Forum Archive Index - May 2004

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi Marilyn,

>
>You make a good point about established hydro power being 
>a licence to print money Snoopy.
> 
>To wander off topic, some idiot is going to suggest "hey nuclear
>power is cheap to run".
> 
>They are of course correct nuclear is cheap to run, but they fail to
>take into account that the byproducts of this process are incredibly
>toxic and difficult to dispose of.   No country which has a nuclear
>power industry has an economic or generally public accepted means 
of
>disposing the byproducts or old reactors.
>

Oh I don't know.    There is a Mr Kim in North Korea who seems to be
interested in buying up nuclear waste 'for further processing' ;-).

> 
>Any proposal to generate nuclear power will be uneconomic when
>shutdown costs (which in reality are unquantifiable and open ended)
>are added in.
> 

If you define something as 'unquantifiable and open ended' then that
is tantamount to expressing a personal view that cannot be argued
with- period.    I prefer the more cost based argument.

Last year I went to an energy seminar in which one of the speakers 
was Barry Hill, an Australian nuclear expert.   He told us that nuclear
power plants cost four times the cost to build compared to gas power
stations of equivalent output.   A nuclear power station would also
cost between four (if modular units of construction were used) and
seven years to build, which is quite a long time to have capital tied
up producing no return.

The wholesale cost per unit for nuclear, Hill estimated at 3.8cUS/kWh.
This is around 6.2cNZ/kWh per unit at current exchange rates.  That is
comparable in cost to the larger scale wind projects and gas power
stations, but cheaper than micro hydro 7.0-8.5c.   But nuclear power
is not compellingly cheap.     And none of these options compare
favourably with coal.  The wholesale generation cost of coal ranges
between 4.0-.07cNZ/kWh, although a carbon tax could be expected to 
add 1.5cNZ/kWh to those coal figures.

The second problem with nuclear plant is that because of the high
capital cost of plant, it doesn't make sense to do it unless you build
a large one.    It is unlikely that any of the existing energy players
could justify introducing the equivalent of two Clyde Dams into the
market in one hit without causing havoc in the wholesale power 
market.
  
No competitor is going to allow a player who builds a nuclear
station to steal away that many customers at once!    Nuclear power is
a base load system that has to be operated all the time to get the
best economics out of it.   You can't afford to switch your nuclear
power plant  on and off to meet demand if you own one.

The third problem with the nuclear is that economics of the plant
depend on the cost of capital.   With a 5-7% cost of capital you can
make the economics of nuclear look OK on a 'discounted capital price
per unit basis'.    However, with a 12% cost of capital, the economics
of nuclear are terrible.     Because New Zealand, and to a lesser
extent Australia, are high interest rate countries the cost of capital
tends to trend towards the 'unacceptable' end of the spectrum.

In summary, the thing that sinks nuclear power in New Zealand is the
economic arguments.   No need to bring any philosophical arguments
into it.

SNOOPY


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