Some of the things said about the financial aspects of nuclear power show a considerable lack of understanding (perhaps wilful) of the proper way of calculating costs.

(Now, there are other issues with nuclear power, but this thread is about honesty in representing the financial costs).

A couple of common claims are

a) That the decomissioning costs are so high that if they are included in the cost of the power stations then nuclear power becomes uneconomic.

b) Since the nuclear waste has to be stored pretty much forever, this means that the cost of doing so is infinite.

Neither of these claims are true, because of the way discounted cash flow (DCF) works. See http://forum.onlineopinion.com.au/thread.asp?discussion=96 for a discussion of DCF.

A consequence of that is that if a power station lasts 50 years, then the cost of decommissioning it at the end of its life with a discount rate of 4%, the cost of decommissioning has to be divided by 7 before being added to the cost of construction. Since the decomissioning costs are in any case not large compared with the cost of construction, this means that decomissioning has a minimal effect on the cost of the electricity.

I've chosen 4% for the discount rate because it is approximately equal to the difference between the current interest and inflation rates.

Even if the waste has to be stored forever, then the present value of doing so is simply the amount of capital required to produce a real annual interest equal to the annual cost. With a rate of 4%, this means that for every $1 annual cost of storage, we need a present day investment of $25. This is really the cost of storing the waste as from today. If the waste only has to be stored after the station is decomissioned, then that figure is divided by 7. In practice, the waste will be produced during the life of the station, so the true figure lies between the two.

Sylvia.

Syliva, are you in the middle of an accounting degree or similar?
You seem obsessed with DCF.
I work for a major Investment Bank, and even we don't look at everything in such purely financial terms.
We are often willing to lose some money on our first few dealings with a new client in order to build a RELATIONSHIP that lasts, which is far more profitable in the long term.

DCF is not the be all, and end all of life on earth, reagrdless of what your Uni lecturer may have told you (I find most financial lecturers way out of touch with the real world.

There are too many other factors like goodwill, and evironmental benefits, or the defence of freedom & human rights etc etc etc. Do you think Churchill did a DCF analysis before he sent men into battle?

Think about it, or something else would be a good idea :)

Tao,

Please confine your responses to the topic. I am not the subject of this thread.

Sylvia.

Clearly, the request that responses be confined to the topic should have been addressed to Stomont, not tao.

Sylvia.

Sylvia,

People don’t have to see things according to your rules and parameters. If you want to restrict debate to only what you want to discuss, then talk to yourself in the mirror.

One of the major concerns I have with nuclear energy and the long term storage of waste is that we have to trust the people in power to do the right thing with it. Yet there is no way that we can possibly trust them to give us the right information, or to ensure that there is no long term damage, particularly in our political and economical system.

There is no amount of money that will compensate for an unlivable planet.

Tao,

This is a thread about truth about the financial aspects of nuclear power. I have started the thread for the purpose of discussing that. If you want to discuss other aspects of nuclear power then start your own thread for the purpose - don't hijack the one I've started.

It is a forum rule that replies must be on topic.

Sylvia.

But the truth, Sylvia, is that such things cannot be reduced to purely monetary considerations

The decomissioning costs have been grossly inflated by the
anti-nuclear community , excepting the fuel the only " hot" parts are
the cuve of the reactor and the primary steam circuit , not exactly
big deal ,it can be left in situ for a couple of hundred years with a
bit of landscaping , the wildlife would LOVE it !

most of the rejects by bulk are low grade stuff , usualy stored in
garage and basement for any non power user such as research and
medical
the real glow in the dark stuff is easy to store and quite safe ,
unless one want to set standards so high as to prohibit watching TV
without a radiation suit !

Dazzled by Sylvia's arithmetic, I confess that I lost the flow.
I wonder can Sylvia tell me why the power companies in the UK are so reluctant to build new nuclear reactors. They say that it all depends on whether or not the UK government, (i.e. the taxpayer) will agree to foot the bill for the waste disposal and storage. If the government won't commit to this, then they won't build new ones. How come, if nuclear power is so economic.
Another question that I would like Sylvia to answer, (preferaby in short non-arithmetical, non-jargon words suitable for peasants such as myself) is:
What will be the cost of the security required for transport, storage, and perpetual guarding of nuclear plants, decommisioned plants, and wastes?
Christina Macpherson www.antinuclearaustralia.com

ChristinaMac it's hard for me to comment without some reference. Can you cite documentation that describes the stated unwillingness?

