My uncle was 17 years old, proud of his martial Prussian heritage, when he joined the U.S. Marines, just in time to make the landing on Guadalcanal. He made it through that encounter, was later wounded on Okinawa, recovered, and was training for the invasion of the Japanese mainland when Hiroshima and Nagasaki went up in atomic flames. When we buried him a few years ago, the Marine Honor Guard spokesperson on hand said that most of the 500,000 Purple Hearts minted for the invasion were still in inventory. That is fortunate for Americans, though it meant woes a thousandfold had come raining down upon the Land of the Rising Sun.

It is understandable that his generation thought (and that those who remain continue to think) that atomic power was a miracle -- a godsend. For Japan, it was Godzilla, and that nation’s miserable luck with nuclear energy continues to this day. The plot thickened in 1949 when the Soviets detonated their first atomic bomb, and the Cold War heated up.

“If the radiance of a thousand suns were to burst at once into the sky, that would be like the splendor of the mighty one” -- Robert J. Oppenheimer

When Robert Oppenheimer saw the first atomic test go off in the New Mexico desert 70 years ago, like his fellow engineers, he was awestruck by what they had accomplished. “We knew the world would not be the same. A few people laughed, a few people cried. Most people were silent. I remembered the line from the Hindu scripture, the Bhagavad Gita; Vishnu is trying to persuade the Prince that he should do his duty and, to impress him, takes on his multi-armed form and says, 'Now I am become Death, the destroyer of worlds.' I suppose we all thought that, one way or another,” Oppenheimer recounted.

As terrifying as the new power was, the prevailing feeling about atomic energy on this side of the Pacific was hope. Less than 10 years later, President Eisenhower’s Atomic Energy chief even believed that electricity from nuclear plants would be “too cheap to meter.” It hasn’t turned out that way, and not long after the Fukushima disaster, the Economist ran a cover story on the technology, declaring that the dream had failed. Was that declaration correct? If so, why are some smart people trying to develop the next generation of nuclear technology? Why are several countries, China included, planning to build dozens more reactors?

Those who still favor nuclear power have strong headwinds to contend with. Like the stamp pictured above, the cost of nuclear power has risen more than tenfold. The cost of renewables, on the other hand, has fallen by more than that factor. The gulf is widening, and it is hard to see why any prudent investor would bet on fission and the problems that come with it.

Nuclear power is not only too expensive; it is extremely risky from a financial perspective. Private investors will not finance or insure it. It does not scale down, except in submarines where cost is not the primary issue. The cost to decommission the reactors is high and still rising, and no one has yet satisfactorily figured out what to do with the mounting collection of wastes.

Finally, the most terrible weapons of mass destruction, whose impact would be the next worst thing to a large meteor hitting the earth, can be made as a byproduct of generating power that can be produced in many other ways. It is not the only, nor even the best, way to produce power without emitting carbon.

According to the recently published World Nuclear Industry Status Report (WNISR), “China, Germany, Japan -- three of the world’s four largest economies -- plus Brazil, India, Mexico, the Netherlands, and Spain, now all generate more electricity from non-hydro renewables than from nuclear power. These eight countries represent more than 3 billion people, or 45 percent of the world’s population.”

The market is telling us something, and the news from the nuclear front is rather dire. A recent article in Forbes concludes: “For all intents and purposes, [French nuclear giant] Areva is dead.” Forbes is not generally regarded as an anti-nuclear mouthpiece.

It is worth considering that when it comes to nuclear power, when anything goes wrong, the taxpayer has to pick up the tab -- and the pieces. In other words, the risks are socialized.

Furthermore, the upside for nuclear power (baseload power, less carbon) may be had in abundance from other, cheaper, less risky sources. As to the claim that it is the best answer to carbon-free power production, according to the WNISR study, compared to 1997, when the Kyoto Protocol on climate change was signed, “in 2014 there was an additional 694 TWh [terawatt-hours] per year of wind power and 185 TWh of solar photovoltaics -- each exceeding nuclear’s additional 147 TWh.”

To be fair, nuclear plants produced 2,410 terawatt-hours overall in 2014, roughly one-tenth of the world’s electricity. Renewables didn’t come close to that figure. However, the amount of electricity generated from nuclear in 2014 was 9.4 percent below peak generation in 2006. In other words, over the past decade, older reactors have shut down faster than new ones can replace them.

