Which Is Cheaper? Nuclear vs. Solar

“Commercial-scale solar developers are already offering utilities electricity at 14 cents or less per kWh. Duke Energy and Progress Energy are limiting or rejecting these offers and pushing ahead with plans for nuclear plants which, if ever completed, would generate electricity at much higher costs — 14–18 cents per kilowatt-hour according to present estimates.”

This is the research conclusion from a study entitled Solar and Nuclear Costs — The Historic Crossover authored by John O. Blackburn, PhD, Professor Emeritus of Economics and former Chancellor, Duke University.

The study’s premise is that traditional energy supplies including fossil and nuclear energy are experiencing what economists called “upward cost curves” or in other words, their costs keep going up and are not likely to ever go back down. However, the research claims of Blackburn/Cunningham are that renewable energy has achieved a “downward cost curve” over the last decade, namely that their prices have gone down and there is a strong likelihood that they will continue to fall in price.

The forces behind renewable energy’s downward price curve are technology innovation combined with the emergence of a global manufacturing base that is producing economies of scale (lower unit prices achieved from mass production efficiencies). Fueling this push for innovation and mass production is the emergence of a global renewable energy market with examples that include China’s recent announcement to increase their wind power supply by 50% beyond their world leading growth levels and Ontario’s success in attracting 8,000 MWs of solar development proposals from their feed-in tariff. Today wind power is price competitive on a kWh basis with coal fired power plants and tomorrow’s post will outline the facts behind the drop in the cost of PV utility-scale solar panels from approximately $6 per watt to less than $2 per watt in just five years.

While renewable energy has been achieving lower costs, fossil fuel prices are being driven higher by a combination of increasing global demand compared to global supply plus the higher risks facing fossil fuel suppliers as they increasing source supplies from high risk locations, either deep below the seas or from a foreign country with heightened profit expectations or political instability, or both. For example, coal prices have reached $100 per ton as China grows into a net coal importer and oil now trades in the $70-80 per barrel range. Only natural gas has been able to achieve price stability at around $4-5 per mmbtu as fracturing drilling technology creates an increasing, global supply of natural gas. The claim of the Blackburn/Cunningham study is that nuclear power also faces an escalating price scenario based upon their reference of a study by Mark Cooper, Senior Fellow for Economic Analy- sis at the Vermont Law School’s Institute for Energy and the Environment that concludes “…a new nuclear plant will produce electricity at costs of 12–20 cents per kilowatt-hour (with a mid-range figure of 16 cents) at the plant site, before any transmission charges.”

A major issue that confronts an assessment of which energy supply is truly least cost is the confusing, lobbyist driven array of government subsidies that appears to have been given to every energy resource. This large quantity of taxpayer subsidies is distorting the consumer’s and voter’s ability to understand an energy resource’s “real cost” at the pump or meter. As a result, the debate on energy policy now includes fossil vs. nuclear vs. renewable energy advocates pointing fingers at each other over which fuel is the most subsidized. The Blackburn/Cunningham study also attempts to address this issue as to whether solar or nuclear is the greater beneficiary of taxpayer subsidies. The obvious answer is that taxpayers are subsidizing all energy sources and the obvious question is why?

What insight can be drawn from analysis like that of Blackburn/Cunningham? The first conclusion is that the future price of electricity is going to be much higher! The current average national price for retail electricity is in the 10 cents per kWh range. Energy prices from either solar or nuclear energy at their projected costs per kWh will drive consumer prices above current national averages!

The second observation not addressed by the Blackburn/Cunningham study is the need for an increased electricity supply. Yes, conservation is needed because the USA is an energy hog compared to other countries. U.S. Energy Information Agency statistics document that while we account for approximately 5% of the world’s population we consume approximately 21% of the world’s energy. A Jato Dynamics study found that “…33.9 percent of vehicles sold in the U.S. still fall within a 15 mpg to 20 mpg consumption bracket, compared with Europe where only 0.28 percent of vehicle sales in Europe fall within that bracket and only 0.63 percent of sales in Japan.” Conservation and energy efficiency is America’s least cost solution compared to the consumption of fossil, nuclear or renewable energy.

However, even with the anticipated benefits of conservation and energy efficiency, our country is entering a new wave of electrification that will increase the demand for electricity. Transportation electrification is emerging as a solution to both our dependence upon foreign oil, higher gasoline prices and the environmental consequences of fossil fuel consumption. The promise of transportation electrification is an electric car industry offering consumers a lower fuel cost per mile, acceleration and performance that is a car enthusiastic dream plus solutions to fossil fuel emissions and energy independence.

