Economics Keeps Killing the Nuclear Power Renaissance

A blog about business and economics.
Feb. 19 2014 3:39 PM

Economics Keeps Killing the Nuclear Power Renaissance

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A helicopter-camera flies in front of a Freedom Statue on Feb. 3, 2014, during Greenpeace activists' demonstration against the Hungarian government's energy policy and plan to expand the country's Paks Nuclear Power Plant.

Photo by Attila Kisbenedek/AFP/Getty Images

Ed Crooks reports for the Financial Times that in states with competitive electricity markets, nuclear power plants simply can't compete and are at risk of shutting down:

Where nuclear plants have to go head-to-head with gas-fired plants, and with wind and solar power that are supported by regulatory mandates, they are finding it hard to compete.
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“Competitive markets can be efficient, but right now they aren’t,” says Marvin Fertel, president of the Nuclear Energy Institute, the industry group.
“We’ve seen a real problem that needs to be fixed.”
It has been clear for years that the shale gas boom made it hard for costly new reactors to compete. Over the past year, though, it has become clear that even some existing plants are no longer commercially viable.

Nuclear power usually gets discussed in the context of some wag trying to make the point that even though the environmental movement got a lot of juice in the 1970s from anti-nuclear campaigning, nuclear power is actually quite clean and from a climate change perspective it would be good for green groups to be more nuclear-friendly.

As best I can tell, that's all basically true. The problem with nuclear power is actually the economics. These plants are extremely expensive to build, moderately expensive to operate, and despite decades of hype and promise we really don't seem to be getting much better at it. Natural gas has become really cheap recently thanks to new developments in shale mining, and solar power is at least getting cheaper. If you just care about money, gas is clearly the way to go. If you care about the environment too, then subsidizing solar makes sense. Nuclear seems extremely well-suited to the rather unusual problems of power generation on a military submarine but as a mainstream electricity source it has a lot of problems. The scenario in which an existing plant becomes uneconomical to operate is pretty extreme and I think efforts to deliberately shut down existing plants that are economically misguided, but politics aside there just doesn't seem to be a future for new plants

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.