However, I can well understand that companies are reluctant to have largish and somewhat uncertain liabilities sitting on their books for 50 years. So if they can twist the arm of Government to take over the liability, no doubt in exchange for a levy to fund the future decomissioning, then they would no doubt take that course.

At the moment, the estimated cost of power from new nuclear power generators is higher than that for coal fired generators. This is largely due to the financial risks of building a generation of reactors of a new design. So as long as governments remain willing to allow new coal fired stations to be built, companies are going to be reluctant to build nuclear powered generators.

I have no detailed costings for security, but consider that a 1GW power station is generating in excess of $1 million of electricity per day. That provides significant room for some heavy duty security without a huge impact on the price.

Most of a decomissioned station has no security significance. Low grade radioactive waste wouldn't be worth trying to steal. The high grade waste is low in volume, so I cannot see it being expensive to secure.

This site provides some background regarding costs in general.

http://www.nuclearinfo.net/Nuclearpower/WebHomeCostOfNuclearPower

Sylvia,

Do you mean to say you haven't factored in all possible costs in your DCF? A bit remiss of you don't you think?

Here again is the profit problem. Companies get to profit from nuclear power but want the public to foot the bill for the cleanup.

A classic case of privatising profit and socialising losses.

Your comments about there being plenty within the turnover to pay for security etc. assumes that private companies will be interested in ensuring adequate security, however in the end they will cut costs wherever they can in order to maximise profits.

No doubt you consider I am "off-topic" but quite frankly Sylvia, I don't give a damn!

Tao,

Many industries operate under a set of strict rules designed to ensure that they are safe. They are monitored, and get fined if they break the rules. In more serious cases they can lose their right to operate, with serious profit implications.

There is no reason to think that the profit motive would cause nuclear power generation companies to skimp on security if the rules require that that security be in place.

Sylvia.

.

Good on ya Silvia !

.

“Many industries operate under a set of strict rules designed to ensure that they are safe. They are monitored, and get fined if they break the rules. In more serious cases they can lose their right to operate, with serious profit implications.

There is no reason to think that the profit motive would cause nuclear power generation companies to skimp on security if the rules require that that security be in place.”

Come off it Sylvia, pull the other one.

A few examples of private companies/industries which wilfully put the profit motive before the wellbeing of the public/employees/customers:

Tobacco
Oil
Mining
Chemical/Pharmaceutical
James Hardie – asbestos
HIH
Enron
AWB

These are just off the top of my head.

Some of these industries (i.e. oil and mining) actually kill people who live on the land they want to explore/exploit (not officially or publicised of course).

What “reason” do you have to think that nuclear power companies are going to be any different? Maybe they are just good guys and want to help out.

What makes you think regulations are going to make any difference?

Are you unaware of the ways in which those with vested interests lobby (i.e. pull strings and bribe) governments in order to make conditions as favourable to them (i.e. profitable) as possible which includes relaxing as far as possible any laws or regulations that may restrict their ability to make profit? Do you think the nuclear power people are just going to be one out of the box?

Have you ever thought that the politicians who get in power (or even a whiff) only do so because they have proven they can/will play the corporate game?

And have you actually factored in the possible cost of a breakdown of this foolproof system, and the contamination of various regions, populated, unpopulated, high environmental value, high economic value etc.?

It is a pity Christina hasn’t replied with a reference, however (supposing it is true) I will deal with your comment:

“ChristinaMac it's hard for me to comment without some reference. Can you cite documentation that describes the stated unwillingness?

However, I can well understand that companies are reluctant to have largish and somewhat uncertain liabilities sitting on their books for 50 years. So if they can twist the arm of Government to take over the liability, no doubt in exchange for a levy to fund the future decomissioning, then they would no doubt take that course.”

So you can understand that companies wouldn’t want large and uncertain liabilities, yet the implication is that the public should accept those same liabilities.

And doesn’t the fact of “largish and somewhat uncertain liabilities” fly in the face of your DCF by which you can supposedly calculate to the very last cent the “real” value, costs and savings of things. How do you factor in “largish and somewhat uncertain liabilities”?

Tao,

I'm just going to ignore your posts until you can make them without comments like "Come off it Sylvia, pull the other one.".

Confine your comments to the subject matter, or you'll be talking into a black hole as far as I'm concerned.

Sylvia.

Sylvia,

“Many industries operate under a set of strict rules designed to ensure that they are safe. They are monitored, and get fined if they break the rules. In more serious cases they can lose their right to operate, with serious profit implications.

