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Nuclear vs. Renewables, a tale of two subsidies July 22, 2011

Posted by Maury Markowitz in nuclear, power grid.
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Thinking over the recent AECL sale, and all the political hay due to Samsung’s part in the Green Energy Act (GEA), I realized there’s a wonderful illustration of the difference between subsidy levels in the power industry.

SNC-Lavalin got to buy AECL for $15 million, and was immediately paid $750 million in tax write-offs.

Samsung got access to the grid for $7 billion, and was handed $452 back in tax write-offs.

That’s really the whole story right there. But when you dig a deeper, it gets even better…

According to the last reports I can find, from 1998, it cost Ontario Hydro 7.7 cents to product a kWh of power from their nuclear plants. This compares to 1.1 from their hydro assets, and about 4 cents for coal. They get paid 6.8 cents on average for all the power put together, so in other words the hydro and coal is subsidizing the nukes. Numbers for the gas peakers aren’t known yet, but the industry average is about 20 to 25 cents.

In comparison, the “sweethart deal” with Samsung pays 10 cents for a kWh from the wind, and 30 for solar peaking. This doesn’t seem all that “sweet” to me. Especially when you consider they’re paying a net of $6.5 billion dollars to do so.

Even the capital costs looks great when you look at them. AECL’s bid, or what we know of it anyway, for Darlington B was $26 billion for 3.2 GW. That’s $8.125 a watt. In comparison, Samsung is going to build 2.5 GW of wind and solar for $6.5 billion, or $2.8 a watt.

Right now commercial wind power with zero “deal” and no support is selling for about 7 to 8 cents. This is cheaper than nukes. Oh sure, the wind doesn’t blow all the time, and we need gas peakers too. But the same argument cuts both ways, nuke’s can be throttled so you have to under build, and then build gas peakers to make up the demand.

So you’re the government. You have to invest a bunch of money to develop infrastructure 20 years out. Renewables have come down in price 20 times in the last 30 years. Nuclear has gone up in price over the same period. Which do you chose to back? Duh!

But how far can all of this go? Aren’t we going to need all the power we can get? Well if a recent study from Queen’s University is a good guide, the answer is that there’s enough barren land in southern Ontario to host 90 GW of power. All the nukes in the US put together at 100 GW. Even if we limit ourselves to just easy to use rooftops for solar only, that’s 5 GW. How much is that? Well all the coal plants in Ontario can produce 6 GW.

Seriously, why are we even having this discussion? Yes, we need to talk about rates, and install times, and caps, and growth rates. But the technology to choose? No, we don’t have to talk about that.

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