By Jane Shaw Stroup — September 9, 2021
Ed. Note: This interview with Robert L. Bradley Jr. by Jane Shaw Stroup appeared earlier this week at the Liberty and Ecology website of the Goodman Institute for Public Policy Research. Comments are welcomed, including new questions to clarify the role of nuclear power in a free economy.
Q1. What role should nuclear power have in the years ahead?
A. “Let the market decide” is the straightforward classical-liberal, free-market answer. This means government neutrality in terms of not subsidizing or penalizing one energy technology versus another to determine what, when, where.
The decision to build new capacity, or the decision to operate-versus-retire, should be based on stand-alone economics, without government favor or penalty.
Q2. Under this standard, what is the future of nuclear in the energy mix as far as new capacity?
A. Not good, at least here in the United States. New nuclear capacity creates output at costs far in excess of the market price of power. Far cheaper kilowatt hours are generated by natural gas combined-cycle plants that can be built to scale quickly with less risk. The revolution in producing natural gas from shale has added to the competitive advantage of natural gas versus nuclear, which was already substantial.
Q3. Has nuclear ever been competitive?
A. No, and this is a point to remember. The “Atoms for Peace” program that developed after World War II was entirely a governmental initiative. Not only did the government subsidize the development of nuclear plants, it provided crucial liability protection through the Price-Anderson Act. Private insurance was just not going to be available for such a new, risky technology.
Nuclear also got a crucial boost because states regulate power producers as public utilities. The high cost of nuclear plant construction would help utilities maximize (“swell” to critics) their rate base, leading to higher profits.
Q4. How exactly did this work?
A. Under cost-of-service regulation, a utility passes its “reasonable” costs to consumers and receives a “reasonable” return on invested capital. The higher the capital cost, the greater the potential return. Because nuclear capacity has always been much more expensive than coal- or gas-fired plants, the returns are higher.
For example, if a nuclear plant costs $100 million more to build than a similarly sized gas-fired plant, and the government-authorized rate of return is 15 percent, then the choice of nuclear creates $15 million more in annual profits, adjusted for depreciation.
Q5. Nuclear advocates say that the high costs stem from federal safety overregulation.
A. That is partly true. No doubt, regulators would err on the side of caution. But making a very complicated, dangerous technology foolproof requires a lot of infrastructure. Nuclear is “the most expensive way to boil water” because of this.
Q6. So how much regulation is necessary?
A. This should be a question for the private insurance market rather than the current setup of government-capped liability limits and pooled premium costs. The Price-Anderson Act would need to be repealed to find out, via insurers, what is reasonably safe or not.
Q7. What about existing nuclear capacity in the United States?
A. This capacity has been built, creating large sunk costs, and the operating (marginal) costs are low compared to most existing and certainly new capacity. And nuclear operations have become much more efficient, particularly with “deregulated” merchant plants (stand-alone plants that are free from public-utility regulation) that get to keep all profit. This advantage changes, of course, when a plant becomes run down and problematic to fix.
Unfortunately, otherwise competitive nuclear capacity has been (prematurely) retired because government has forced renewable energy on the grid, namely wind power and solar power.
Q8. Why has that nuclear capacity been retired?
A. Call it an unintended consequence of government intervention, which, by the way, works against the climate change agenda of reducing carbon dioxide (CO2) emissions.
Because wind and solar do not have fuel costs once their infrastructure has been built, they have the lowest incremental costs. Thus, they get taken first to meet demand. This means that renewables not only idle gas- and coal-fired plants but lower the margins for nuclear, resulting in early retirements.
Keep in mind that the average cost of wind and solar is much higher than existing capacity from the so-called reliables due to very high infrastructure and integration costs. Such capacity would not have been built in the first place except for a raft of government mandates and favors.
Q9. So wind and solar are government-subsidized, and such subsidies have hurt nuclear power. Should victimized nuclear capacity get government support to cancel out this distortion to ensure grid reliability or to reduce carbon emissions?
A. Do two wrongs make a right? The answer is to remove the existing intervention rather than try to fix it with new intervention. It is ironic that renewables have distorted the carbon-free generation sector, but the policy reform should be toward markets, not against them. That points toward ending the outsized favor toward politically correct, economically incorrect renewables, wind and solar.
Q10. Michael Shellenberger, a “realist” environmentalist, advocates nuclear power as the middle ground in today’s contentious environmental debates. Do you agree?
A. No. I do appreciate his work toning down climate alarmism, as well as documenting the problems of renewables as an affordable, reliable, scalable resource. But I do not favor government “bailouts” of existing plants or subsidies to enable new capacity.
New nuclear plants are just not competitive or timely—by a long shot. Georgia Power’s Plant Vogtle 3 and 4, still under construction, has been a nightmare of delays and cost overruns. Gas-fired capacity could have been built at one-tenth the cost and been in service years ago.
Q11. What are new-generation technology for nuclear that we hear about?
A. A new design being promoted by Bill Gates’s TerraPower for Wyoming has already received $80 million in U.S. Department of Energy funds—and for a not-yet-started project that will take an estimated seven years to build. NuScale Power’s proposed project is greenlighted to involve as much as $1.4 billion of DOE money.
Q12. Without nuclear power, what are the chances of the U.S. reaching the stated goals of cutting carbon dioxide emissions by 50 percent from 2005 levels by 2030?
A. First, this goal is impossible and pernicious. Second, with nuclear capacity retiring and with new capacity limited for political and economic reasons, nuclear is not going to make much of a difference by 2030 or a decade hence.
