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Deeper Thoughts Than Usual About Nuclear Energy

Professor Ferdinand E. Banks
ferdinand.banks@telia.com
April 15th, 2009

My situation is somewhat different, Michael. I knew enough about electricity to work on power lines for the U.S. Army before falling into disfavour with my superiors, and later I designed terminal installations for the U.S. Navy, but although I have taught social science (i.e. economics) in 14 universities, I am still unable to understand why so many people are willing to risk the economic futures of themselves and their families by falling in love with bunkum put into circulation by persons with a psychotic hatred of technological excellence, although they are quite capable of enjoying its material advantages. Something to be aware of here is that the rich will never be without reliable and plentiful energy, regardless of its availability or lack thereof to the less fortunate. One reason is that they are fully aware of its importance.

Perhaps the most straightforward reasoning in favour of nuclear-based electricity is in the non-technical article of Rhodes and Beller (2000). They say that “Because diversity and redundancy are important for safety and security, renewable energy sources ought to retain a place in the energy economy of the century to come.” The meaning here is clear, especially if you add that we probably will never possess what is known in intermediate economic theory as the optimal amount of nuclear power. Next they unambiguously state that “nuclear power should be central….Nuclear power is environmentally safe, practical and affordable. It is not the problem – it is one of the solutions.”

Everyone of course does not welcome this kind of reminder. The construction of the Swedish nuclear sector and its later development was one of the most impressive engineering phenomena of the 20th century, however eventually a glib argument began to circulate that nuclear energy was just a “parenthesis” in world energy history, and a recent prime minister called nuclear “obsolete”. Just for the record, the Swedish nuclear sector – comprising 12 reactors, and supplying almost half of the Swedish electric power – was constructed in only 13 years. In the period before electric deregulation gained momentum, the cost of electricity generated in Swedish nuclear facilities was among the lowest in the world – and occasionally the lowest. In addition, to my great surprise, I discovered that the Swedish electricity price was also extremely low. This was especially favorable for the Swedish industrial sector.

In the most nuclear intensive country in the world – which is France – the intention from the beginning was to create a nuclear sector that would provide some of the lowest priced electricity in the world, and to use that electricity to make it possible for the country to optimize its macroeconomic performance. Unlike the situation in Sweden, the French decision makers made plans to stay in the forefront of nuclear development, and in addition to provide both the industrial and household sectors with reliable and comparatively inexpensive electricity. They have also expressed a desire to achieve and maintain a low level of carbon emissions.

Assuming that this is comprehensible, I would like to emphasize that nuclear cost issues need to be examined in greater detail for a meaningful discussion of electricity generation to take place. For France the basic comparison was between nuclear and coal, and given the various costs associated with importing and using coal, it was easy to show that nuclear was preferable. It might be possible to argue successfully that this is not true for the U.S., but I happen to enjoy another opinion. This assertion cannot be treated at great length in the present short paper, but my energy economics textbook (2007) presents a more detailed clarification. The core of my argument turns on the supply of reactor fuel, the length of ‘life’ of a reactor, the lack of carbon emissions, the possibility of a radical improvement in reactor technology and the time required to construct reactors (which is important for the investment cost, which in turn is important for the capital cost). Below I consider only the latter, but I would like to inform readers that I will soon publish a long survey of nuclear, which I hope will be examined by the curious. The same is true of the mostly non-technical chapter on nuclear in my textbook .

I have had the misfortune to see many estimates of the cost of a kilowatt of capacity of nuclear energy. Too many as far as I am concerned! They range from $1500/kW by the director of an electric generating firm, to $9000/kW by a gentleman who is convinced that most of my work on the economics of nuclear energy hardly deserves to be called nonsense. In my own calculations I often use $2500-3000/kW.

In a similar vein, a (3rd Generation) reactor is being constructed in Finland at the present time that has a capacity of 1,600 megawats (= 1600 mW), which makes it the largest in the world from the point of view of capacity, and initially the intention was to construct it in 5 years. An early estimate of its investment cost was 5 billion dollars. Now it appears that it will take 8 years to construct this reactor, and it has been claimed that before grid power is attained, its cost may reach 8 billion dollars, and perhaps slightly more.

None of this bothers me, because although much of this depressing news originates with engineers who have a far more thorough knowledge of industrial management and engineering than I ever possessed, I am satisfied with my ability to examine the issue on the basis of economics and history. First of all we can consider the time from construction start to commercial operation of nuclear power plants in six important industrial countries. The figures that will be given below originate in the database of the International Atomic Energy Agency, and are quoted in an important article by Roques, Nuttall, Newbery, de Neufville and Connors (2006). I have also questioned Fabien Roques – who wrote the chapter on nuclear energy in the latest IEA survey – and he assures me that he finds them realistic. I quote them here employing the scheme [Country (Minimum Time, Maximum Time, Average Time)], where the times are of course construction times, and these are measured in years. China (4.5, 5.1, 6.3); France (4.9, 16.3, 7.1); Japan (3.3, 8,1, 4.7); Russia (2.1, 20.3, 6.8); UK (4.9, 23.5, 10.8); U.S. (3.4, 23.4, 9.2). In examining these it should be clear that the average times are weighted in terms of capacity (i.e. power) or energy.

