Minnesota Nuclear Plant Cost Overruns Show Shortcomings of Large Scale Power Generation

Date: 11 Sep 2014 | posted in: Energy, Energy Self Reliant States | 8 Facebooktwitterredditmail

With the rich history of cost overruns in the nuclear industry, Xcel Energy and Minnesota regulators probably shouldn’t have been surprised when the retrofit cost to the Monticello nuclear power plant ballooned to more than twice the original estimate late last year. Regulators are asking tough questions about whether the cost overruns are the responsibility of poor management.

But this recent Minnesota example only reinforces why nuclear power (similar to other large-scale power generation) isn’t cost-effective or compatible with a clean energy future.

Nuclear is Expensive

The Minnesota nuclear problem actually starts in 2005, when Xcel Energy applied to extend the life of the Monticello power plant beyond its initial 40-year license. The Public Utilities Commission ignored evidence suggesting that the use of a wind and natural gas hybrid system could replace Monticello’s output more cost-effectively than continuing operation of the nuclear plant. Among the data ignored were the potential economic value of community-based wind power, the value of capturing the federal Production Tax Credit for wind energy production, and the high capacity factor of modern wind turbines. (They also ignored an earlier study from the state’s Department of Commerce on the relatively low cost – $6 per customer per year – of closing down the state’s other nuclear plant, Prairie Island).

The massive cost overrun of the Monticello retrofit – $665 million compared to an initial estimate of $320 million – doubles down on the mistake to extend the power plant’s life.  Alone, it’s enough money to install over 400 megawatts of new wind power. When coupled with investments in energy efficiency – itself the lowest cost electricity resource – the money spent to extend the life of Xcel’s nuclear reactor could have purchased cleaner and less expensive power from other sources. The following chart illustrates the competitive clean alternatives to extending the life of this nuclear power plant.

Cost of New Electricity Resources (ACEEE)

levelized cost of energy resources

If you missed it in your first look at the chart above, note that both wind and solar PV are less expensive than cost estimates for new nuclear power plants.

The cost overrun at the Monticello nuclear reactor is part of an ongoing story of nuclear cost explosions. The following chart from the Union of Concerned Scientists shows the sordid history of expensive nuclear power plants.

Cost-splosion: History of Nuclear Plant Cost Overruns (Union of Concerned Scientists)


The story isn’t much better for new reactors added to existing power plants. Georgia Power’s Vogtle expansion, for example, is $900 million (6%) over budget so far, with the estimated operation date already delayed by nearly two years, until 2018 (plenty of time to balloon the budget!).  You’d think the utility learned a lesson when the original project went 1200% percent over budget!

Let’s not forget, either, that nuclear power has some of the largest per kilowatt-hour subsidies of any electricity source.

As the Pittsburgh Post-Gazette said, “a new nuclear project may be the hardest large-scale construction venture to keep on schedule and on budget, because of the cost, the regulations, and the infrequency of such events.”

A Poor Fit for a 21st Century Grid

Nuclear power is an expensive energy source, especially because it’s such a poor fit for a 21st century grid system. In a grid centered on distributed renewable energy resources, the best energy supply is one that is flexible (can rapidly change output to match grid demands). As a “baseload” resource, nuclear is the least flexible electricity supply, with nuclear power plants requiring very stable output around the clock. The following ILSR infographic explains:

clean energy flips the grid - ilsr infographic v2

Nuclear power plants have some flexibility, but only if they’re already operating at 50-60% of capacity.  Below that level, they have to be shut down.

Nuclear energy had its heyday when advocates believed it would be “too cheap to meter,” but the cost and operational parameters of large-scale power plants do not align with the needs of a modern electricity grid. Maybe the future will look more like the miniaturization of nuclear power in Isaac Asimov’s sci-fi novel Foundation, but until then, using already-available and cost-effective distributed renewable energy makes more sense.

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Democratic Energy weekly update.

Photo credit: Tobin

John Farrell
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John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.

John Farrell
Follow John Farrell:
John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power.

