NC WARN released a report that argues new solar power is less expensive than new nuclear power. The report was discussed in this N & O article.
I. Costs
According to the Energy Information Administration, new solar power is about 40 cents per kilowatt-hour. New nuclear power is about 12 cents per kilowatt-hour.
Hmmm. That’s odd. Solar is more than triple the cost.
In their report, nowhere does NC WARN explain why their numbers are somehow more credible than EIA’s numbers, or for that matter inconsistent with other major studies, such as this leading MIT study (with a global warming alarmist angle) that says nuclear would be 8.4 cents per kilowatt-hour.
Here’s what NC WARN did. They calculated that the cost of solar power was 35 cents per kilowatt hour. This is a bit low, but at least it is somewhat in the ballpark. They used a high capacity factor of 18 percent (Progress is quoted as saying it is 16 percent). Capacity factor is the % of potential energy achieved over a year. For example, nuclear power produces 90% of the total possible electricity it could generate if it was running all the time (nuclear is the most reliable form of electricity). Solar in NC only produces 16% of the total possible electricity it could generate if it was generating all the time.
Then NC WARN took the state and federal tax credits (subsidies) for solar and determined that this reduced the cost to 15.9 cents per kilowatt-hour.
Magically, because there are tax credits, those additional costs (19.1 cents) disappear. These costs simply are borne by taxpayers–somebody pays for it.
The NC WARN report mentions that “subsidies” for nuclear are taken into account, although it isn’t clear how. One subsidy that is mentioned (it isn’t shown how it is used in the calculations) is federal money to the Department of Energy for nuclear power R & D, but this isn’t money that is directly connected to specific new plants.
This is important because a direct subsidy that drastically reduces the price of a plant (such as with solar) is a lot different than an indirect subsidy that has nothing to do with a specific plant’s costs and doesn’t reduce the price in any clear way (i.e. the nuclear costs don’t get drastically reduced from this indirect subsidy).
Through the methodology that has been used, as least with solar, if we had enough subsidies, solar power could actually cost nothing or even make money (solar receives a lot more than tax credits, including R & D money like nuclear). The solution to reduce costs, apparently, is just to subsidize energy sources as much as possible.
II. Apples to Oranges
It is critical to understand that utilities can’t simply decide between solar and nuclear (or other conventional sources). Since the sun isn’t always shining, solar power is unreliable. Just like with wind power, it can’t provide baseload generation nor meet peak demand. We need nuclear or other conventional sources no matter what in order to meet our need for electricity.
It is like comparing a Big Wheel to a car. If both are $20,000, do they have the same value (yes, I know value is an individual decision, but work with me here so I can explain this point)? They do both transport people. However, you aren’t going very far with a Big Wheel, and can’t take the family to the beach on your Big Wheel.
Most people aren’t going to pay $20,000 for a Big Wheel because it has far less value. It can’t do what is necessary when we need to move from Point A to Point B. Think of solar and wind as Big Wheels.
III. Assume Solar is Equal to Nuclear
For the sake of argument, let’s say that solar power is interchangeable with nuclear power as NC WARN suggests. They have explained that nuclear power is more expensive than solar power. They didn’t mention this, but utilities are required to buy renewable energy, such as solar power, under state law (there’s even a specific solar requirement in the law).
Unless you believe that utilities don’t want to make profits and don’t want to meet the requirements of this mandate, why wouldn’t utilities be developing solar power all over the place?
IV. Costs to Consumers
It is nice that NC WARN is so concerned with the costs to consumers. I hope they will be consistent and continue a push for low-cost electricity. As they say in their report, under North Carolina law, “less expensive resources [electricity resources] are to be added first, followed by more expensive ones, provided that system reliability is maintained.”
If nuclear is too expensive for them, they should therefore support natural gas (8 cents per kilowatt-hour) and coal (11 cents per kilowatt hour).
I’m also glad they mentioned system reliability–since wind and solar are intermittent and unreliable sources requiring back-up generation, these sources undermine the reliability of the electricity grid.
NC WARN may think nuclear power is too expensive. However, even to their line of thinking in this report, this shouldn’t mean that the other conventional sources of electricity should somehow be ignored.
If we do care about consumers, we should be pushing natural gas, coal, and nuclear and ignoring costly and unreliable sources of electricity such as solar and wind.