There is no reason to think that the profit motive would cause nuclear power generation companies to skimp on security if the rules require that that security be in place.”

A few examples of private companies/industries which wilfully put the profit motive before the wellbeing of the public/employees/customers:

Tobacco
Oil
Mining
Chemical/Pharmaceutical
James Hardie – asbestos
HIH
Enron
AWB

These are just off the top of my head.

Some of these industries (i.e. oil and mining) actually kill people who live on the land they want to explore/exploit (not officially or publicised of course).

What “reason” do you have to think that nuclear power companies are going to be any different? Maybe they are just good guys and want to help out.

What makes you think regulations are going to make any difference?

Are you unaware of the ways in which those with vested interests lobby (i.e. pull strings and bribe) governments in order to make conditions as favourable to them (i.e. profitable) as possible which includes relaxing as far as possible any laws or regulations that may restrict their ability to make profit? Do you think the nuclear power people are just going to be one out of the box?

Have you ever thought that the politicians who get in power (or even a whiff) only do so because they have proven they can/will play the corporate game?

And have you actually factored in the possible cost of a breakdown of this foolproof system, and the contamination of various regions, populated, unpopulated, high environmental value, high economic value etc.?

It is a pity Christina hasn’t replied with a reference, however (supposing it is true) I will deal with your comment:

“ChristinaMac it's hard for me to comment without some reference. Can you cite documentation that describes the stated unwillingness?

However, I can well understand that companies are reluctant to have largish and somewhat uncertain liabilities sitting on their books for 50 years. So if they can twist the arm of Government to take over the liability, no doubt in exchange for a levy to fund the future decomissioning, then they would no doubt take that course.”

So you can understand that companies wouldn’t want large and uncertain liabilities, yet the implication is that the public should accept those same liabilities.

And doesn’t the fact of “largish and somewhat uncertain liabilities” fly in the face of your DCF by which you can supposedly calculate to the very last cent the “real” value, costs and savings of things. How do you factor in “largish and somewhat uncertain liabilities”?

I hope this is OK

Tao,

It's true that there are companies that have put profit before the public interest, but the relevant issue here is not whether nuclear power generators would act in the public interest out of good will, but whether they would act in compliance with regulations. The fact that some companies have behaved badly from an ethical perspective tells us nothing about whether they would comply with express rules.

As regards governments taking over liability for decommissioning, I observed that this would be no doubt be in exchange for a levy on the power generated. That this represents a transfer of risk would be reflected in the levy. In that respect it's no different from insurance. The use of a levy is already the practice in at least some of the countries that use nuclear power. Indeed, having a separate fund to cover decommissioning expenses, rather than leaving the cost on the books of the generators, is desirable, because it ensures that the money is there to pay for the decommissioning even if the generator goes into liquidation.

The costs of decommissioning are only somewhat uncertain, not hugely so, since some decommissioning of nuclear power plants has already occurred. Costs seems to be around $US300 per kilowatt of installed capacity, the notable exception being for gas cooled reactors which are for some reason significantly more expensive.

It is true that if a nuclear power station were to explode, it would do a huge amount of damage. However, with the newer designs it is believed that an explosion is impossible - the laws of physics prevent it. At most, the risk must be very small, and this risk has to be taken into account when trying to include the costs of an explosion.

DCF describes how to bring together costs and incomes that occur at different times. I have never suggested that it claims to "calculate to the very last cent the “real” value." You have misrepresented my position, and sought attack it on the basis of the misrepresentation. That is a classical strawman argument, and is intellectually dishonest.

The issue of the altruism or morality of listed companies miss
the point , such entities are dedicated to the making of profits in a
legal manner and are neither better or worst than the people who run
them
It's like blaming the motorcar for road accidents !
All large companies , such as power generators consider their public
profile and reputation as an asset ,
especialy in a public retail situation ,

To claim than large corporations are set on an course of reckless
exploitation of the public is simplistic in the extreme
The power generators operate a technical process in a legislated
environment ,
the green movement has been incapable of adressing the debate
on a technical point of view , further a galaxy of extrem left wing
groups have been using nuclear power as agit-prop material , stiring
trouble for recruitment and exposure ,
their strategy has been to resort to hysterical claims
on safety , strong arm tactics and generaly infiltration of any
platform with a megaphone .
the discution on the cost of waste is a non issue , no amount of
safety will satisfy someone who is of bad faith !
when the cost of energy will be such as to affect the lifestyle
of the urban " Pink neck " then all problems will disappears ,like
a labor policy mist in the sun of an election .

