Wednesday, June 18, 2008

On costly generation

It's truly stunning how media coverage of the Wall government's plan to pour its efforts into a nuclear reactor in Saskatchewan has utterly failed to note the likelihood that nuclear energy will actually be far more expensive than alternatives. (A rare exception, though without a clear discussion of the costs involved, is Murray Mandryk's column today.)

With that in mind, let's take a look at how the respective costs look to line up at the moment.

Here's the Globe and Mail's discussion of the expected costs associated with Ontario's next wave of nuclear reactors:
When the government first received advice in 2005 about its power-supply system, the Ontario Power Authority was assuming nuclear construction costs of $2,600 per kilowatt or $2.6-billion for a 1,000-megawatt reactor. It is to dream. Now, a U.S. industry group, the Washington-based Nuclear Energy Institute, is saying that the figure is at least $3,500 per kilowatt and this might even be a low ball.

Last fall, for example, Moody's Investors Service said new reactors could cost as much as $6,000 per kilowatt. The company said this was "only marginally better than a guess," but this spring, Florida Light and Power proposed building new units at a cost of up to $8,000 per kilowatt or $12-billion per reactor.
Likewise, here's Salon's coverage of new nuclear power generation in the U.S.:
(B)y mid-2007, a Keystone report, funded in part by the nuclear industry and NEI, estimated overnight (construction) costs at $3,000 per kilowatt, which, with interest, equals $3,600 to $4,000 per kilowatt. The report notes, "The power isn't cheap: 8.3 to 11.1 cents per kilowatt hour." That's not cheap, when you consider that in December 2007, retail prices in this country averaged 8.9 cents per kilowatt-hour.
By way of comparison, let's take a look at Natural Resources Canada's estimates for the cost of wind power production:
Modern wind turbine generators cost between $1500 and $2000 per kilowatt for wind farms that use multiple-unit arrays of large machines. Smaller individual units cost up to $3000 per kilowatt. In good wind areas, the costs of generating electricity range between five and ten cents per kilowatt hour. That cost is somewhat higher than the costs associated with an electrical facility, but wind energy costs are decreasing every year, whereas most conventional generation costs continue to increase.
So even if the Sask Party's ultimate goal were merely to pour its money into as much electrical generation as possible either for export or as a basis for future development, there's little reason to believe that nuclear power would actually be the best way of accomplishing that.

So what else is at play? Well, Mandryk's column also catches another point which seems to have been largely missed elsewhere:
Cheveldayoff announced his government was calling for proposals on private-sector electrical generation because "We believe not every dollar risked in power generation in Saskatchewan should be a government dollar."
While such a statement is misleading in that it ignores co-generation that's already taking place, it likely does reflect the Sask Party's intentions. Rather than making decisions about Saskatchewan's energy future based on cost efficiency, environmental merits, or any other factor which actually should matter, Wall's government is simply looking to turn as much generation over to the private sector as it possibly can. And nuclear reactors figure to be the largest of the possible privately-funded megaprojects.

Needless to say, Bruce Power has to be happy with that direction. But for Saskatchewan residents in general - particularly those who took Wall at face value in his assurances that the Crowns would at least be permitted to keep carrying out their core functions - this is the clearest indication yet that the Sask Party's goals couldn't be further from their own.

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