Who Will Dare to Invest in Nuclear Power?

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Will there be a nuclear power renaissance in the United States, as a host of rosy-glassed prognosticators have predicted? Not as long as it remains such an abysmal investment opportunity, Matthew Wald writes in Technology Review (Nov.-Dec. 2009).

Wald, a New York Times reporter, contends that nuclear has come a long way in reliability and efficiency but carries serious financial baggage. “As the possibility of an accident that panics or injures the neighbors has diminished,” he writes, “the likelihood has grown that even a properly functioning new reactor will be unable to pay for itself.”

Wald cites three factors, all in flux, that make nuclear a huge financial risk. One is the sheer cost of building a new reactor: using optimistic math, $4,000 per kilowatt of capacity—more than coal ($3,000) and far more than natural gas ($800). Another is the future competitive landscape in energy, and thus the price of electricity. And finally, no one is certain of the future price of fossil fuels, especially natural gas, which could change the whole equation.

The upshot is that prospective builders want government help in the form of federal loan guarantees—help that is not currently forthcoming. “The odds are probably not good enough for the nuclear industry to place a bet with its own money,” Wald concludes. “Only the government can agree to back up that bet, and has yet to do so.”

How bad a gamble could it be? The online magazine Facing South (Nov. 16, 2009) reports that the Union of Concerned Scientists has crunched the numbers and calculated that the potential risk exposure to the federal government and taxpayers from nu-clear loan guarantees could range from $360 billion to $1.6 trillion.