Monday, August 02, 2010

Is Solar Really Cheaper Than Nuclear?

Based on an anti-nuclear group’s report, the New York Times and its global edition, the International Herald Tribune, published a piece last week claiming that solar is now cheaper than nuclear. Rod Adams right off the bat saw through the bunkum and took the NYT as well as the anti-nuclear group’s report to town. After taking a closer look, we have more to add.

The report the NYT references comes from the group North Carolina Waste Awareness & Reduction Network (WARN). Below is the thesis of their 18 page report (pdf):

Here in North Carolina, solar electricity, once the most expensive of the “renewables,” has become cheaper than electricity from new nuclear plants.

When digging into the foundation of this statement, there’s one key factor in the solar cost assumptions that makes all the difference. As Rod pointed out, it’s that they are based on large incentives. On page 17 of the report, this sentence explains the large solar incentives included in the calculations:

A 30% Federal tax credit and a 35% North Carolina tax credit were applied to the capital cost [of solar] to reach a net cost per kWh.

How big of a difference do these make?

Before accounting for the incentives, the report derived a cost of 35 cents/kWh for solar (p. 18). After adding in the incentives, the cost of solar dropped by more than half: to 15.9 cents/kWh. If NC WARN wants to be accurate, then they should revise their thesis to read:

Thanks to state and federal incentives, solar electricity, once the most expensive of the “renewables,” has become cheaper than electricity from new nuclear plants.

But is solar now cheaper than nuclear even at the incentivized 15.9 cents/kWh? Credible sources still say no. Back to Rod:

The [NC WARN] paper ignores all other cost projections for nuclear. Some of the previous work on this topic that the professor and his graduate student ignored includes the following:

Further, the Energy Information Administration finds that without incentives, solar’s levelized costs range from 25.7 cents/kWh to 39.6 cents/kWh compared to nuclear at 11.9 cents/kWh. As well, EIA looks at a total levelized cost for all technologies that accounts for all costs over a plant’s life. NC WARN’s report only looks at capital costs. Because of the capital-intensiveness of nuclear and solar, the conclusions for only looking at capital between the two don’t change too much though.

The nuclear cost assumptions for the NC WARN’s dubious statement are based on a bent source: a report from Mark Cooper, senior fellow from the Vermont Law School. Last year, we highlighted testimony from FPL (now NextEra) that identified multiple flaws in Cooper’s claims. Did NC WARN further distort Cooper’s flawed report?

Below is the chart NC WARN created to claim that solar in 2010 is now cheaper than nuclear.

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Based on Cooper’s report, the dots for nuclear up to 2008 in the graph above are not actual costs but the estimated costs of new nuclear plants by various academics and groups. Cooper’s chart for comparison is below.

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As shown in Cooper’s chart, the purple dots to the right all vary based on who’s reporting the costs. Yet apparently it somehow makes sense for NC WARN to lump all these varying cost estimates together to create a meaningful trend. It doesn’t.

As Cooper’s chart above shows, the nuclear cost estimates depend on the estimator. A trend-line may be appropriate to use if utilities had made projections earlier in the decade so we could compare to their latest projections. But comparing early academic studies to utility studies and even to “Wall Street and Independent Analyst” studies doesn’t constitute a meaningful trend.

In NC WARN’s report, the data that continues the trend-line for nuclear past 2009 is based on an historical GDP investment index from 2000 to 2009 that has little to do with nuclear. On page 17, their report says to check the following page on why this index was applied to nuclear. No reason was provided.

On the opposite end, if we go to EIA, we find that their AEO 2010 “reference case already projects a 35 percent reduction in capital costs [for nuclear] between 2010 and 2035” due to learning curves by building new plants. We’ll leave it to the readers to decide which source of assumptions for the future is reasonable: an anti-nuclear group’s or a credible agency’s.

None of NC WARN’s and Cooper’s figures for nuclear are based on actual costs; the data are only estimates. Without any real costs on completed new nuclear plants in the US, it’s way too premature for NC WARN to claim solar is cheaper than nuclear in 2010. Solar’s costs may be declining, but based on government data, they still have a long way to go before they’re competitive with nuclear.

