I try to be funny on this blog, but now for something completely different. I had the most annoying "conversation"
at work today. I'm wanting to talk about work but there's already a
conversation going about how coal or nuclear are the only options and
renewables can't ever play a part. So as I couldn't work I "joined
in". I tried to say that the only way either could compete with
renewables on price was by externalising the costs. So their way of
discussing that was to simply tell me I was wrong and talk over the
top of my reasoning.
Since I can type here and no-one can
talk over the top of me, I'm going to climb on my soap box and talk
about externalised costs. The externalised cost of coal is well
known: possibly making the planet uninhabitable. Also taking assets
owned by all and using them for the benefit of a few without
compensation. Nuclear is different. The upfront cost is known.
It's between 4 and 10 dollars per watt, but lets call it 4 dollars
per watt. Australia draws 222 billion kWh a year (CIA fact book).
That's an average of about 25 GW. So that would cost about 100 G$ to
install nuclear replacement. The interest payments on that would be
about 5 G$/yr. Replacement would be another 5 G$/yr to keep them up
to date. So that's 10 G$/yr. Can't externalise that, but what is
externalised is the risk. If one blows up then everything downwind
of it is rendered uninhabitable for about 100 years or so. (Which in
economic terms is forever). So say it made a city like Sydney
uninhabitable. Any normal business would have to have insurance to
cover any public liability costs. So what would be the cost of
public liability to cover that? First you have to have some idea of
the risk. There have been around 25 nuclear accidents in the 15000
reactor years that we've racked up so far in all the reactors around
the world. There have been really 4 reactor meltdowns that breached
the containment completely. However 3 happened together so lets call
them 2 meltdowns. So say you get 2 meltdowns (really 4) per 15000
reactor years. To supply Australia you'd need about the same number
of reactors as Russia, about 30. 15000/2/30 is 250. So on average
you would expect a major meltdown every 250 years. So to make it
worth while for an insurance company to cover the “worst case”
you should expect to pay somewhat more than 1/250 of the total worst
case cost. Say 1/100th of the cost. So what is 1/100th of the cost
of building a replacement city and compensating all the business that
have lost money from the disruption. It's hard to say, but given
that you'd need to build new factories, schools, roads, hospitals,
railways, ports, dams, sewers, houses, opera houses etc lets say a
million dollars per person. There's 4 million people in Sydney so
that's 4 T$. So the externalised cost is 1/100th of that per year.
40 G$/yr. Add the non externalised cost and you get say 50 G$/yr to
make 222 billion kWh. This ignores the cost of mining and
enrichment.
Compare that to renewables. Powerplant
level Photovoltaics are down to 1 dollar per watt, but the sun
doesn't shine all the time. Say 10 dollars a watt effectively
(surely a generous multiplier!). That's 250 G$ fully installed.
Using the same maths as nuclear to estimate cost of borrowings and
replacement after 20 years comes to 25 G$ a year. That's half the
price! (even ignoring the cost of mining and enriching uranium and
disposing of the waste and decommissioning the plants which is
thought to be similar in cost to building them in the first place)
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