Germany's phaseout reveals the true costs of nuclear power
This is bad news for nuclear advocates: Nuclear power turns out even more expensive than we thought. According to a study by Arthur D. Little, the four German nuclear utilities (E.ON, RWE, EnBW, Vattenfall) face costs of at least $25 billion for decommissioning their reactors. After the Fukushima disaster, Germany decided to say goodbye to nuclear by switching off eight reactors immediately while the remaining nine are scheduled for a gradual phaseout by 2022.
Of the many myths about nuclear power, we kinda knew that the myth “nuclear power is cheap” is not true. The stunner is how expensive it turns out to be when you start factoring in its real costs, according to this analyst from a public bank in Germany:
“The quantification of dismantling costs is in line with our estimate amounting to 1 billion euros per block,” but “such estimates comprise several uncertainties”, said Landesbank Baden-Wuerttemberg (LBBW) analyst Bernhard Jeggle.
There you have it: It costs at least $1.4 billion to dismantle one reactor unit. The utilities are required by law to build up a cash pile to finance the decommissioning. Still, one can expect them to raise rates for their customers. In a regulated market without competition, this would hit ratepayers. In a deregulated electricity market — like Germany — this makes nuclear power less competitive. Customers can choose their power provider and switch to one without nuclear — such as city municipalities or green power brokers (which is very easy). By factoring in the true costs of nuclear power, we are getting closer to a level playing field among different energy sources. This is Environmental Economics 101: The market sends only true price signals if external costs (such as pollution) are being internalized. If we had the perfect market and all external costs of fossil fuels (climate change, air pollution) and nuclear (decommission, contamination, full insurance against an accident, final waste deposit) were truly factored in, renewable energy would today already be cost competitive.
In many countries, the nuclear industry has been pampered with billions of dollars in subsidies while emerging technologies received comparably little support (e.g. the United States). Green Budget Europe, a German think tank, calculated nuclear subsidies over the last half century to $230 billion for Germany alone. It’s one thing to support the deployment of renewable energy and efficiency technologies. It’s another to internalize those costs that the fossil fuel and the nuclear industry burden our societies with. Eventually, we need to do both to transition to a low-carbon economy that is powered completely by renewable energy.