Sylvia,

I have not sought to attack your argument on the basis of misrepresentation, my understanding of your promotion of DCF is that it is the only true way to assess the costs, savings and value of things. My comment about “down to the very last cent” was perhaps a humorous exaggeration of it’s precision (which you obviously don’t find very funny :) ). However, any method of calculating such things (particularly if we are going to make important decisions on the basis of it) should have a certain degree of precision which, I presume, a “largish and somewhat uncertain liability” that is not acceptable to private companies, would throw into fuzzy land. You have not yet demonstrated that it does not. However you appear (conveniently) to have revised your estimate from “largish and somewhat uncertain” to “only somewhat uncertain, not hugely so”. Very precise.

The payment of a levy merely transfers the “largish and somewhat uncertain” risk to the public for a set cost and is therefore an advantage to the private company, but a disadvantage to the public. There may be a relative advantage in ensuring that there is money available for the cleanup, however a better outcome for the public would be that the company which makes all of the profit from the venture bears full responsibility for the potential liabilities if and when they occur. The question that arises is, why should a company be able to make the profit and not take full responsibility for the consequences? Or, why should the public take responsibility for the consequences, but not derive the full benefit of the venture (i.e. the “profit” staying in public hands, or benefit from reduced power costs?) Interestingly, Wall Street is extremely reluctant to invest in, or insure, nuclear power plants because the economic risk is too great, hence the push for the public to bear the responsibility.

You say: “It's true that there are companies that have put profit before the public interest, but the relevant issue here is not whether nuclear power generators would act in the public interest out of good will, but whether they would act in compliance with regulations. The fact that some companies have behaved badly from an ethical perspective tells us nothing about whether they would comply with express rules.”

Your previous words were: “There is no reason to think that the profit motive would cause nuclear power generation companies to skimp on security if the rules require that that security be in place.’ This is appears to be a statement of fact.

I however, suggested that there are reasons to be concerned that the profit motive would cause nuclear power generation companies to skimp on things (security or otherwise) regardless of what “rules” are in place, and would in fact influence the “rules” that were made.

The transgressions committed by the companies/industries listed include wilfully disregarding laws and regulations, as well as moral or ethical transgressions. There is no end of examples of companies who disregard environmental and other laws for the sake of their bottom line. There is little reason to believe that nuclear power companies will be any different and, I would suggest, such belief is wishful, naïve thinking.

Then there is the added aspect of what such companies do with knowledge they have that hasn’t made its way into legislation. Big Tobacco for example knew the dangers of smoking long before any rules or regulations were made, yet they hid that knowledge in the interests of profit. So, contrary to your assertions, compliance with regulations is not the only relevant issue.

I also suggested that those laws and regulations that will be made may in fact be influenced by those with vested interests. For example, the former Australian Chief Scientist, Robin Batterham, whose role was to advise the government, and therefore influenced policy, was also working for Rio Tinto, and doing his “consulting” for the government from Rio Tinto’s offices, and using their data. Hardly impartial.

So while you categorically state that THERE IS NO REASON to believe that the profit motive would lead to skimping as long as there are rules in place, I submit that your categorical statement is untrue. Further, even if it were true, the fact of legislation or regulation does not satisfactorily eliminate the potential risks.

Indeed, for those who think critically, and in broader terms than the economic bottom line, there is little reason to take your word for it that there are no such risks.

Given that you appear to dismiss such risks, one could assume that they have not been costed (if in fact they can be at all), nor included in DCF. Nor will any government body include them in their calculations.

The other point that your comments highlight, is that there is a conflict between the public interest and private profit making which requires laws, regulation, and penalties for non compliance. The question that arises is that if private profit is so good for society as a whole, why would we need laws to protect the public interest?

No doubt you will consider some of my points “off-topic”, however in my opinion, while DCF may be a correct method of calculation, for as long as there is a profit system, the real value of anything which is supposedly in the public interest will be obscured by the competing agenda of private profit. There is the necessary “cost” of producing any kind of energy which is the basic requirements of natural resources, technology and labour, and potential risks. On top of that there are unnecessary costs which are the requirement of certain people to derive a profit and all of the motives and consequences which flow from that.

If the aim is to make the best decisions for humanity as a whole, then any calculation must take all factors into account and make rational decisions on that basis. We can’t know the true costs of any form of energy production until we separate the necessary from the unnecessary.