MIT Nuke Study Uses Unsupportable Reactor Cost Estimates

An MIT study titled "The Future of the Nuclear Fuel Cycle"
released today in Washington
uses an unsupportable reactor construction cost estimate, undercutting its
recommendation that taxpayer subsidies for new nuclear reactors should be
increased and accelerated.

"Congress would be ill-advised to follow the MIT
recommendation," said Michael Mariotte,
executive director of Nuclear Information and Resource Service (NIRS),
"since the study relies on a construction cost estimate for new reactors
that is 50% or more below current cost estimates. Reliance on such an estimate
would turn a high-risk taxpayer loan into an exorbitant-risk taxpayer bailout
for wealthy nuclear power companies. Congress needs real numbers when it
considers spending taxpayer money, not nuclear industry fantasies."

The MIT recommendation, which calls for an acceleration and expansion
of taxpayer subsidies for the first 7-10 new reactors, is based on an estimated
construction cost of $4,000/kilowatt, or about $4 billion for a 1,000 Megawatt
reactor.

"This is a remarkable flaw from what is touted as an expert
study," said Mariotte. "Even a cursory review of the literature
finds that no new U.S.
nuclear reactor proposal is coming in at $4,000/kw," said Mariotte.
"The real-world estimates are ranging from $6,000-9,000/kw--or 50% to
more than 100% higher than MIT's study asserts. Based on those kinds of
estimates, it would make no sense for taxpayers to support the nuclear industry
at all. New reactors won't be economic, and the taxpayer loans would be
far too risky."

Mariotte cited several examples to refute MIT's cost figures:

*Calvert Cliffs-3 is estimated to cost "about $10 billion"
according to testimony from Constellation Energy CEO Mayo Shattuck before the
Maryland Public Service Commission in March 2009. That's more than
$6,000/kw for that 1600 MW reactor.

*PPL estimates, on its website, that a reactor identical to Calvert
Cliffs-3, would cost $13-15 billion, or about $8,000-9,000/kw (including
financing costs). https://www.bellbend.com/faqs.htm

*A September 2008 estimate filed with the Florida Public Service
Commission put the proposed Turkey Point reactors at $8,200/kw.

*The Southern Company's Vogtle reactors in Georgia--slated to be the
first recipients of taxpayer loans to support their construction--are
currently estimated at about $6,200/kw.

Wall Street appears not to accept the MIT figures either:

*An October 2007 report from Moody's Investor Service predicted
costs of $5-6,000/kw. Less than a year later, in May 2008, Moody's
predicted costs "...potentially reaching over $7,000/kw."

*Standard & Poor's, quoting the Federal Energy Regulatory
Commission in October 2008, predicted costs ranging from $5-8,000/kw.

"The MIT study correctly notes that 'nuclear electricity
costs are driven by high up-front capital costs,' whereas natural gas and
coal costs are more dependent on fuel costs," said Mariotte, "then,
it vastly underestimates nuclear capital costs and presents a grossly
misleading picture of the costs of electricity to the consumer if nuclear
reactors are built, as well as understating the risk of nuclear loans to the
taxpayer."

Mariotte noted that the study only compared nuclear costs
to natural gas and coal, and not to alternatives like wind power, solar power,
geothermal and energy efficiency technologies. Some of these alternatives, like
wind and energy efficiency, are already much cheaper than nuclear power and
solar is rapidly declining in price while increasing in its efficiency. Earlier
this week, the Department of Energy's National Renewable Energy
Laboratory released a report detailing the potential of offshore wind resources
for the U.S., finding that
offshore wind alone could generate more than four times the entire current
electrical demand in the U.S.
https://www.nrel.gov/docs/fy10osti/45889.pdf

Mariotte pointed out that
the MIT study acknowledges "generous financial support

from the Electric Power
Research Institute (EPRI) and from Idaho
National Laboratory,

the Nuclear Energy
Institute, Areva, GEHitachi, Westinghouse, Energy Solutions, and Nuclear
Assurance Corporation."

"Areva, GEHitachi
and Westinghouse are the three reactor vendors hoping for taxpayer money to pay
for their products," said Mariotte. "It is at least suspicious that
the study would support their aims using a cost estimate that simply does not
stand up to scrutiny."