Monthly Archives: January 2014

Nuclear Energy

How can Nuclear Power be Cheap?

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

I once had a beloved old car – a 1984 Volvo – that didn’t look great, and needed regular work, but ran beautifully. I only scrapped it because my girlfriend hated it. That decision, I figure, cost me several thousand dollars over the next two years as I paid for a pricey lease on a new car.

The two most basic ways to get value out of equipment are to make sure you use it, and to keep it a long time. Cars are getting more expensive and complex, but this doesn’t stop us from buying them. It does lead us to keep them 50% longer than we did a decade ago. These days, my wife and I share our old car with my brother and his wife. We spread the fixed costs of ownership across two families’ driving needs, cutting the fixed costs per family in half.

Equipment that’s expensive can still be highly economic. Up-front cost isn’t an obstacle if the equipment runs efficiently, gets used a lot, and lasts a long time.

A nuclear reactor is a big piece of equipment, and the business of owning one is like owning a vehicle, only more so. For nuclear plants, looks don’t count. These plants are designed to run extremely well for a long time, and they do it. They typically produce electricity at 80% or more of their designed capacity, and they last – with refits – for fifty or sixty years.

That’s a lot of use over a very long time. How many products do you – or even your employer – own that you know will have five to six decades of life? The result is cheap, reliable power, as this chart from the Ontario Power Authority shows:

relative-cost-of-electricity

A jurisdiction where I do a lot of weekend driving, the province of Quebec, recently decided to decommission its only nuclear plant, rather than give it a mid-life refit. The decision came one week after the election of a new provincial government – before it had even been sworn into office. The government then asked for an economic analysis. In other words, they made their decision – it was written into their election platform – and then asked for backup.

The province’s electrical utility, which had planned to refit the plant, came back with re-worked numbers that raised the refit cost by 126%, and the cost of shutting it down by only 12%. Surprise, surprise:  the new numbers justified the announced decision.

The utility’s new estimate for refit cost was $4.3 billion. But a refit of a similar reactor came in at $2.4 billion in neighbouring New Brunswick. There, Energy Minister Craig Leonard was quoted saying, “If you look at the market today and try to obtain 700 megawatts of baseload emission-free power for $2.4 billion, you’re probably going to be searching for quite a while.” (iPolitics.ca, July 16, 2013, item by K. Bissett).

This story isn’t unusual. We often get rid of good things for poor reasons (as with my Volvo). And we more often than not have poor reasons for shutting down reactors early. Many, like Quebec’s, are political (kind of like scrapping a car at a girlfriend’s request). These days, some good nuclear plants are driven out of business by ultra-cheap fossil fuels. In these cases we are not giving enough weight to clean air or to having alternatives.

The latter is like scrapping our cars because the local taxi service is giving us a month’s worth of free rides. The problem, of course, is what happens at the end of the month. We’re caught without cars, we’re hostages to the taxi business, and we’re paying taxi fares two to four times a day. Our cost of getting around has quintupled!

This is why so many countries continue to choose nuclear. According to the WNA, nearly twice as many reactors will start up as shut down by 2030. India has six future units under construction, Russia has ten, China has twenty-eight. A long list of other countries are following, from Turkey to Saudi Arabia to Argentina.

Yes, nuclear power generating capacity has a capital cost and it takes time to build. But as we have seen, high capital cost is compatible with good economics. Good efficient equipment, used well, maintained well, and kept long, pays off.

CNA Responds Nuclear Energy

Our Strength: We’re our own Toughest Critics

By John Stewart
Director, Policy and Research
Canadian Nuclear Association

Canada’s nuclear energy sector “plays a key role in driving innovation, generating jobs, and providing low electricity rates.”  That’s the first conclusion of the Public Policy Forum’s recent report on the sector’s future.

CNA read it with great interest, not just because we’d sponsored it, but because we did not get to co-write it and, until we received an advance copy a little while ago, we did not know what it would say.

Canada’s nuclear industry values the broad, multi-stakeholder conversations on which the report was based.  And we respect PPF’s independence in summarizing them.

It’s not perfect or unassailable – no study is – but it’s an unbiased assessment of where we stand in the world, and we wanted that.

(We should note that the report covered only nuclear energy, and not the many other applications of nuclear technologies in which Canada is a world leader, such as medical imaging and diagnosis, radiotherapy, materials testing, and food safety).

Of course, we wouldn’t necessarily agree with everything in the report.

  • It’s self-contradictory at times.  (Is our reactor technology “lagging” or is it “leading-edge”?)
  • It understates our public approval, or “social license.”  (Nuclear produced 59.2% of Ontario’s electricity last year.  Ontarians appreciate affordable, reliable power, and the host communities in which we operate love their thousands of durable, highly trained jobs).
  • It tends to view Canada’s investment in a unique, and in many ways better, reactor technology as a challenge rather than a strength.  (You could underestimate any emerging brand or technology in this way at some point in its development).

Many industries’ advocates might have tried to meddle in such a report at the drafting stage, and tried to align it with their own messaging.  CNA didn’t.  Some lobbyists, eh?

Well, the nuclear energy industry isn’t just any industry.  It’s a hard-headed scientific and engineering culture in which we know we need to be the best.

We start by being our own toughest critics.

Then we invite our peers in to assess us with fresh eyes (like the World Association of Nuclear Operators does with its peer review process).

And then we comply with (or, usually, exceed) international standards (like those set by the International Atomic Energy Agency and other bodies).

That’s how we get the kind of performance that we do:

So we’re proud to congratulate PPF on its assessment of the future of Canada’s nuclear energy sector.  Warts and all, we welcome the scrutiny, and we look forward to working with them again.