Intermittency is a term of abuse often hurled against wind and solar. To be sure, at best, wind turbines and PV arrays are in operation about 35 percent to 40 percent of the time. However, when a nuclear plant goes offline, usually without warning, taking a billion watts off the grid at once, there is no telling when it will come back on. In 2014, three years after the tsunami, not a single kilowatt-hour was produced by a Japanese reactor.

“WNISR classifies 40 Japanese reactors as being in Long-Term Outage” (LTO), which it defines as any unit that has produced no power during the previous calendar year and during the first half of the current calendar year. (Sweden, South Korea and India also have reactors in LTO.)

Small modular reactors

Hopes, including those of Bill Gates, now rest on the next generation of "advanced reactors," which are often dubbed Generation IV reactors.

Generation III reactors, which were started after Chernobyl (1986), have been a disappointment. Of the 18 units begun (eight are the Westinghouse AP 1000 design, six the Rosatom AES-2006, and the other four are the Areva EPR design), none are operational. There is no standardization, and according to the WNISR, the delays have been caused by “design issues, shortage of skilled labor, quality-control issues, supply chain issues, poor planning either by the utility and/or equipment suppliers, and shortage of finance.”

“As of 1 July 2015, the 62 reactors currently being built have been under construction for an average of 7.6 years,” the WNISR Report finds. At least 47 have been delayed and the other 15 (nine in China) “were begun within the past three years or have not yet reached projected start-up dates, making it difficult to assess whether or not they are on schedule.”

With Generation III falling short of expectations, the industry is looking toward Generation IV. One design in particular is the small modular reactor (SMRs -- "small" meaning less than 300 megawatts). The SMR concept (for which there are several basic designs) has actually been around for decades, and the U.S. government has been funding its most recent incarnation since the 1990s. (For an excellent analysis and history of SMRs, see M. V. Ramana’s article published in IEEE Spectrum in April 2015.)

The most recent impulse for developing SMRs came in 2002 after years of doldrums for the nuclear industry. That year, analysts at the International Atomic Energy Agency concluded that no one wanted to build new reactors because “we, in all our doings, continue to rely on nuclear technology developed in the 1950s, which had its roots in military applications [that] cannot exclude absolutely the possibility of a severe accident and which has reached its limits from an economic point of view."

A report to Congress in 2001 from the Department of Energy stated: “The most technically mature small modular reactor designs and concepts have the potential to be economical and could be made available for deployment before the end of the decade, provided that certain technical and licensing issues are addressed.” In 2012 (i.e., the following decade), DOE provided initial funding of $452 million over five years for R&D, design certification and licensing. Two designs were selected: one being developed by Babcock & Wilcox, the other by NuScale Power with Fluor as a strategic partner.

Russia is developing a design that has been used in its nuclear icebreaker fleet and has been in operation for decades. The World Nuclear Association expects commercial deployment at the end of this decade, but notes that cost estimates have jumped from $140 million to $740 million. South Korea began developing its SMR in 1996. Though there have been no firm orders so far, there was a memorandum of understanding signed earlier this year with Saudi Arabia to “conduct a three-year preliminary study to review the feasibility of constructing SMART [System-Integrated Modular Advanced] reactors.”

China and South Africa began working together to develop a Pebble Bed Modular Reactor in 2005, but South Africa gave up in 2010, after spending $1 billion, because there were no private investors or customers. In other words, it was neither cost-effective nor bankable, which are imperatives for any energy technology. China has continued to work on its own high-temperature reactor and expects to connect one to the grid in 2017. China is working on 24 of the world’s 62 reactors now under construction. India is working on a reactor that uses thorium and hopes to have one completed by 2020.

Figure: Nuclear Reactors Under Construction, July 2015

Argentina began construction of a small unit in 2014 with an estimated capital cost of $17,000 per kilowatt, 10 times the cost of utility-scale PV in the U.S., which has no fuel, waste disposal or decommissioning costs. As a further advantage, there are minimal operating costs for PV, which cannot be said for any nuclear reactor (other than the sun). The analysis of SMRs above indicates that the industry is far from agreeing on a standard, cost-effective design, modular or otherwise, that can be finished on time for the projected price. It would seem that the only thing standard about the technology, to date, is construction delays, cost overruns and potential danger.

Bill Gates has invested in a company called TerraPower. The company’s website asserts that “TerraPower’s Generation IV traveling wave reactor (TWR) offers a safe and economic form of low-carbon energy that meets baseload demand for electricity. It offers enormous environmental benefits, high barriers to proliferation, and uninterrupted energy security that significantly address many of the issues faced by today’s reactors.”