The shift to digital information is also a key driver in the growing demand for electricity. Digital information is the technology that is enabling the unprecedented labor productivity being achieved by Corporate America. The scale of these labor productivity gains are paradoxically generating higher profits even as Corporate America’s revenues face the headwinds of a global recession. Digital information is also transforming our every day life-experiences offering increased transportability and lower costs compared to the historical fossil-based carbon-based products sold through a retail outlet-centric supply chain consuming vast quantities of energy. While the digital age is producing “Cost Less, Mean More” results in the form of lower prices, increased benefits and positive environmental results, its backbone is electricity.

Digital age applications applied to our current electrical grid does offer the promise of a quantum leap in consumer conservation and more efficient use of energy. However, this will not be enough to satisfy the growing demand for electricity when we are recharging our electric cars while also running our businesses and homes off of a “cloud” of connected, smart computers and appliances. Voltage maintenance (best appreciated as lights dim and electric motors make unusual noises during extreme hot spells when electricity demand is so high that it stresses the electrical system) will challenge currently designed utility electrical systems as A/C compressors, refrigerator compressors, machine motors, computers and the electric car create a combined local load level that the electrical distribution systems was not designed to handle.

A re-engineering of the local distribution grid utilizing renewable energy supplies combined with enhanced distributed battery storage technologies plus smart grid technologies could address both voltage and supply issues. The public policy question confronting this scale of innovation is the utility industry’s 100 years of legacy law and rulemaking now operating through local, state and federal agencies, commissions and courts. This legacy system links utility profits to the utility building and owning assets, a logical linkage during the 1930-60’s when the technology benefits of large central power plants connected to a transmission grid were delivering annual rate decreases to consumers. In today’s applications of this legacy system the utility is often confronted with a tightrope walk between doing what is best for the consumer vs. what is best for the investor. For example, a utility profits from investing in approved power plants but does not profit from least cost energy purchased from a third party or from encouraging consumer conservation. In addition, regulatory oversight is very focused upon management’s cost prudence with little linkage between the level of profits a utility is allowed to earn and the utility’s achievement of customer satisfaction, system reliability, reduced environmental footprint and competitive pricing.

While the issue of nuclear vs. renewable vs. fossil technologies merit such commendable efforts of analysis as provided by Blackburn/Cunningham, the issue that would most enable a least cost analysis is rational economic public policy that aligns rather than divides business incentives behind creative, least cost innovations (including cost analysis that incorporates environmental/wellness cost/benefit impacts) that will enable the benefits of transportation electrification and the digital age.

Bill Roth is the founder of Earth 2017 and author of The Secret Green Sauce.

First Green Business Coach for Entrepreneur.com. Founder of EARTH 2017, a website posting economic analysis on disruptive trends impacting communities and businesses. President of NCCT, a consulting company that coaches CEOs and business owners on pricing and marketing best practices proven to win the millennial generation, and their moms, as customers.

32 responses

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  7. The Solar Costs are based on 'clear atmospheric conditions' and 'optimum angle in relation to the sun'.

    Which means a motor on the solar panels to track with the sun and a cloud free sky.

    It's all fine and dandy that commercial solar entities are prepared to sell their electricity at 14 cents a KW but in the real marketplace, at 14 cents a KW is only paid if it is a callable resource. I.E. It's peak load time and we need more juice.

    Solar can not offer that resource, the 14 cents is for 'must use' rates.

    In the Pacific Northwest various wind generators are already receiving 'do not generate' orders from the Grid Managers as the wind is blowing when there is no demand.

    1. Lets also consider that a solar panel last 15-20 years compared a nuclear plant that lasts 40-60 years. Lets also consider that a nuclear plant operates on average 23.5 hours per day at 100% power while a solar panel operates on average 7 hours per day at 100% power.

      That means that a nuclear power plant will produce WAY more power for the same kW of installed capacity as a solar panel. Lets also consider the cost of replacement power when the respective generators aren't running: A solar panel needs a 'backup' for 17 hours per day whereas a nuclear plant needs 1/2 hour of backup.

      This study completely ignores ther reality of selling power on the grid.

        1. Almost everything you said here is incorrect.

          Solar panels last 30+ years, and here is the important part with almost no maintenance beyond washing.

          Nuke may last 40-60 year but they need billion dollar refurbishments every 20-30 years to do so plus a similar amount for decommissioning.

          Nuclear power plants do run at higher capacity it is true.  Nuclear is about 90% and solar about 30%.  So you do get more bang for your buck when comparing the 2 but currently nuclear costs 10$/watt to build and solar 4$/watt.

          Also you do not need separate ‘replacement’ power for solar and nuclear.  Both plants need dispatchable power to make up for there different poser curves.  Nuclear needs more poser during the day as peak power consumption is high then base nuclear.  While for solar they need the extra power at night.