Update 8/3/10, 9:10: The NYT just posted an Editor's note on the article:

An article published July 27 in an Energy Special Report analyzed the costs of nuclear energy production. It quoted a study that found that electricity from solar photovoltaic systems could now be produced less expensively than electricity from new nuclear power plants.

In raising several questions about this issue and the economics of nuclear power, the article failed to point out, as it should have, that the study was prepared for an environmental advocacy group, which, according to its Web site, is committed to ‘‘tackling the accelerating crisis posed by climate change — along with the various risks of nuclear power.’’ The article also failed to take account of other studies that have come to contrasting conclusions, or to include in the mix of authorities quoted any who elaborated on differing analyses of the economics of energy production.

Although the article did quote extensively from the Web site of the Nuclear Energy Institute, an industry group, representatives of the institute were not given an opportunity to respond to the claims of the study. This further contributed to an imbalance in the presentation of this issue.

18 comments:

JD said...

That trendline graph makes me laugh. Anyone who takes the time to read this report (rather than just the bottom line judgments) will know it is total nonsense. It's as simple as that. Unfortunately, people don't have (or want to spend) the time to read past the summary. Even worse, media articles take a few quotes out of the article, subtract the underlying assumptions and context, and add in a wealth of one-sided additional information.

The International Herald Tribune article quotes again the 2003 CBO 50% default, without also saying the CBO has said since then that it's not necessarily applicable. Also, while it continues to hammer on nuclear power about loan guarantees, it somehow forgets to mention that renewable technologies have been getting the same volume of loan guarantees. It also never points out that the report is comparing the cost of utility-scale nuclear power plants to the cost of installing a solar panel at your house after 30% federal and 35% state subsidies. What does such a comparison mean to the broader picture of US energy policy? Not much.


Of course, this kind of thing happens all the time with our media. Nuclear energy is not the only victim.

DocForesight said...

The physics do not, and will not, support solar as ever competing with nuclear power plants for base-load.
To pretend that they are even worthy of mention in the same breath is intellectually dishonest. And I say that as one who is involved in solar and battery back-up units.

There is a place for solar, but it is primarily rural, off-grid, remote locations which, even with 5,000 nukes built and deployed by 2050, there will remain millions of people who don't even have a light bulb to turn on.

Read this: http://www.21stcenturysciencetech.com/Articles%202008/Energy_cost.pdf

Frank Jablonski said...

Solar is cheaper than nuclear if the taxpayers pay 65% of the cost up front and you believe a series of self-serving cherry-picked assumptions generated by anti-nuclear activists who derive them from other anti-nuclear activists, who are alleged or implied to be reliable sources.

In other words, its not. Not even close.

Meredith Angwin said...

I debated someone using that trendline graph at one point. As I recall, much of the data on the graph come from that distinguished economist, Armory Lovins.

The problem is that people simply want to believe what they want to believe. People want to believe in solar. I understand that desire. If we can get all our energy from the sun, everything is going to be okay. The problem is that it won't work.

I have been trying to figure out Mark Cooper, also. He always says he "holds a Ph.D from Yale." The implication is that the Ph.D. is in economics. It isn't. It is in sociology, with a thesis that was a retrospective study of socialism in Egypt. Probably a decent thesis, but not a convincing background for an energy economist.

Remember the learning curve said...

Right now, Westinghouse is on a trend to bring down the cost of constructing AP-1000's from the current ~$4000/kW price for the first U.S. units. Their costs will drop along the same learning curve that the KEPCO has achieved over the last decade.

GE-H is pretty well out of the ALWR business, it appears, since to date they have been losing U.S. customers to other vendors.

The Roussely report verifies what has been known for some time, that Areva's EPR design is too large, expensive, and time consuming to build to be competitive in the international market. So Areva needs to get its new reactor design completed and licensed before it will be able to bid in at prices competitive with that Westinghouse and KEPCO will offer.

Thus watch the SMRs--they are in the most interesting new players right now.

The idea that future nuclear construction prices are going to go up from the values that the vendors are charging for the first few U.S. engineering, procurement, and construction contracts is silly. ALWR prices will definitely be coming down over the coming decade. Watch WARN explain that.

Anonymous said...

