Historic Crossover in Cost/KWH: Solar vs. Nuclear

In 2003 High Impact® launched its first portfolio that included clean energy companies such as solar and wind. Since then several new index funds, ETF's and social mutual funds have entered the "clean energy" or "renewables" investment space using definitions for those terms that may include ethanol, clean coal and/or nuclear. For High Impact®, "clean energy" means investments in solar, wind, geothermal, fuel cells, and natural gas companies. High Impact® does not invest in those companies directly involved in nuclear, ethanol, fracking-natural gas and clean coal technologies.

Despite the current argument for a nuclear "renaissance", our reasons for not investing in nuclear technologies have to do with the three tests of cost, safety, and climate change. Advocates in industry, government and some environmentalists claim that nuclear, relative to its alternatives, is cheap, safe, and the best solution to climate change. Yet my research indicates that nuclear energy fails all three tests: Nuclear safety is an illusion, building nuclear power plants is prohibitively expensive, and concentrating on nuclear instead of its alternatives retards reductions in C02, toxins and pollutants. Moreover, we're reaching a critical threshold where the comparative costs/KWH of solar vs. nuclear are trending toward solar, and without the safety disadvantages of continuing to invest in nuclear.

Cost

Solar and Nuclear Costs — The Historic Crossover

We are close to the moment when solar energy reaches the milestone of costing less than 10 cents/KWH. Wind energy is already past that marker. The downward slope in solar and wind costs dramatically steepened a few years ago with the financial crisis and with Chinese solar players stampeding into the solar space gaining market share through lower costs.

The plummeting of solar costs, in particular, has changed the energy landscape more than the most optimistic thought possible. A recent report from Dr. John O. Blackburn and Sam Cunningham of Duke University says that solar energy and nuclear energy have passed a “historic crossover,” where decreasing solar energy costs and increasing nuclear energy costs have met and then parted. “Solar energy is now cheaper than nuclear energy and is getting increasingly cheaper every day,“ says Zachary Shahan in Scientific American.¹

Nuclear costs on the other hand have skyrocketed. The cost of nuclear recently passed the same crossover point but trending in the opposite direction from solar and wind. There is little debate that nuclear costs are rising and solar costs are decreasing. “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,”² says Mark Cooper, senior fellow for economic analysis at Vermont Law School’s Institute for Energy and Environment who specializes in tracking nuclear power costs: "...some analysts argue that the real potential for cost reduction lies on the side of the alternatives. For example, Lazard offers an analysis that sees a very steep decline in the cost of some photovoltaics... It sees the potential for the cost to be cut in half, rendering thin film and Crystalline Solar photovoltaic competitive with conventional natural gas and any of the other renewables." ²

"Solar photovoltaics have joined the ranks of lower-cost alternatives to new nuclear plants,” concludes Dr. John O. Blackburn.³

Climate Change

Increased costs for nuclear power plant construction also impact efforts at addressing climate change. From 1950-1999, 95% of all government money earmarked for alternative energies went to nuclear, and nuclear stands to get a large proportion of alternative energy money during the coming decade.  If resources were instead focused on alternatives other than nuclear, the results would be much better for the planet. According to Amory Lovins, “if you buy more nuclear plants, you’re going to get about two to ten times less climate solution per dollar, and you’ll get it about twenty to forty times slower, than if you buy instead the cheaper, faster stuff that is walloping nuclear and coal and gas, all kinds of central plans, in the marketplace.”⁴

The current energy policy in the United States has been and continues to be a patch quilt of ideas that miss the mark of a focused and strategically crafted policy. If the energy cost crossover between nuclear and solar/wind has been reached, how many of these new nuclear plants will be half-finished before they are scrapped? In an era of government financial austerity, why consider an energy source that costs more?

Major US corporations have a huge profit stake in the return to the building of nuclear reactors. General Electric is doing its best to put forth a positive spin on all things nuclear. “…renewables, other than big hydro, got last year $71 billion of private capital; nuclear, as usual, got zero. It is only bought by central planners with a draw on the public purse. What does this tell you? I mean, what part of the story does anybody who take markets seriously not get?”⁴

Safety

The safety of nuclear energy has been debated for decades and is now playing out before our eyes in the disaster at Fukushima. The nuclear industry is making reassurances that modern nuclear technology is safer than the old GE light-water reactors at Dai-ichi. Are we willing to bet the future that safer is safe enough?

An honest discussion of nuclear's safety, cost and climate change potential is critical, especially in light of the technology advances happening with alternatives. The time and money wasted building nuclear reactors could be much better spent building alternatives and improving energy efficiencies.

And the alternatives are mutiplying as the cleantech sector picks up steam. Several exciting new solar and wind technologies promise to improve the efficiency of solar and wind for large scale utility installations. While this is not to be construed as investment advice, some examples of companies that are on our radar are Catch the Wind Inc. and Emcore Corp.

The game has changed and energy thinking and policy must change accordingly. High Impact® retains the conviction that nuclear power is the wrong policy for investing in renewable energy going forward.

Please visit the links below, and especially Amory Lovin’s work at the Rocky Mountain Institute.

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¹ http://www.scientificamerican.com/article.cfm?id=historic-report-solar-energy-costs-2010-08
Zachary Shahan, Scientific American. Historic Report: Solar Energy Costs Now Lower than Nuclear Energy, August 1, 2010.

² http://www.nytimes.com/2010/07/27/business/global/27iht-renuke.html?_r=1&pagewanted=1
New York Times. Nuclear Energy Loses Cost Advantage, July 26, 2010, and The Economics of Nuclear Reactors, Renaissance or Collapse? Mark Cooper, Ph.D., June, 2009.

³ http://www.ncwarn.org/?p=2290
The Historic Crossover. Study by Dr. John O. Blackburn, professor of economics and former Provost, Duke University, North Carolina, and Sam Cunningham, graduate student.

⁴ http://www.democracynow.org/2008/7/16/amory_lovins_expanding_nuclear_power_makes
Amory Lovins, Rocky Mountain Institute: Expanding Nuclear Power Makes Climate Change Worse. July 16, 2008.

⁵ http://www.huffingtonpost.com/amory-lovins/nuclear-power-fukushima-_b_837643.html
Amory Lovins, Rocky Mountain Institute. With Nuclear Power, No Acts of God Can Be Permitted. March 18, 2011. 

"Nuclear power is the only energy source where mishap or malice can kill so many people so far away; the only one whose ingredients can help make and hide nuclear bombs; the only climate solution that substitutes proliferation, accident, and high-level radioactive waste dangers. Indeed, nuclear plants are so slow and costly to build that they reduce and retard climate protection."