Mark Halper recently published a piece on SmartPlanet.com titled Nuclear power cheaper than gas. He cited an article from InvestorIntel.com written by Canon Bryan titled Nuclear versus Natural Gas. That article was based on a report from a private consultancy named Energy Path Corporation. The Energy Path report is titled “Will Low Natural Gas Prices Eliminate the Nuclear Option in the US?”
People who get most of their electricity-related economic analysis from the current executives at companies like Exelon, EDF, Dominion, Duke Energy, or SCE would be shocked to learn that nuclear power plants produce electricity for approximately the same long term cost as natural gas fired combined cycle gas turbine power plants. On a fair comparison basis, the above observers reported that the natural gas option creates “significantly higher long-term investment risk”.
For me, the conclusion is nothing new; on a 60-year, levelized cost of power generation basis, my models show that nuclear power plants often produce cheaper electricity than natural gas depending on small variations in the input assumptions. That’s true even if there is cost assigned to the greenhouse gas emissions that are an inherent feature of burning methane gas (CH4). Nuclear plants produce electricity with smaller financial variations because fuel costs are low and rarely change.
One of the major reasons that nuclear plants are not flying off of the shelves is that rate-regulated utilities do not pay the cost of buying fuel. They have convinced public service commissions that establish their rates that they have no control over variable fuel costs; as a result, the money that they pay for fuel is considered to be a direct “pass through” to customers.