no one’s certain this will be cost-effective either
One of the great sins of nuclear energy programs implemented during the 50s, 60s, and 70s was that it was too cost effective. Very difficult to turn a profit on electricity when you’re practically giving it away. Nuclear energy functions great as a kind-of loss-leader, a spur to your economy in the form of ultra-low-cost utilities that can incentivize high-energy consumption activities (like steel manufacturing and bulk shipping and commercial grade city-wide climate control). But its miserable as a profit center, because you can’t easily regulate the rate of power generation to gouge the market during periods of relatively high demand. Nuclear has enormous up-front costs and a long payoff window. It can take over a decade to break even on operation, assuming you’re operating at market rates.
By contrast, natural gas generators are perfect for profit-maximzing. Turning the electric generation on or off is not much more difficult than operating a gas stove. You can form a cartel with your friends, then wait for electric price-demand to peak, and command thousands of dollars a MWh to fill the sudden acute need for electricity. Natural gas plants can pay for themselves in a matter of months, under ideal conditions.
So I wouldn’t say the problem is that we don’t know their cost-efficiency. I’d say the problem is that we do know. And for consumer electricity, nuclear doesn’t make investment sense. But for internally consumed electricity on the scale of industrial data centers, it is exactly what a profit-motivated power consumer wants.
One of the great sins of nuclear energy programs implemented during the 50s, 60s, and 70s was that it was too cost effective.
I don’t see how any of this has any bearing on financial feasibility of power plants.
For what it’s worth, before the late 90’s there was no such thing as market pricing for electricity, as prices were set by tariff, approved by the Federal Energy Regulatory Commission. FERC opened the door to market pricing with its Order 888 (hugely controversial, heavily litigated). And there were growing pains there: California experienced rolling blackouts, Enron was able to hide immense accounting fraud, etc. By the end of the 2000’s decade, pretty much every major generator and distributor in the market managed to offload the risk of price volatility on willing speculators, by negotiating long term power purchase agreements that actually stabilize long term prices regardless of short term fluctuations on the spot markets.
So now nuclear needs to survive in an environment that actually isn’t functionally all that different from the 1960’s: they need to project costs to see if they can turn a profit on the electricity market, even while paying interest on loans for their immense up front costs, through guaranteed pricing. It’s just that they have to persuade buyers to pay those guaranteed prices, rather than persuading FERC to approve the tariff.
As a matter of business model, it’s the same result, just through a different path. A nuclear plant can’t get financing without a path to profit, and that path to profit needs to come from long term commitments.
It can take over a decade to break even on operation, assuming you’re operating at market rates.
Shit, it can take over a decade to start operations, and several decades after that to break even. Vogtle reactors 3 and 4 in Georgia took something like 20 years between planning and actual operational status.
Now maybe small modular reactors will be faster and cheaper to build. But in this particular case, this is cutting edge technology that will probably have some hurdles to clear, both anticipated and unanticipated. Molten fluoride salt cooling and pebble bed design are exciting because of the novelty, but that swings both ways.
That was true in the 70’s, too. You always needed a way to show that people would pay the long term prices necessary to cover the cost of construction.
The big changes since the 70’s has been that competing sources of power are much cheaper and that the construction costs of large projects (not just nuclear reactors, but even highways and bridges and tall buildings) have skyrocketed.
There’s less room to make money because nuclear is expensive, and cheaper stuff has come along.
Upfront costs are expensive. But operational and fuel costs are very low, per MWh.
So take the upfront costs at the beginning and the decommissioning costs at the end, and amortize them over the expected lifespan of the plant, and add that to the per MWh cost. When you do that, the nuclear plants built this century are nowhere near competitive. Vogtle cost $35 billion to add 2 gigawatts of capacity, and obviously any plant isn’t going to run at full capacity all the time. As a result, Georgia’s ratepayers have been eating the cost with a series of price hikes ($700+ million per year in rate increases) as the new Vogtle reactors went online. Plus the plant owners had to absorb some of the costs, as did Westinghouse in bankruptcy. And that’s all with $12 billion in federal taxpayer guarantees.
NuScale just canceled their SMR project in Idaho because their customers in Utah refused to fund the cost overruns there.
Maybe Kairos will do better. But the track record of nuclear hasn’t been great.
And all the while, wind and solar are much, much cheaper, so there’s less buffer for nuclear to find that sweet spot that actually works economically.
