Sunday, 2 March 2014

Nuclear Cost Unclear

The Japanese government wants to restart their nuclear plants which have been offline since 3-11, pending safety inspections. It's not that they intentionally want to upset my wife, but that's the impact for me. The common refrain is that importing gas and oil is weighing down the economy.

Colour me skeptical. After all, they have to import uranium, which is harder to obtain and transport. I suppose that is offset by global demand being less than that for oil or gas, and that they have a stable uranium rich country (Australia) nearby.

Besides, nothing says, "I've made it as a country" like nuclear power generation.

The prices are surprisingly easy to find. The Institute of Energy Economics has done the work for me.

I've cropped an Electricity Generation Cost by Source chart from their publication, Japan Energy Brief 17 (January 2012):

Wind (Onshore)9.9~17.38.8~17.3
Wind (Offshore)9.4~23.18.6~23.1
PV (Residential)33.4~38.39.9~20.0

The uncertainty behind the nuclear figure stems from the Fukushima incident. To quote from the publication:
"The nuclear power generation cost, which was estimated to be ¥5.9/kWh in the previous study, is revised to at least ¥8.9/kWh or an increase of 50%, reflecting inflated construction costs and additional safety costs (¥1.4/kWh), policy-related costs, including subsidies given to host communities of nuclear plants and R&D costs for the Monju fast-breeder reactor (¥1.1/kWh), and damages identified at present for the Fukushima Daiichi accident (5.8 trillion Yen, or ¥0.5/kWh). The accident risk fund, which is currently estimated to be 5.8 trillion Yen per model plant, is exclusive of undefined costs, such as compensation to residents and interim storage and permanent disposal costs for contaminated materials generated in decontamination activities. If damages amount to 10 trillion Yen, the generation cost is calculated to be ¥9.3/kWh, and if 20 trillion Yen, this will be ¥10.2/kWh."

It seems that despite the revision, nuclear remains highly cost effective, especially compared to Coal, LNG, and Oil. However, an extra ¥1.1/kWh is contingent upon damages for Fukushima which are almost certainly - barring parliamentary intervention - going to be borne. The government has not been fantastic at assessing the damage in the past, so there is a possibility that the cost of nuclear will be revised further. If so, then renewables may already be competitive..

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