Worldwide, since l991, the figures given by Roques (et al) are (4.0, 8.0, 5.2). With an average construction time of 5.2 years, it might therefore be possible to argue that taking 8 or 9 years to construct a nuclear facility is an aberration, and in the fullness of time, the average plant will be constructed in about 5 years. My position of course is that once the nuclear renaissance get up steam, the average plant will be constructed in 4 years or less. As I informed someone in one of the forums to which I contribute, unlike most concerned citizens, I know what happened in e.g. the United States during the Second World War. The battle of Midway took place in l942, and in the approximately 3 years following that major naval clash until the end of the war, the United States constructed 17 fleet (i.e. large) aircraft carriers, 10 medium carriers, and 86 escort carriers. In addition crews and pilots were trained to efficiently and successful utilize these assets, and hundreds of other warships were produced. It should be appreciated that before the U.S. entered the war, nobody in their right mind would have claimed that the ‘miracles’ of modern technology and management skill that became commonplace during the war were possible.

It also needs to be stressed that the U.S. industrial capacity and morale of the work force in 1941 was far less robust than that existing today. A Japanese engineer with whom I worked at Camp Gifu (Japan) prior to being unexpectedly promoted to the infantry, once informed me that the radio broadcast in which President Franklin D. Roosevelt called for tens of thousands of aircraft to be constructed was transmitted verbatim to himself and his colleagues as an example of American pretentiousness and hysteria.

Another quantitative triumph was the U.S. armoured force, although techologically I regard it as deficient. The main U.S. battle tank, the Sherman, was produced in the thousands, even after it was discovered that it was an inferior piece of equipmen. What is still not adequately understood is that it would have been extremely simple to produce in large numbers the qualitatively superior Pershing tank. Had that been done, and the approaches to the port of Antwerp cleared when they should have been cleared, American armor would have been across the Rhine and in Berlin before Christmas of 1944. I call this a gigantic failure to exploit existing technology, and the same kind of flaw applies to the inability to greatly reduce the time of construction of nuclear plants.

According to Donald E. Carr in his brilliant book (1976), the Japanese were able to construct a nuclear plant in 4 years in the l970s, which leads me to believe that they will be able to construct one in 3 years when their decision makers and voters eventually comprehend what awaits their standard of living if they do not get the energy message. (I was also told some years ago in Vienna that the Japanese government is in no hurry to increase the size of the present nuclear inventory. What they want instead is to introduce breeder reactors, which would enable a greater utilization of the energy in a reactor’s fuel.) It might also be possible to argue that if at the present time if it takes 5 years or more to construct a nuclear plant, then coal is a more economic resource for electric generation than nuclear, but since I expect nuclear plants to eventually take less than 4 years to construct, this should not be the case.

I can close this short contribution by pointing out that when the next (or 4th) generation of nuclear plant appears, it probably won’t make a great deal difference if it does take 5 or 6 years to construct a nuclear facility: in theory, 4th Generation equipment is greatly superior to previous models.

I would also like to point out that I am familiar with many of the claims of nuclear failure that are in constant circulation throughout this old world of ours, but as it happens I am singularly unimpressed. American industry was able to bring about miracles during WW2 because for the most part pessimism and failure were not encouraged – as is NOT the case today with both nuclear energy and the U.S. macroeconomy. At the same time I am willing to admit that while many beliefs about the energy future that are often found in the U.S. and Sweden do not make any economic sense at all to me, I am convinced that if the citizens of those two countries continue to accept that more money is preferable to less money, then a different attitude toward nuclear energy will eventually appear.

REFERENCES

Banks, Ferdinand E. (2009). 'Economic theory and nuclear energy: a long survey'. (Forthcoming)
______ . (2009). Energy and economy: a global approach. (Forthcoming)
______ . (2007). The Political Economy of World Energy: An Introductory Textbook. Singapore and New York: World Scientific. Carr, Donald E. (1976). Energy and the Earth Machine. London: Abacus.
Constanty, H. (1995). "Nucleaire: le grand trouble" L'Expansion (68-73).
Martin, J-M. (1992). Economie et Politique de L'energie. Paris:Armand Colin.
Rhodes, Richard and Denis Beller (2000), 'The need for nuclear
power'.Foreign Affairs (January-February).
Roques, Fabien and William J Nuttall, David Newbery, Richard de Neufville,
Stephen Connors, (2006), 'Nuclear power: a hedge against undertain gas and carbon Prices'. The Energy Journal (No. 4). Rose, Johanna (1998). "Nya Krafter", Forskning och Framsteg (September).
Thunell, J. (1979). Kol, Olja, Kärnkraft - en Jamförelse. Stockholm: Ingenjörsförlagen.

Professor Ferdinand E. Banks
April 15th, 2009
ferdinand.banks@telia.com