To be fair here, no one’s certain this will be cost-effective either. The new techs make it worth trying though.
One of the great sins of nuclear energy programs implemented during the 50s, 60s, and 70s was that it was too cost effective. Very difficult to turn a profit on electricity when you’re practically giving it away. Nuclear energy functions great as a kind-of loss-leader, a spur to your economy in the form of ultra-low-cost utilities that can incentivize high-energy consumption activities (like steel manufacturing and bulk shipping and commercial grade city-wide climate control). But its miserable as a profit center, because you can’t easily regulate the rate of power generation to gouge the market during periods of relatively high demand. Nuclear has enormous up-front costs and a long payoff window. It can take over a decade to break even on operation, assuming you’re operating at market rates.
By contrast, natural gas generators are perfect for profit-maximzing. Turning the electric generation on or off is not much more difficult than operating a gas stove. You can form a cartel with your friends, then wait for electric price-demand to peak, and command thousands of dollars a MWh to fill the sudden acute need for electricity. Natural gas plants can pay for themselves in a matter of months, under ideal conditions.
So I wouldn’t say the problem is that we don’t know their cost-efficiency. I’d say the problem is that we do know. And for consumer electricity, nuclear doesn’t make investment sense. But for internally consumed electricity on the scale of industrial data centers, it is exactly what a profit-motivated power consumer wants.
I don’t see how any of this has any bearing on financial feasibility of power plants.
For what it’s worth, before the late 90’s there was no such thing as market pricing for electricity, as prices were set by tariff, approved by the Federal Energy Regulatory Commission. FERC opened the door to market pricing with its Order 888 (hugely controversial, heavily litigated). And there were growing pains there: California experienced rolling blackouts, Enron was able to hide immense accounting fraud, etc. By the end of the 2000’s decade, pretty much every major generator and distributor in the market managed to offload the risk of price volatility on willing speculators, by negotiating long term power purchase agreements that actually stabilize long term prices regardless of short term fluctuations on the spot markets.
So now nuclear needs to survive in an environment that actually isn’t functionally all that different from the 1960’s: they need to project costs to see if they can turn a profit on the electricity market, even while paying interest on loans for their immense up front costs, through guaranteed pricing. It’s just that they have to persuade buyers to pay those guaranteed prices, rather than persuading FERC to approve the tariff.
As a matter of business model, it’s the same result, just through a different path. A nuclear plant can’t get financing without a path to profit, and that path to profit needs to come from long term commitments.
Shit, it can take over a decade to start operations, and several decades after that to break even. Vogtle reactors 3 and 4 in Georgia took something like 20 years between planning and actual operational status.
Now maybe small modular reactors will be faster and cheaper to build. But in this particular case, this is cutting edge technology that will probably have some hurdles to clear, both anticipated and unanticipated. Molten fluoride salt cooling and pebble bed design are exciting because of the novelty, but that swings both ways.
If you don’t get a high ROI, you’re not going to have lots of investors offering up their cash at low interest rates.
That was true in the 70’s, too. You always needed a way to show that people would pay the long term prices necessary to cover the cost of construction.
The big changes since the 70’s has been that competing sources of power are much cheaper and that the construction costs of large projects (not just nuclear reactors, but even highways and bridges and tall buildings) have skyrocketed.
There’s less room to make money because nuclear is expensive, and cheaper stuff has come along.
Not when the federal government was just building them to generate fissile material and giving the electricity away after that.
Upfront costs are expensive. But operational and fuel costs are very low, per MWh. Long term, nuclear is cheaper.
So take the upfront costs at the beginning and the decommissioning costs at the end, and amortize them over the expected lifespan of the plant, and add that to the per MWh cost. When you do that, the nuclear plants built this century are nowhere near competitive. Vogtle cost $35 billion to add 2 gigawatts of capacity, and obviously any plant isn’t going to run at full capacity all the time. As a result, Georgia’s ratepayers have been eating the cost with a series of price hikes ($700+ million per year in rate increases) as the new Vogtle reactors went online. Plus the plant owners had to absorb some of the costs, as did Westinghouse in bankruptcy. And that’s all with $12 billion in federal taxpayer guarantees.
NuScale just canceled their SMR project in Idaho because their customers in Utah refused to fund the cost overruns there.
Maybe Kairos will do better. But the track record of nuclear hasn’t been great.
And all the while, wind and solar are much, much cheaper, so there’s less buffer for nuclear to find that sweet spot that actually works economically.