Nuclear Dreams and Realities
The ladies and gentlemen at Helsinki's airport understood perfectly what that meant, because the new (1600 Megawatt = 1600 MW) nuclear reactor in Finland - called Olkiluoto 3 - that was supposed to be constructed in 5 years, to cost 5 billion (U.S.) dollars, and to supply a large slice of Finland's electricity, might require more than 8 years to go from 'ground break' to 'grid power' (where a 'grid' is a collection of wires). As for the additional 3 billion (or more) dollars that will be the aggregate cost of this delay, a financial journalist assured his readers that the constructing firm - Areva, of France - will have to "eat" that extra money, which can be construed as the penalty for not fulfilling the terms of the contract entered into with the Finnish purchaser of the reactor.
Before continuing, we can note what appears to be an approximate relation between construction time and the present cost of a reactor outside of China and maybe South Korea. On the basis of the initial sales arrangements in Finland, and later the reported agreement between South Korean reactor manufacturers and the United Arab Emirates (UAE), perhaps a good estimate is a billion dollars a year. I consider this outlay temporary however, because I am familiar with the present and estimated future cost of reactors in e.g. China. That cost (or something close to it) - which is likely the lowest cost globally - will eventually prevail for all reactor producers in the industrial world!
Given the opportunity, I would argue at great length that because of the importance of electricity, we need every energy source that we can muster, which includes nuclear and perhaps every conceivable kind of renewable, although I would have a hard time just now convincing my students or myself that paying 8 billion dollars (or more) for a nuclear facility is an acceptable outcome. I won't argue with the Finns however, because there has been talk in that country of ordering another very large reactor, and some observers have apparently suggested that two would be better.
The nuclear operators in Finland have had good experiences with (both Swedish and Russian) equipment, and more relevant have concluded that nuclear is and will remain the best way to obtain the most inexpensive electricity for their industries and households. I can understand what is behind this decision, although it is not the kind of thing to sing about in the Karaoke clubs of e.g. Stockholm, given the long held belief of the Swedish media that Scandinavia has much to learn from countries on the rim of the Kalihari. Finland has one of the best school system in the world, and as a result the general level of intelligence is such that detrimental energy experiments and irresponsible beliefs are not attractive to a majority of Finnish voters.
I can sympathize with this situation, because one thing that my stay in Sweden has taught me is that comparatively inexpensive energy, and a world- class level of technical education (especially at all levels of all secondary schools), are the key to an optimal macroeconomic future. From that I go directly to Professor Arthur Schumpeter's (1942) conception of technological diffusion. It has to do with the comparatively rapid adoption by successful firms of optimal technologies and modes of thought introduced elsewhere, which is the reason I claim that the cost of reactors in China will eventually prevail in ALL of the reactor building world. Of course, where nuclear is concerned, diffusion is not - for obvious political reasons - a self propagating industrial process. As a result, as I often argue, governments should take part, by which I mean take part with subsidies when projects make economics sense.
The Swedish government took the initiative when it became obvious in this country that it would be a mistake to play the fool and jeopardize economic progress by relying on suppliers of energy resources who were thousands of miles away, The result was the construction of 12 reactors in just under 14 years, and those reactors gave Sweden some of the least expensive electricity in the world. This would still be the case if the Swedish government had not listened to goofy arguments about deregulating electricity. According to a long discussion in my forthcoming energy economics textbook (2013), those reactors eventually provided over fifty-percent of Swedish electric energy (in kilowatt-hours), though slightly under fifty-percent of capacity (in kilowatts).
In my courses in and lectures on energy economics I never miss an opportunity to point out that although I concluded in my book Scarcity, Energy and Economics and Economic Progress (1977) that the optimal policy for countries who do not control large amounts of nuclear fuel is to construct a minimum of nuclear capacity, the global economic and demographic situation has radically changed, and regardless of my beliefs then or now about energy policy, a new generation of nuclear equipment is or will soon be on the launching pads in every part of the world. By every part I definitely mean Germany and Japan, because regardless of what the politicians and civil servants in those two countries do, say or think, a majority of voters will not tolerate the attack on their standard of living that is implicit in a nuclear retreat.
In an article just published in the New York Times by Matthew Wald (2013), he outlines the apparent cost fiasco now being experienced in Georgia (U.S.) with the construction of two nuclear reactors called Vogtle 3 and 4. His article ends with a dire forecast by Mark Cooper, an economic analyst affiliated with the Vermont Law School Institute for Energy and the Environment. According to Mr Cooper, those reactors will cost $10 billion more than the alternatives. (NOTE: not $10 billion, but ten billion MORE than the ALTERNATIVES!) This is why the word "dreams" is in the title of the present contribution, although I might change that word to nightmares in the long and brilliant lecture on natural gas that I contemplate giving to friends and neighbors at some institution of higher learning in wonderful summer Sweden, assuming of course that the invitations that I have solicited are forthcoming, which unfortunately is not certain..
But if I do receive a bidding, I would never consider questioning in detail Mr Cooper's economics or mathematics, because if he were really a serious economic analyst he would comprehend that the correct economic cost for nuclear equipment at the present time - for industrial countries with the engineering and managerial aptitudes of e.g. North America and Sweden - is the cost in China, and perhaps even lower. It would also be clear to him that since it is the intention of the Chinese government to provide the industrial sector in China has enough reliable energy to outshine the industries in Georgia or any other state or 'hood' in the U.S. (or for that matter any country on the face of the earth), the U.S. Congress has no choice but to restart the nuclear construction business.
Banks, Ferdinand E. (2013), Energy and Economic Theory. Singapore, London and New York: World Scientific.
(1977). Scarcity, Energy and Economic Progress. Lexington Massachusetts and Toronto: D.C. Heath and Company (Lexington Books)
Goodstein, David (2004). Out of Gas: The End of the Age of Oil. New York and London: Norton
Schumpeter, Joseph (1942). Capitalism, Socialism and Democracy. New York: Harper.
Wald, Matthew (2013). 'Nuclear faces critical test in U.S.'. The New York Times (June 13).