A study out of Duke University summarized by the New York Times demonstrates that steadily-falling solar photovoltaic, or PV, costs have now fallen below the current construction and operating costs for large-scale Nuclear Reactors. While solar PV material costs have dropped consistently at a rate of 10-20% per year, nuclear costs are rising significantly.
"Estimates of construction costs — about $3 billion per reactor in 2002 — have been regularly revised upward to an average of about $10 billion per reactor, and the estimates are likely to keep rising, said Mr. Cooper, an analyst specializing in tracking nuclear power costs. "
Utilities, including Georgia Power, wishing to build new plants are passing on rate increases to consumers. These rate increases for new nuclear plants can be introduced to the ratepayers up to 12 year in advance of when power from the new plant is finally brought into the grid. Not to mention the risks:
“A November 2009 research report by Citigroup Global Markets termed the construction risks, power price risks, and operational risks “so large and variable that individually they could each bring even the largest utility to its knees.”
The guaranteed financing structures used by utilities for large-scale construction include a return on equity component, meaning that even if the project experiences cost-overruns or even fails entirely, the utility is making money. The taxpayer that is bearing the advanced rate increases is bearing this risk, and is also on the hook if the project needs additional investment. The utility has little incentive to meet the targeted project costs.
While nuclear reactor construction requires a large amount of land, a source of water and significant consumption of groundwater, as well as complex, long-term environmental studies, many large-scale solar arrays can be placed on existing rooftops or in open fields with little re-zoning, no water consumption and negligible environmental impact. Not to mention that the “fuel” is free.
“Without loan guarantees and guaranteed construction work in progress, these reactors will simply not be built, because the capital markets will not finance them.” “The risks that have dismayed Wall Street should be taken seriously by policy makers because they would cost not just hundreds of billions of dollars in losses on reactors that are canceled, but also trillions in excess costs for ratepayers when reactors are brought to completion by utilities that fail to pursue the lower-cost, less risky options that are available.”
The full article can be seen here: http://www.nytimes.com/2010/07/27/business/global/27iht-renuke.html?_r=1&src=busln