Last week San Antonio’s CPS released their cost estimate for the proposed South Texas Project Nuclear Expansion, and we found their numbers naive optimistic ignored history wanting. To find out why, check out this Guest Column, printed in today’s San Antonio Express-News, from Public Citizen’s own Energy Policy Analyst Matthew Johnson.
Matthew Johnson: Why not cheaper, safer sources of energy?
Matthew Johnson: Why not cheaper, safer sources of energy?
Nuclear reactors too expensive
By Matthew Johnson – Express-News Guest Voices
CPS Energy announced its cost estimate for two more nuclear reactors at the South Texas Project near Bay City last week. The $13-billion price tag is the latest estimate in a sustained and systemic low-balling by utilities wishing to receive government subsidies.
CPS’ partner, NRG Energy, recently pegged the cost of units 3 and 4 at $10 billion, a figure that has jumped nearly 50 percent from its original estimate of $5.4 billion.
Other analyses, however, have estimated the cost of two new reactors to be nearly 100 percent higher than the CPS estimate. Former Texas Office of Public Utility Counsel official Clarence Johnson recently estimated the cost of STP expansion to be $20 billion to $22 billion, while nuclear engineer and president of the Institute for Energy and Environmental Research Dr. Arjun Makhijani estimated a cost of up to $17.5 billion in 2008.
A new study by Mark Cooper, of the Vermont Law School, analyzed numerous cost estimates of the so-called nuclear renaissance beginning around 2001. He discovered that early estimates of new nuclear reactors were made predominantly by industry and academics and were optimistic and eager to rejuvenate the industry.
Since then, utilities’ estimates have shown similar wishful thinking, but continue to rise. Independent analysts and Wall Street, Cooper shows, offer the most realistic estimates that are much higher.
The history of the STP expansion effort follows this pattern. CPS and NRG have been attempting to gain support in federal, state and city government since they submitted their application to build two new reactors to the Nuclear Regulatory Commission in 2007.
Wall Street estimates also place a similar and continuously rising price tag on new reactors. The bond-rating agency Moody’s predicted $5,000-6,000 per kilowatt for new reactors almost two years ago, which translates to $16.2 billion for STP expansion, and recently indicated that it could downgrade bond ratings on utilities constructing new nuclear reactors.
The federal government established an $18.5 billion subsidy to back loans taken out to construct new reactors. STP expansion advocates brag about being on the short list for part of these loan guarantees, but proponents and opponents agree that more reactors won’t be built if the feds don’t pony up the dough.
The reason is simple. Investors are squeamish to lend money for projects with such a high risk of defaulting on repayments. Delay and cost overruns increase risk. STP’s original reactors took eight years longer than planned to complete and costs soared six times over original estimates.
CPS Energy has faster and cheaper alternatives. Their recent announcement on the 27 megawatt solar plant in West Texas, the Mission Verde plan to develop 250 megawatts of solar and new wind contracts plus their goal to save 771 megawatts through energy efficiency by 2020 are shining examples of the path they should focus on to keep rates stable and low in the future. This path also creates more local jobs.
City Council will soon have to decide on San Antonio’s involvement in new reactors. It must vote no on nuclear to protect San Antonians from bearing the overwhelming economic burden of building costly, dangerous and unnecessary nuclear reactors.
Matthew Johnson is an energy policy analyst for Public Citizen’s Texas office.
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Mr. Johnson, I read your article in Tuesday’s Express-News “Nuclear rectors too expensive” and could not believe you could write an entire article deriding the cost of nuclear energy and yet not give even ONE fact on the costs of your solar and wind alternatives!
You article is just another attempt to dodge the facts that solar/wind are not and will not be in the near future be able to meet our future energy needs.
The main reason you most likely do not give costs is that these cannot be quantified.
Please give your readers even one example of a large city (SA is #7) that uses your vision for their energy needs.
Mr. Weldon, thanks for reading my article. The purpose of the piece was primarily to illustrate how much cost estimates for new nuclear reactors have increased since the COLA was submitted for STP 3 & 4. CPS’s partner, NRG Energy, was quoted at $5.4 billion and $6-7 billion for both reactors in August, 2007. They’re most recent estimate is $10 billion. CPS added $3 billion onto that estimate to cover financing costs. Keep in mind these are not busbar costs. The report I mention in my article by Mark Cooper does a good job at explaining the differences between cost estimates and why the nuclear industry and utilities continuously low-ball estimates.
Due to the word limit, I couldn’t get into CPS’s public statement (Vicki Vaughan’s July 1 article) that they plan on selling half their share of the nuke on the wholesale market. Keep in mind that up until now, CPS has been claiming they will need all that power to meet demand. That’s no longer true. Also, keep in mind the diminishing demand forecast when comparing different resources to meet demand. Efficiency and renewable energy are more easily scalable than large central power plants, and therefore are better resource options.
Now, to your point on alternatives that I mentioned, I mentioned energy efficiency and renewable energy. I did not mention solar and wind specifically, although those are two types of renewable resources that CPS can and does use.
In regard to efficiency, if you want to use statewide averages, you can look at the recent PUC report on energy efficiency in Texas (commonly known as “The Itron Report”) that put the cost of energy efficiency at 1-4 cents/kWh. If you want a large municipal example you can look at Austin, which says it pays about $330/kW on efficiency and demand-side management. Both these figures are lower than any alternative. It’s commonly accepted that efficiency is the cheapest resource a utility can invest in.
San Antonio estimates they’ll spend $850 million to save 771 MW by 2020. That equates to around $1100/kW. That seems extremely high given what other utilities pay for efficiency, so it’ll be interesting to see how they run their programs. But even with that large estimate, it’s still lower than the $4800/kW they estimate for new nuclear.
Renewable energy encompasses many different resources and technologies of varying costs-almost all of which are cheaper than nuclear. You can find market prices for different renewable energy resources in many different reports, you can look at PPA’s for wind for CPS or Austin Energy. I encourage you to read Cooper’s report which covers these differences between nuclear and its alternatives, as well as the independent analyses by Johnson and Makhijani.
Since you didn’t contend the point of the article, I’ll take it that you acknowledge that new nuclear plants are incredibly expensive.
Thanks again, for reading.
-Matt
I do contend the point of the article in that the alternatives are not even quantifiable as opposed to nuclear’s cost which can most definitely be estimated.
You do realize that San Antonio is listed as one of the fastest growing cities in America don’t you? You cannot conserve your way to more energy, you need to actually produce it.
Did you read the Express-News’ Anton Caputo’s article about the cost of Nuclear energy?
The story you ran on 4/29/09 “Nuke Plant may cost 22 Billion”
http://www.mysanantonio.com/news/local_news/Nuke_plan_may_cost_22_billion.html
The chart that was captioned “CPS Energy believes it is the most cost-effective way to generate energy” that stated that nuclear is 8 cents and wind is 12.5 cents and solar 21 cents shows how much cheaper nuclear is than either wind or solar.
So you believe that conserving energy is cheaper than nuclear?
I notice how you have had two opportunities to show the cost of alternatives and you insist on repeating how conserving is how CPS will find the energy for future consumers.
No matter how much CPS will be able to conserve it will never be able to keep up with demand.
I also have noticed how you keep using conserving and saving energy without giving even one concrete example. Why is that?
It is actually quite simple economics. If conserving and saving were cheaper and attainable don’t you think it would have been done by now?
[...] announced that $13 Billion was a good, round number. We worried at this point that CPS was being overly optimistic, ignoring the history of the South Texas Project and other nukes around the nation and independent [...]