Nuclear revival? Don't bet on it!

In January this year, Newsweek magazine's cover boldly proclaimed "The Return of Nuclear Power." As I gazed at the cover photo of a glowing red nuclear power plant, I realized that I had seen virtually the same cover--on Time magazine, roughly 15 years ago. The two stories had the same thesis: nuclear power is about to mount a comeback.

Since nuclear construction collapsed in the early 1980s, its return from the dead has been proclaimed at regular intervals, spurred by environmental and economic concerns and by the public-relations efforts of a multi-billion-dollar industry that has had an almost empty order book for over two decades.

None of these "revivals" materialized, but many argue that the latest should be taken more seriously. With oil prices skyrocketing and concern about global warming deepening, scores of editorial writers and policymakers, and even a few environmentalists, argue that we can't afford to discard any energy option with the potential to displace coal, which provides 40 percent of the world's electricity and is the largest threat to the world's climate.

The appeal of nuclear power starts with the fact that it is already a large established power source--the world's 441 reactors have a generating capacity of 369,000 megawatts (MW) that produce 16 percent of the world's electricity. But that is the perspective from a rear-view mirror (see graphs). The industry is now growing at well under 1 percent per year, and the construction pipeline is virtually empty: only 23 reactors, with a capacity of 16,000 MW, are under construction. (In the mid-1980s, more than 200,000 MW were in the pipeline.) Two more reactors were shut down last year, bringing to 116 the total number of reactors that have been permanently taken off line since the age of nuclear power began; that's nearly 35,000 MW. Most of the engineering specialists who built the current fleet of nuclear plants have retired, and many universities have closed their nuclear engineering programs. The relatively conservative International Energy Agency forecasts that nuclear power generation will peak within 10 years and then begin a slow decline.

The industry likes to blame environmentalists for its moribund state. But market forces have done far more to damage nuclear power than anti-nuclear activists ever did. The dramatic collapse of the nuclear industry in the early 1980s--described by Forbes magazine as the most expensive debacle since the Vietnam War--was caused in large measure by massive cost overruns driven by expensive safety upgrades after the Three Mile Island accident revealed shortcomings in nuclear plant design. These made nuclear power plants far more expensive than they were supposed to be. Some U.S. power companies were driven into bankruptcy and others spent years restoring their balance sheets.

Nuclear executives argue that they have learned much since the industry meltdown of the 1980s and that improved technologies will allow them to lower costs. That may be true, though it remains to be proven. Data from the few nuclear power plants completed in the last few years suggest that they produce electricity at roughly twice the cost of new coal and gas plants, both of which have seen steady cost reductions. And the new reactor designs being proposed by some companies are more likely to raise than lower costs in the short run, since the first prototypes are likely to have problems that need to be worked out.

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High costs matter at a time when the electric power industry has become more competitive. During the height of nuclear construction in the 1960s and 1970s, the power industry was either owned by the state (as it still is in France) or protected by regulators from its own mistakes, as in the United States. Today, power industry executives in most countries carefully weigh costs and risks before deciding what kind of power plant to invest in. A single nuclear plant requires an investment of roughly US$3 billion, and at least a decade for the planning, regulatory approval, construction, and testing of the plant. U.S. utility analysts say that a power company deciding to build a nuclear plant might see its bond rating lowered to reflect the extra risk it had taken on.

Responding to these concerns, the U.S. Congress passed a law in 2005 that provides additional federal subsidies while also offering liability protection that shifts much of the risk to the federal government. Although this legislation has not yet resulted in any new plant orders, industry observers expect as many as six. That would increase the country's nuclear generating capacity by 5 percent, assuming that none of the 104 nuclear plants operating today is shut down in the decade or more it would take to build the new ones.

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With the nuclear construction business virtually dead in North America and Europe, energy-starved Asia is where a nuclear revival is more likely to begin. Indeed, India and China both have ambitious nuclear plans. Up to 30 nuclear plants are planned in each country over the next two decades--which sounds impressive until you do the math. Even if their nuclear dreams are realized, neither country will be getting even 5 percent of its electricity from nuclear power in 2020. This is simply not a significant commitment for countries with populations of well over a billion and electricity demand growing at 10 percent annually.

Globally, nuclear power is more likely to decline than to increase in the coming years, because more than half the world's nuclear power plants are over 20 years old. At least 70 nuclear plants would have to be built in the next decade just to replace those that are projected to be closed. This is virtually inconceivable, given that only 14 are now under construction. Meanwhile, world electricity demand is projected to grow by more than 30 percent (the equivalent of more than 500 nuclear power plants) during this same period.

If nuclear power can't do the job, the question remains: how will the world meet all of its electricity needs without a massive increase in the combustion of coal and the resulting emissions of carbon dioxide? The answer, I believe, is a large-scale commitment to renewable power--including solar, wind, hydro, geothermal, and biomass energy--coupled with rapid improvement in the efficiency with which power is used.

Renewable sources of power provide about 20 percent of the world's electricity today, more than nuclear power does. More importantly, they are active, growing industries, attracting over US$25 billion in new investment last year. The generating capacity of new wind plants alone that were ordered in 2005 was triple the figure for nuclear power. And because renewable technologies are smaller scale and modular, their cost is falling rapidly as the scale of production rises. In recent months, renewable power has become one of the hottest sectors for venture capitalists looking for "the next big thing."

Many argue that no matter how promising renewable energy is, we cannot afford to foreclose any options given the magnitude of the economic and ecological challenges now facing us. I agree. Those who are convinced that large-scale nuclear power is viable should go ahead and invest in it, as many governments are encouraging them to. But building nuclear plants today on a scale that would make a serious dent in the world's energy problems is virtually inconceivable. In a world where money is limited and time is short, we would be better off focusing on energy sources that have a better chance of replacing the fossil fuels that threaten our future.

Christopher Flavin is president of the Worldwatch Institute. He has tracked the fortunes of the nuclear power industry since before 1983, when he researched and wrote Worldwatch Paper 57, Nuclear Power: The Market Test.