ECONOMICS OF SUBSIDIZING THE ‘NUCLEAR RENAISSANCE’

[just found this loitering around as a draft. Better late than never]

Mark Cooper, Senior Fellow for Economic Analysis. Institute for Energy and the Environment, releases new report:

ALL RISK, NO REWARD FOR TAXPAYERS AND RATEPAYERS: “THE ECONOMICS OF SUBSIDIZING THE ‘NUCLEAR RENAISSANCE’ WITH LOAN GUARANTEES AND CONSTRUCTION WORK IN PROGRESS”
November 2009

Based on a review of Wall Street analyses and new evidence on the economics of nuclear reactors, this study shows that constructing reactors is uneconomic and faces six critical risks, technology, policy regulatory, execution, marketplace and financial. The study shows that the ultimate harm of the loan guarantees would be to encourage utilities to skip over lower cost, less risky options to meet the need for electricity and build dozens, if not hundreds, of overpriced nuclear reactors that will cost consumers trillions of dollars more than the least cost approach.

While many politicians claim to be worried about the cost of reducing the threat of global warming, they are pushing loan guarantees for nuclear reactors, which is the most expensive approach possible to reduce greenhouse gas emissions.

The study documents the reasons that Wall Street considers nuclear reactors to be risky ventures, many of which are likely to fail, requiring a downgrading the financial ratings of utilities. The loan guarantees are a bald face attempt to override the judgment of the capital markets, which will leave taxpayers and ratepayers holding the bag.

Misallocating risk and shifting it to taxpayers is exactly what got the big banks in trouble and led to the recent financial meltdown. The irony is that many of the same people who were the loudest critics of bailing the banks out with taxpayer dollars are the very same people who want to force taxpayers and ratepayers to underwrite the nuclear industry.

The study finds that the constellation of economic conditions that led to the nuclear fiasco of the 1980s – escalating construction costs, weak utility balance sheets, slowing demand growth, and lower cost alternatives – is once again making it a near certainty that a push for nuclear power today will result in another train wreck, with taxpayers and ratepayers being forced to bail the utilities out.

Link to original .pdf: