Over the past several years, Utah Associated Municipal Power Systems (UAMPS) has been working on a project to build a nuclear reactor to provide some of their power needs. Later this summer, the cities involved will be voting to increase their financial commitment to cover the entire cost of the federal licensing process.
It is commendable that UAMPS wants to build a project will provide baseload energy with no CO2 emissions, but it is also vital that they are accurate and transparent about the costs of the project to their ratepayers for a first-of-a-kind project that will have costs for the next half-century.
UAMPS has completed an internal process which estimates that the project will be reasonable from a cost perspective, but all of the external evaluations I can find estimate that the project will be much more expensive than other forms of energy. Here are costs estimates from three other outside sources, all of which estimate that the costs of producing electricity from nuclear power will be much higher than other means of energy production.
First, we have estimates from other large publicly owned utilities like Rocky Mountain Power and Idaho Power. These utilities are required by law to choose the lowest cost alternative for producing power for their ratepayers and to publish all of the other more expensive alternatives they considered to show that they have done their due diligence.
Both of them evaluated the long-term costs of Small Modular Nuclear Reactors (the kind that UAMPS is proposing to build) and determined that the long-term cost was much higher than their other alternatives. Idaho Power estimated that it would be more than double the cost of utility scale solar energy, even when including the cost of adding four hours of battery back up to the solar project.
Second, estimates from academics come to the same conclusion. An article published in June 2018 in the Proceedings of the National Academy of Sciences concluded that small modular nuclear reactors would not be any cheaper per megawatt than large reactors, which have been shown over the last 20 years to be economically non-viable. They estimate that nuclear reactors would not be economically feasible unless there were a federal carbon tax of around $100 per ton on CO2 emissions.
Third, private companies who estimate the long-term costs of electricity production for investors also conclude that nuclear energy is more expensive than producing that same energy using coal, natural gas, wind, or solar.
The most recent estimate by Lazard’s, a firm that has specialized in this field for many years, is that nuclear power costs will be more than triple that of natural gas, wind or solar. Furthermore, over recent years, the total production costs of natural gas, wind and solar have all decreased, while the estimated costs to produce nuclear energy have actually increased.
It isn’t just estimates of future costs that suggest that nuclear power plants are a risky investment proposition. Both of the two most recent nuclear power projects in the United States have gone poorly from a financial perspective.
The Vogtle plant in Georgia has seen its estimated costs double and the projected date of producing any energy pushed back from 2016 to 2021. A similar project in South Carolina spent $9 billion before going bankrupt and their ratepayers will be paying higher rates for their electricity for the next 20 years without one watt of energy ever being produced.
All of the investors in the UAMPS project so far are medium and small municipalities. Despite the project actively seeking investors now for some years, no city with a population over 100,000 has agreed to invest money. No large utility has agreed to invest money. The only participants agreeing to invest their money are those who do not have the institutional size to get an independent evaluation of the likely costs.
Finding a way to get the energy we need while reducing our CO2 emissions is an important goal, but it is also very important to be accurate about the likely costs of the different alternatives.
I hope the municipalities participating in UAMPS will carefully consider cost estimates from outside sources before increasing their financial commitment to this project.
Ray Ward
Rep. Ray Ward, M.D., Ph.D., a Republican from Bountiful, represents District 19 in the Utah House of Representatives.