  8. Thanks Harry for your insights. It appears to me that the electricity industry is benefiting from the emergence of new technologies that will require substantive changes in the role and operation of the grid. “Central dispatch” by a utility will dramatically change with the further introduction of the smart grid, battery storage advancements in scale and price and the expansion of local, renewable generation. My own experience with Real Time Pricing suggests “dispatched” price swings between “free” to $4 per kWh. And into this price volatility an array of technology and financial solutions will emerge that will enable cost effective, efficient and environmentally responsible results.

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  10. Dr. Blackburn is a known anti-nuclear activist so I would be curious to see his assumptions that went into the $/kWh figure for new nuclear, especially since existing reactors are now producing electricity at 1.87 cents/kWh. Assuming that Dr. Blackburn is using the industry figures, that means he is projecting the capitol costs for nuclear to be 12 to 16 cents/kWh. There was a study done by City Bank that projected new nuclear to be 25 cents/kWh. Their assumptions were $10B/GW to build, 80% capacity factor (industry is now greater than 90%) and a Weighted Average Cost Of Capital (WACC) of 14%. That last figure is way off. With government backed loans provided by DOE, new nuclear construction is expected to have a WACC of 5-7%. If Dr. Blackburn is using a WACC anywhere near the Citi number then you can see how his cost estimate could easily be almost double of what might actually occur.

  11. Recently the OPA announced a proposed rate change for ground-mounted solar systems that will affect nearly 70% of all microFIT applicants. As if a rate change was not bad enough, the applicants who in good faith applied for contracts as far back as January are going to be retroactively affected by the change should it be adopted. The OPA’s proposed rate change has already sent ripples of uncertainty and disappointment through the industry, with the real damage yet to be done. This rate change has the potential to cripple the industry before it has even gotten off the ground. The OPA has described this up and down rollercoaster as “the growing pains of a new industry”. For those who have invested their life savings in projects or built businesses based on the program this is much more than “growing pains”, these are crippling and quite possibly bankrupting blows.

    We are now in the midst of a '30-day comment period' before this change is considered final. Together we must act quickly and decisively with a unified effort to contact everyone who may be affected by this change. We also encourage everyone to contact your local MPP's and inform them of the serious damage this proposed rate change will have, and how it will impact the economic growth and stability in their riding. (http://www.ontariotenants.ca/government/mpp.phtml). We encourage you to make your voice heard by joining the call to action and filling out the petition located through the following link http://www.microfitaction.com.

  12. PoloniumMan –

    I must add an emphatic 'me too' to your comment, and an equally emphatic WTF to both the author of this piece and the results of the featured study.

    I swear, people who proclaim this have NO idea of what is going on outside the western hemisphere, where nextgen nuclear plants are routinely priced, and coming in at $1500-$2000/KW overnight cost, and they are aiming at 3 years (now at 4) from first concrete pour to grid activation.

    Lord, deliver us all from analysts like this. They are bound to drive our civilization to an early grave.


  13. The electric cars only solve the emissions problem if they are plugged into nuclear power (or un-reliable renewable power sources). If you plug in your new battery powered car to charge for the night and your local power plant burns coal, that car is still in the carbon burning cycle.

    New nuclear reactors (and the current ones in place) are much cleaner and more efficient than any other power source. The rest of the world has already passed us by in the fields of nuclear design and development. Where are our nuclear fuel recycling plants? Why is Yucca Mt. a bad spot, especially since most of the “waste” that will get stored there will some day be fuel again? The fact that the material is radioactive and has a half-life means that we might be able to burn it in a reactor some day. Nuclear power is the power of the future. The Russians already are experimenting with it for space propulsion. The French get 80% of their power from it (with plenty to sell to other EU nations). The Chinese are building new reactors by the dozens.

    What is holding us back? We invented the tech to begin with. We even designed the first Thorium reactor, but because it didn't make bombs we scrapped the plans. Nuclear tech may have started at the Manhattan Project, but it has grown up since then and the fuel is way too precious for us to be using it for bombs anymore.

    Fact: a one mile long train full of train cars that are brimming with coal is equivalent in electrical power generation to one 55 gallon drum of yellowcake (refined uranium ore, prior to enrichment). Nuclear power is several orders of magnitude greater than anything we have ever encountered as an energy source in the past (or probably ever will, unless Fusion works).

  14. Excellent debate, thanks to all that are making these comments.

    So how do we bring clarity and transparency to which is cheaper, solar or nuclear?

    Both solar and nuclear advocates point to other countries as examples where their preferred technology is being built in larger quantities at lower costs? What is America doing wrong? Is there a path for a zero emission electrical grid of renewable and nuclear power that rate payers can afford?

    Your continued contributions to this discussion is greatly apreciated!