The word “offers” in that paragraph is used twice in the present tense. On the Progress Report section of the company's website, however, it is revealed that TerraPower "aims to achieve startup of a 600 megawatt-electric prototype traveling wave the mid-2020s.” Note that the word “prototype” does not mean commercial.

Even if TerraPower’s prophecy comes true, with PV prices already below 5 cents per kilowatt-hour and wind in some places even cheaper, neither of which have any fuel-price risk, construction risk or supply chain risk, it is hard to see why the TWR will matter unless, perhaps, it can eat up spent uranium fuel, which would otherwise have to be stored.

The burden of proof lies with TerraPower, as it does for all other Generation IV reactors.

Cleaning up their act

For those power plants already in operation, or mothballed, there is still the question of what it will cost to decommission them. According to Nuclear Energy Insider, the cost estimates between 2008 and 2013 for the U.S. have risen by 44 percent to $80 billion. The U.S. has 100 reactors, so that means around a billion dollars each. The fleet (worldwide) isn’t getting any younger, with the average age being nearly 29 years, out of a design life of 40, so this isn’t just a problem for the U.S., and it is one that is only going to accelerate. (Three-quarters of U.S. reactors have either already gone past 40 years of operation or have been approved to do so.)

Decommissioning costs can even surpass the cost of building the reactor in the first place. Germany shut down a small, 106-megawatt plant in Bavaria in June and the decommissioning cost was greater than the cost to build it, according to Craig Morris of The Energy Transition. “As the example of another reactor in Stade shows (closed in 2003 after 31 years of operation), the cost ratio between construction and dismantlement has not improved. Stade cost 150 million euros to build. Dismantlement should have already been finished at a cost of 500 million, but the latest estimate is 1 billion euros,” Morris wrote in June.

It would not be a surprise if the cost estimates to decommission existing plants continued to rise. What is also rising is the amount of waste that needs to find a safe and permanent home, if such a condition can be provided. A July 9 Bloomberg headline reads: "Japan’s 17,000 Tons of Nuclear Waste in Search of a Home." “It’s part of the price of nuclear energy,” Allison Macfarlane, a former chief of the U.S. Nuclear Regulatory Commission, said in an interview in Tokyo on atomic waste. “Now, especially with the decommissioning of sites, there will be more pressure to do something with this material. Because you have to.”

Though 17,000 tons may seem like a lot, unfortunately, it is only a drop in the bucket. “The world’s 437 operating reactors now produce about 12,000 tons of high-level waste a year, or the equivalent of 100 double-decker buses," according to the World Nuclear Association. Nobody really knows what it is going to cost to get this material stashed safely in a manner that will not affect people born thousands of years from now.

Even if a nuclear weapon is never again set off, the risks from this technology are formidable, perhaps unsolvable. The U.S. and its allies have spent years trying to keep Iran from making such a weapon, but a fearsome genie has leapt out of the bottle and we are not going to get him back in. Eventually, any nation, or even any highly motivated group, who wants to get hold of a nuclear weapon will be able to. That is the way it is with weapons; it always has been.

Belief in nuclear power is a form of religion, forged in the fire of war; it is not based upon reason. If the great Admiral Hyman Rickover, father of America’s nuclear submarine fleet, were still alive, if he could hand-pick the engineers and administrators to watch over the technology, then perhaps this quest would be worth the risk and the technology would thrive. But he isn’t and it won’t.

The future liabilities are truly massive in scale; that is the only thing about the technology that does scale. The present benefits are scant and can be obtained in a number of superior ways. However, like Dracula, this is a hard beast to kill. Ultimately the courts may decide to put the stake in nuclear power’s heart. And when they do, a good place to start their opinion would be the great English case of Rylands vs. Fletcher (1868):

Mr. Justice Blackburn...states the opinion of that Court as to the law in these words: “We think that the true rule of law is, that the person who, for his own purposes, brings on his land and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril; and if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its seems but reasonable and just that the neighbour who has brought something on his own property (which was not naturally there), harmless to others so long as it is confined to his own property, but which he knows will be mischievous if it gets on his neighbour's, should be obliged to make good the damage which ensues if he does not succeed in confining it to his own property. But for his act in bringing it there no mischief could have accrued, and it seems but just that he should at his peril keep it there, so that no mischief may accrue, or answer for the natural and anticipated consequence. And upon authority this we think is established to be the law, whether the things so brought be beasts, or water, or filth, or stenches.”

As beasts go, it is hard to think of one more fearsome than nuclear energy.


Henry Hewitt is an investment strategist and portfolio manager with 36 years of experience in renewable energy.