Nuclear is on a steep upward cost trend (and the complex, nearly nonexistent supply chain ensures that is going to continue) while renewables are already approaching or at parity with fossil fuels.
Craig A. Severance, CPA is co-author of The Economics of Nuclear and Coal Power (Praeger 1976), and former Assistant to the Chairman and to Commerce Counsel, Iowa State Commerce Commission. His practice is in Grand Junction, CO.
Given this discrepancy, nuclear’s history of cost overruns, and the fact new generation designs have never been constructed any where, there is a major business risk nuclear power will be more costly than projected. Recent construction cost estimates imply capital costs/kWh (not counting operation or fuel costs) from 17-22 cents/kWh when the nuclear facilities come on-line. Another major business risk is nuclear’s history of construction delays. Delays would run costs higher, risking funding shortfalls. The strain on cash flow is expected to degrade credit ratings.
Generation costs/kWh for new nuclear (including fuel & O&M but not distribution to customers) are likely to be from 25 - 30 cents/kWh. This high cost may destroy the very demand the plant was built to serve. High electric rates may seriously impact utility customers and make nuclear utilities’ service areas noncompetitive with other regions of the U.S. which are developing lower-cost electricity.
Based on current industry practices, CBO expects that any new nuclear construction project
would be financed with 50 percent equity and 50 percent debt. The high equity participation
reflects the current practice of purchasing energy assets using high equity stakes, 100 percent
in some cases, used by companies likely to undertake a new nuclear construction project.
Thus, we assume that the government loan guarantee would cover half the construction cost
of a new plant, or $1.25 billion in 2011.
CBO considers the risk of default on such a loan guarantee to be very high—well above
50 percent. The key factor accounting for this risk is that we expect that the plant would be
uneconomic to operate because of its high construction costs, relative to other electricity
generation sources. In addition, this project would have significant technical risk because
it would be the first of a new generation of nuclear plants, as well as project delay and
interruption risk due to licensing and regulatory proceedings.
While this CBO estimate is dated, it is also based on market conditions that favored nuclear power more than the current one does, so the situation regarding the competitive ability of nuclear is actually even worse today.
The only possible argument you can make is that the government subsidies are "free" and involve no cost to the public. That too would be false since the subsidies are a reflection of the risk that is being shifted from the capital market onto the backs of the taxpayers. If the "risk premium" is properly assessed, then there is not going to be any advantage to public guarantees and loans so the normal capital markets would be able to finance these projects as well as the governments can.
The only way the nuclear power industry can "revive" itself is to shift the risk (and associated inevitable costs) onto the backs of taxpayers and ratepayers.