrete by 27%, piping by 50% and electrical cable by 36%. As the regulation ratchet tightened, builders added features to anticipate rule changes that sometimes did not happen. Tight regulations forced them to lose the habit of on-the-spot innovation to solve unanticipated problems, which further drove up costs and delays.
The ratchet has continued to tighten, and today we have very slightly greater safety at very much increased cost. Nobody doubts that the EPR is a safe design; after 9/11 it was made even more aircraft proof, for example. But then nuclear power was always very safe. Even a bad design, built and managed by a criminally negligent regime, managed at Chernobyl to kill remarkably few people.
The plain fact is that per megawatt-hour of power generated, nuclear power causes fewer deaths than any other way of making electricity bar none. Coal kills nearly 2,000 times as many people; bioenergy 50 times; gas 40 times; hydro 15 times; solar five times and even wind nearly twice as many as nuclear. That’s including Chernobyl and 2
Fukushima. It is clear that increasing the cost and the time to build a plant by at least ten times over the past 40 years has merely made a very, very safe system into a very, very, very safe system.
But that cost escalation has stopped nuclear plants being built, which has cost lives by making us adopt more dangerous technologies instead. It has also given nuclear projects time horizons that rule out private investment, repetition and hence cost-saving innovation. Centrica pulled out of Hinkley because its build time expanded to eight years and its cost doubled.
Ken Owen, Commercial Director for EDF at Hinkley was quoted last week as saying that he is quite happy for British contractors to do the “muck shifting” but “most of the available contracts could be beyond UK suppliers which are struggling to meet the complex safety and quality standards of the nuclear industry”. It need not be this way. If, instead of building huge reactors from scratch, we were to manufacture small reactors in factories, then deliver them one after another by low loader, there is every reason to think the costs could come tumbling down without compromising safety. Somebody needs to do for nuclear reactors what Samuel Colt did for revolvers: mass-produce them with interchangeable parts.
This idea -- of small, modular reactors -- has been floating around for some time (and of course is already routine in the world of submarines). Babcock and Wilcox in the United States is leading a consortium called mPower that is building two 180-megawatt reactors at Clinch River. A British consortium called Penultimate Power, which includes some big engineering names, has similar ambitions. Its chief executive, Candida Whitmill, argues that instead of the British digging the holes and making the tea, we still have great nuclear engineering expertise –though it is withering fast – and could be rolling reactors off production lines and delivering them to UK licensed sites where they would start producing some small amount of power in half the time it will take to build an EPR.
But even to get a modular reactor certificated would take three years and cost tens of millions of pounds. The Office of Nuclear Assessment insists on a fresh certification for each design, disproportionately hurting small projects.
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Scale, as I say, is the problem. In theory size brings scale economies. But in practice it prevents the repetition that leads any manufacturer to learn how to cut costs and leads to cautious and conservative construction lest a mistake bring further costly delay. If instead you manufactured small reactor modules over and over again, you would soon bring down the cost. It might take a bit longer than eight years to install ten modules at Hinkley to equal one 1600 megawatt EPR, but at least you would be getting some electricity along the way and all sorts of private investors would come in, attracted by the shorter time horizon and more modest scale of each reactor. Small is beautiful.
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