Doc Foresight keeps pointing us to articles on www.21stcenturysciencetech.com. By now he should be aware that that publication is from the Lyndon Larouche organization, which is (to put it charitably) not always especially careful with the facts.

They contend (seriously), for instance, that AIDS can be spread by casual contact, the Queen of England heads an international drug dealing ring, etc.

I repeat my plea that we confine these discussions to credible sources.

Phil said...

I agree with anonymous. www.21stcenturysciencetech.com is a seriously kooky web site. Nuclear energy is compelling enough that I think avoiding the tin-foil-hat web presence should be simple to do.

There is justice said...

The NY Times Correction that was published today is very significant.

http://www.nytimes.com/ref/pageoneplus/corrections.html

The author of the original, biased article, Diana S. Powers, now has a black mark on her record as a journalist that people can point to every time she writes a new article.

Pretty rapidly she'll find herself unable to get jobs for reputable newspapers and magazines, unless she changes her current practice.

Fantastic!

Anonymous said...

The author of the original, biased article, Diana S. Powers, now has a black mark on her record as a journalist that people can point to every time she writes a new article.

Yeah, that's a great way to garner positive press for the industry. Blacklist journalists you don't like.

How about reaching out to educate Powers rather than giving her a virtual scarlet N on her shirt?

Brian Mays said...

"They contend (seriously), for instance, that AIDS can be spread by casual contact, ..."

Well, if that casual contact is casual sex, then they might have a point.

"... the Queen of England heads an international drug dealing ring"

That would go a long way to explaining the Prince of Wales. ;-)

Brian Mays said...

"Blacklist journalists you don't like."

Er ... I don't think that the NEI is blacklisting anybody. On the contrary, this blog has just given this journalist and her article some additional exposure.

"How about reaching out to educate Powers rather than giving her a virtual scarlet N on her shirt?"

Nobody made her write that article, and nobody made her write it so poorly. I'm sure that the NEI would have been happy to "educate Powers," if she had been willing to give them a call. However, according to the NYTimes editors: "representatives of the institute [the NEI] were not given an opportunity to respond to the claims of the study." The street goes both ways.

She should stand by her work. If it is really sloppy (as apparently the editors of the NYT think it is, and I happen to agree), then it should be a reflection on her abilities as a journalist.

Good work stands on its own and doesn't need any help from bloggers. Poor work also stands on its own, for different reasons, as I'm afraid this particular journalist is about to find out.

Anonymous said...

Er...I wasn't talking about NEI. but about this anonymous comment:

"...now has a black mark on her record as a journalist that people can point to every time she writes a new article. Pretty rapidly she'll find herself unable to get jobs for reputable newspapers and magazines, unless she changes her current practice."

Sounds like blacklisting to me.

So who will maintain the official copy of the media enemies list?

Brian Mays said...

"So who will maintain the official copy of the media enemies list?"

Anonymous internet users yearning for justice? ;-)

Seriously, however, I had interpreted that comment to mean that having the editors of the NYT publish a long note and correction to an article apologizing for imbalance can't be good for one's resume.

K5GP said...

From a personal perspective the economics of nuclear are simple. It I wanted to install solar panels on my house that produce 8760 kWh per year, that would cost me and uncle sam about $35,000 out of pocket now. The 8760 kWh annually could be produced by a 1 kW power source running all the time. I could choose to invest in a nuclear plant like the South Texas project units 3 and 4 by purchasing 1.2 kW for about $6000 out of pocket. However I would only need to supply about $1000 per year for six years. Now which one of these sources of power are more affordable? The answer is obvious.

Krzysztof said...

The Cooper report has more funny things in it. For example it cites Storm van Leeuwen.

Anonymous said...

it cites Storm van Leeuwen

Oh, wow, a TYPO in someone's name. Cooper must be wrong.

Reaching a bit? Never any typos in your reports, I'm sure.

Brian Mays said...

Er ... typo? Huh?

other anon said...

"it cites Storm van Leeuwen

Oh, wow, a TYPO in someone's name. Cooper must be wrong.

Reaching a bit? Never any typos in your reports, I'm sure."
-
No typo there. What Krzysztof was probably referring to as funny can be found here:

http://en.wikipedia.org/wiki/Jan_Willem_Storm_van_Leeuwen#Nuclear_energy_study