Q13. So what is the future energy mix in a free market? And how does this square with the goal of so many for a “carbon constrained” world?
A. Here in the U.S., natural gas-fired capacity is the consumer-friendly, taxpayer-neutral choice for new power generation. Coal has its place with state-of-the-art, low-polluting plants. Wind and solar, on the other hand, are not competitive sans government and have reached blackout (“greenout”) levels in California and Texas. More states can be expected to join this list too.
Fossil-fuel-fired generation has a lot of room to grow in a true free-market setting.
If you make the playing field crooked enough you can get what results you want. In other words Baloney completely divorced from reality.
The problem with this article is that the interviewee picks and chooses what costs and what government incentives he uses and then pretends that the “taxpayer-neutral” natural gas industry is operating in a free-market, unsubsidized environment. That is misleading to say the least.
Next he focuses only on the costs of building the plants and ignores the costs of and the subsides for providing the fuel, again pretending that gas drilling is completely free of government influence. Historically, the largest incentive from the federal government to energy companies is policies that allow companies to forgo paying taxes, with the oil industry receiving the largest amount, followed by the natural gas industry.
For all of his talk about free markets, he ignores that government intervention to encourage renewables (wind and solar) has produced distortions in the market that very much help natural gas. Wind and solar’s unreliability means that dispachable backup power is needed, and that power usually comes from natural gas plants. Thus, the natural gas industry is helped and baseload power plants are hurt.
Finally, Bradley pretends that, because of fracking, natural gas prices are going to stay at their currently low values forever. In a free market, however, there is incentive to build LNG terminals to export gas to overseas markets with higher prices. This will tend to equalize prices, so US gas prices should go up and world prices should go down in the long run.
Below is a link to a rather dated paper that discusses federal government incentives to energy companies. It covers the years from 1950 to 2003, which includes the years that the currently operating nuclear plants were being built, so it’s relevant to this interview.
https://issues.org/realnumbers-21/
I’m not for subsidies for any technology, natural gas or otherwise. It is just the fact that nuclear was an industry born for government favor, and new capacity is just not competitive with NGCC by a long shot.
Nuclear is not the panacea for the carbon taxers with sober evaluation, that ‘s all.
Sure. You’re a paid shill — paid to ignore the facts and the vast amount of government money that has been given to oil and gas, all the while screaming for “Free Markets.”
You can’t complain about the history of one technology, while ignoring the history of its competitors, and be anything other than a hypocrite.
What’s happening now with the weather dependent generators is simply State sponsored dumping and the problem for consumers is the crowding out of dispatchables in general. For a free market you need a level playing field. That would require all tenderers of electrons to the communal grid to only be permitted to supply those electrons they can guarantee 24/7/365 along with FCAS or else they can keep them.
Immediately the unreliables have to invest in costly storage or else partner with dispatchables in order to lift their average tender. That solves the dumping problem but then the doomsters want to put their perceived social price on CO2 emissions defeating the purpose. Such a regime would naturally tip the balance in favour of nuclear until ever more onerous environmental barriers were put in their way too.
So the status quo prevails with dumping and CO2 penalties(RECs and carbon trading) encouraging ever more unreliables penetration. At the same time as it falls to cheapest capital gas to be the insurer of last resort driving up it’s price even further with consequent Industrial Devolution-
Soaring gas and electricity bills putting British steel jobs at risk (msn.com)
Watermelon logic then points to expensive gas that sets prices as the culprit and argues more stridently for more cheap unreliables as the only solution. With some more subsidies to workers in steel aluminium cement etc industries to transition to all the green jobs they know are just around the corner with their cheap green power.
If collective brainfarts could power it all we’d be home and hosed but when did it become fashionable to pay productive industries to close down to conserve power when the sun don’t shine and the wind don’t blow?
…and as the resulting expensive power destroys industry and livelihoods naturally you have to keep up with the international green jobs subsidy league table-
660,000 jobs at risk as UK’s green investment lags (msn.com)
Another libertarian fantasy. Who cares. A world of free market anarchy and salads and sun is not in the cards. Come back when you want to discuss the real world the one we have to live in that is run by the Democrat (a/k/a US Communist) party and the Chineses Communist Party.
Grow up.
Is does not equal ought. A simple free market framework with private property rights, voluntary exchange, and the rule of law is a realistic ideal to one worth keeping alive.
Is fusion considered nuclear power? If it is the greens have something new to worry about:
https://news.mit.edu/2021/MIT-CFS-major-advance-toward-fusion-energy-0908
There are molten salt reactors expected to produce electricity cost competitive with coal. Some are waste burners that use existing nuclear waste for fuel. The reactors can’t melt down – physics, and there isn’t a build up of explosive gases as happened at Fukishima, To see plans and progress of companies involved, check the websites of Seaborg Technologies, Copenhagen Atomics, Thorcon, Terrestrial Energy, Moltex Energy, and Flibe Energy.
The Price-Anderson Act was not the freebie to industry the author appears to claim. It was intelligently designed to create incentives for nuclear plant operators to operate safely. It essentially created a self-insurance fund to which all operators were required to contribute, making all of them financially responsible if any of them screwed up. It did not rely on taxpayer dollars.
The model used by conventional fossil-fuel plant operators was run it until it breaks, then fix it. That model isn’t a good one for nuclear plants. Eventually all of them were taken over by entities run by people trained in the nuclear Navy, and the watchword became the same kind of obsessive preventive maintenance that kept the 747s aloft for almost half a century.