    1. It is easy to tell whether an analysis is valid. If it shows solar costs anywhere near nuclear, it is a bald faced lie. Such studies are easy to do by assuming the rated KW of solar are produced around the clock, when it fact it is only a few hours, or that they are produced near the load, which most are not. Concentrating solar plants can get close to the 15-20 cent/KWhr number, but they have to be located in deserts. Then you have to build multibillion dollar transmission lines to get the power where it is needed.

      As others have noted, other countries build nuclear plants at much lower costs than the US. This is due to our outmoded 'zero risk' regulatory policy. We have learned a lot since the 1970's when these rules were written, but bureaucracies are immortal. If Congress would just sweep away this costly, useless system we could produce power cheaply too. If they don't we will continue our slide into poverty as the rest of the world will use cheap nuclear energy to drive what remaining industry we have offshore.

  15. At the end of the day this sort of comparison is what you need to do before just comparing prices. And as will continue to become more obvious– renewables just make sense

    1. If renewable companies wanted to make sense, then they should compete with the expensive, deadly, and CO2 emitting peak natural gas and not the baseload nuclear which it cannot possibly compete with when anyone with better than a D average does the math.

      Likewise, nuclear should not compete with perfectly good peak renewables (when combined with energy storage). It should focus on competeing with the filthy baseload coal that is destroying our envrionement and killing tens of thousands every year.

  16. The text of the entire 20-page report is available at “http://www.ncwarn.org/wp-content/uploads/2010/07/NCW-SolarReport_print.pdf”. It is an enlightening read.

    In the report, Dr. Blackburn notes that federal and state subsidies pay 65% of the capital cost for the basic solar generators, so that amount is not included in his 14 c/kWh rate estimate for solar generation. That assumption alone makes the actual cost to our economy of solar generated power three times greater than his estimate. Neither does he include the cost of maintaining variable-rate backup power sources, or the added costs for developing a power grid to effectively use solar power feeds that dip with each passing cloud.

    By contrast, he assumes that nuclear generating costs are 18 c/kWh, when, in reality, they currently are typically 6-10 c/kWh in the Southeast. My delivered power rate with Georgia Power is 12.7 c/kWh. Dr. Blackburn burdens the projected rate of nuclear electricity with such items as the tens of billions paid by nuclear utilities into the federal nuclear waste site fund for the Yucca facility. The Yucca Project was recently cancelled by the Administration with no hint of a refund by the government to the ratepayers for this reverse subsidy from nuclear power users.

    In fairness, Dr. Blackburn does include complete references for his assumptions in the report, but even a cursory review of them appears to deflate the entire basis for his conclusions.

    1. In addition, these 65% subsidies are not explicitly cited in the report, but only in the Appendix: it is quite difficult for a normal reader (or a journalist!) to find out this fundamental information…

  17. See the recent posting on V2G or Vehicle to Grid systems for a very practical approach to the question of electric storage to ease the transition to renewables http://www.triplepundit.com/2010/07/v2g-vehicle… . As for nuclear power advocates' claims that their plants are carbon free,they do not take into account the life cycle impacts of mining uranium and building and maintaining the plants which puts their carbon footprint somewhere in the range of one-third to one-half of a comparably sized natural gas plant. As for the economics, the costs of building nuke plants are so astronomical that no free market economy would ever support them. For more see this link: http://www.democracynow.org/2008/7/16/amory_lov

  18. Fantastic comments all. Thank you for your perspectives. So what are the facts, can nuclear be financed without Federal subsidies? Can solar? How do solar, nuclear, natural gas and coal really compare??

    1. Apart from capital or operation costs, how can you compare baseload/peak – flexible/intermittent generation? This requires a whole system approach, where a lot of parameters should be taken into account (even the so-called “externalities”).
      And, finally: what is the goal? 'Sustainability' is a very good concept, but we had firstly to agree to this goal and secondly to set a “roadmap” to gain the objective starting from current situation. In my opinion, these are the real issues, other things come as consequences.

  19. http://bit.ly/cPpavA links to a video interview with Steve Fludder, Corporate VP over GE ecomagination. Insights on wind power's growth and China's emerging leadership in this energy resource. Let's talk about Diana's observation that we need a “roadmap.” What should it look like?

  20. Have we thrown efficiency into the ring here? It's a lot cheaper to give consumers the ability reduce consumption that it is to build any kind of new power plant. Handing out free light bulbs, appliances and insulation, then raising rates to cover the cost is much cheaper and easier! There's money sitting on the table there…

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  22. Digital age applications applied to our current electrical grid does offer the promise of a quantum leap in consumer conservation and more efficient use of energy. However, this will not be enough to satisfy the growing demand for electricity when we are recharging our electric cars while also running our businesses and homes off of a “cloud” of connected, smart computers and appliances.

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