By Josh Freed, Todd Allen, Ted Nordhaus, and Jessica Lovering
In his Feb 13th web article on Toshiba’s heavy losses in its nuclear division, our colleague Michael Shellenberger argues that nuclear energy is in crisis due to a toxic combination of anti-nuclear zealotry, Kafkaesque regulatory excess, and engineers gone wild. There is nothing wrong with 70’s era light-water reactors, he claims, that rolling back regulations at the NRC and standardizing nuclear designs and deployment wouldn’t solve. Indeed, he goes further and argues that efforts to commercialize reactor designs that are easier and cheaper to build and operate are counter-productive, standing in the way of the tried and true path to nuclear deployment, namely standardized deployment of large light-water reactors.
Shellenberger has done some good reporting on the challenges that have bedeviled efforts to build new reactors in the US and Europe, albeit much of it based upon interviews with unnamed sources. And he rightly calls our attention to the crisis that the nuclear industry is presently facing in developed countries and the consequences of that crisis for the effort to transition the global economy toward clean energy sources. But he draws the wrong lessons from Toshiba’s recent losses and from the longer-term struggles that nuclear energy in developed economies has faced in recent decades. Too little innovation, not too much, is the reason that the industry is on life support in the United States and other developed economies.
In this post, we address Shellenberger’s analysis of why Toshiba’s two AP1000 plants in the US have proven so costly and what lessons might be gleaned from that experience. In a subsequent post, we will address Shellenberger’s proposal for how to save the nuclear industry.
Drivers of Nuclear Costs
Shellenberger makes a number of claims that don’t comport well with the facts.
1. The AP1000 represents a fairly straightforward evolution in light-water reactor design, not a radical departure, as Shellenberger claims.
There is nothing in fuel, coolant, materials, or basic design associated with the AP1000 that might be characterized as a radical departure from previous light-water designs. The primary design innovation in the AP1000 involves the placement of the cooling tanks above the reactor, such that the coolant can circulate and cooling pressure can be maintained passively in the event of a loss of power. A number of components in the containment system are also modular, which allows them to be constructed off-site.
These innovations hold some potential for construction and operational savings and improved safety. But they meet no definition of radical innovation of which we are aware. Rather, they represent just the sort of incremental innovation in design and operation that Shellenberger argues elsewhere holds the key to reducing nuclear costs.
2. Standardization is important but is not a panacea.
Shellenberger argues that building a standardized light-water design is the key to reducing nuclear costs. But for the most part, standardization and building of multiple reactors on the same site has limited cost escalation, not brought costs down. France, the poster child for standardization and economies of multiples in light-water reactor design and deployment, has seen modest cost escalation over time, not cost declines. South Korea has seen cost declines, in part at least, due to standardization.[i] But it is important to note that South Korea started with relatively high initial build costs. Cost has come down over time, but the cost of the latest wave of plants built in South Korea is about the same as those in France, which saw costs rise over time.
3. Most of the proximate causes of rising cost and construction delays associated with new nuclear builds in the United States are attributable to the thirty-year hiatus in US nuclear construction, not the novelty of the AP1000 design.
After thirty years of not building nuclear plants in the United States, any nuclear build would, for most practical purposes, be a first-of-kind-build. The companies and suppliers in question have no hands-on experience building nuclear plants. The nuclear supply chain has had to be rebuilt from scratch. Most of the skilled engineering and construction work force that built the existing US nuclear fleet has long since retired. For these reasons, there is little reason to think that if Southern Company had chosen to build a Gen II plant instead of the AP1000, it would not have faced many of the same challenges.
4. Reasonable regulatory reform will probably not dramatically reduce the cost of new light-water reactors, as Shellenberger suggests.
Reforms at the NRC might make it easier to license new reactors and perhaps to deal with changes in specs that turn out to be necessary during construction. But there is no reason to think that even the most zealous reformers would advocate dispensing with containment domes or multiply redundant back up cooling systems in the event of a loss of power or coolant for light-water reactors, nor would such a change be justified. As these are the primary cost centers for nuclear construction costs,[ii] regulatory reform short of that is unlikely to much change the bottom line.
Learning the Right Lessons
If there is one central lesson to be learned from the delays and cost overruns that have plagued recent builds in the US and Europe, it is that the era of building large fleets of light-water reactors is over in much of the developed world. From a climate and clean energy perspective, it is essential that we keep existing reactors online as long as possible. But slow demand growth in developed world markets makes ten billion dollar, sixty-year investments in future electricity demand a poor bet for utilities, investors, and ratepayers.
Liberalized electricity markets only further exacerbate the risk associated with these investments. Conventional light-water reactors are capital intensive, long-lived infrastructure that require central planning, cheap capital, and long operating lifetimes to pay off, none of which exist in liberalized markets. Neither standardized conventional light-water designs nor regulatory reform address any of these challenges, which are in fact the central challenges that investment in new nuclear capacity faces.
The centralized build out of large standardized fleets of light-water reactors has been state led and in response to major geo-political priorities.
Indeed, there is virtually no history of nuclear construction under the economic and institutional circumstances that prevail throughout much of Europe and the United States. Virtually every commercial nuclear plant that has ever been built has been built either by state owned utilities or by private utilities regulated under the cost of service model, with guaranteed return on investment and access to cheap capital.
In every case, the centralized build out of large standardized fleets of light-water reactors has been state led and in response to major geo-political priorities — 70’s era oil shocks and fossil fuel scarcity in France, Sweden, and Japan, rapid energy demand growth, limited domestic fossil resources, and air quality concerns in China and Korea, and the imperatives of the Cold War in the United States and the former Soviet Union.
Absent these circumstances, there is little reason to think that large light-water reactors represent a particularly feasible option for utilities or investors, much less large fleets. Standardization and learning by doing are key requirements for sustainable nuclear economics. But those criteria alone will be insufficient to make new nuclear an economically rational option so long as they are coupled to large light-water technology. Whether Gen II or Gen III, learning by doing and economies of multiples require sufficient replication to bring declining costs. That replication is unlikely so long as the reactor in question is a 1GW, multi-billion dollar proposition, at least in the United States and Western Europe.
The current light-water technological regime, which emerged from military applications in the US Navy, was commercialized at a time when fossil fuels were believed to be scarce, electricity demand was expected to grow for many decades, and virtually all utilities were either publicly owned or regulated under the cost of service model. None of those conditions are any longer present.
The path dependent nature of nuclear technology has meant that what innovation the sector has seen has been incremental innovation in light-water designs that are poorly suited to present circumstances. As we will discuss in a follow up post, a radical break from the present light-water regime is in fact precisely what will be necessary to revive the nuclear industry and assure that we will have the cheap and scalable nuclear technologies available that will be necessary to deeply decarbonize the global economy in the coming decades.
[i] Lovering, J. R., Yip, A. & Nordhaus, T. Historical construction costs of global nuclear power reactors. Energy Policy 91, 371–382 (2016).
[ii] Ganda, F., Hansenb, J., Kima, T. K., Taiwoa, T. A. & Wigeland, R. Reactor Capital Costs Breakdown. in ICAPP 2016 (2016).
Josh Freed is the Vice President for Clean Energy at Third Way. Todd Allen, Ph.D., is a Professor at the University of Wisconsin College of Engineering and Senior Visiting Fellow at Third Way. Ted Nordhaus is the Co-founder and Executive Director and Jessica Lovering is the Director of Energy at The Breakthrough Institute.