8 Responses

  1. John Farrell
    | Reply

    It’s hardly just the 1960s designs. The Vogtle reactors are the modern AP1000 design and already over budget and behind schedule.

    • Michael Mann
      | Reply

      Yet, the same design is on schedule and under budge elsewhere.. hmm The constant legal challenges and delaying tactics of anti-nuclear fanatics could have something to do with this?

      • John Farrell
        | Reply

        If we’re going to be spending money on new generation capacity, it’s reasonable to argue that it be spent on cost-effective energy production sources whose economic value can accrue in our local communities, and that doesn’t have an endless waste problem. That would be wind, or solar, or geothermal, or energy efficiency, to name a few. http://www.lazard.com/PDF/Levelized%20Cost%20of%20Energy%20-%20Version%208.0.pdf

      • JamesWimberley
        | Reply

        “On schedule and under budget elsewhere.” That would be China, right? With its well-known culture of readiness to challenge authority and track record of fearlessly independent regulators? Please list the reactors of any design under construction elsewhere that are not late and over budget.

      • PW
        | Reply

        Hi Michael,
        Are you at all familiar with the Cheney’s 2005 Energy bill and the process through MIT that led to nuclear’s place in it?
        If you are then you should also know that alternatives like thorium were dismissed as Not being “The Answer” for nuclear. That’s because there are 4 problems that need to be assessed – safety, cost, proliferation, and waste and No Known System solves all 4 of those issues – repeat –
        No Known System solves all 4 of those issues. The conclusion of the definitive 2003 MIT study “The Future of Nuclear Energy” is that when all factors are considered the “once through fuel cycle” (what is currently in use) solves more problems than any other design approach.

        The second thing you would know – with absolute certainty – if you were familiar with the 2005 energy bill is that nuclear got every single item that was on their wish list, such as a complete abdication of authority by the legislative and judicial branches in favor of the Nuclear Regulatory Commission. A legislator can’t intervene in construction nor is there a less than extraordinary avenue by which a case be brought against a nuclear plant under construction.
        Not only did Santa Cheney bring them everything they petitioned for, but he also gave them a couple of stocking stuffers they didn’t have the nerve to ask for. An example of that would be the 1/2 billion dollar guarantee put in place. You know, the one that is there to reimburse the builder in very unlikely case the NRC oversight causes a delay?
        No Michael, with the current US regulatory regime there is absolutely no way you can lay the delays and cost over-runs at anyone’s feet but the nuclear industry itself.

        On a related point, can you cite an AP 1000 design build that is on time and budget in any country where the process is transparent? For example, we are still only guessing at the actual cost of the two waves of construction that gave France its current fleet; but even their domestic plant at Flamenville is in Very Serious Trouble.

        At some point you have to look beyond the makeup of nuclear propaganda and see the pig that is actually staring you in the face.

  2. PW
    | Reply

    Not according to MIT.
    Their comparison rates the thorium molten salt reactor as features that are inferior to the once through uranium fuel cycle in the areas of cost and proliferation resistance, the safety of the full fuel cycle and short term waste handling. It was rated even in reactor safety and advantageous in the area of long term waste.

    Quote “This analysis leads us to a conclusion of great significance: the open, once-through fuel cycle best meets the criteria of economic attractiveness and proliferation resistance.

    Closed fuel cycles may have an advantage from the point of view of long-term waste disposal and, if it ever becomes relevant, resource extension. But closed fuel cycles will be more expensive than once through cycles, until ore resources become very scarce. This is unlikely to happen even with significant growth in nuclear power deployment until the end of this century. We also find that the long-term waste management benefits of separation are outweighed by the short-term risks and costs.” End quote

    They go on:
    Quote “Thus our paramount recommendation is:
    For the next decades, government and industry in the United States and elsewhere should give priority to deployment of the once-through fuel cycle, rather than development of the more expensive closed fuel cycle technology involving reprocessing and new advanced thermal or fast reactor technologies.” End Quote


    You are doing little more than promoting the internet nuclear fan club version of a cargo cult.

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