Iowa PIRG Education Fund
Nuclear power is among the most costly approaches to solving Iowa’s energy problems. Fearing the many significant financial risks of new nuclear projects, private investors have stayed away. As a result, utilities and nuclear proponents are now asking Iowa citizens and businesses to pay more on their electricity bills to make the construction of a new nuclear reactor possible.
This would be a bad deal for Iowans. A new reactor project would force Iowans to pay a lot more now for uncertain results in the future. A new reactor would come without a guarantee of final cost, and without a guarantee that the reactor would ever deliver electricity at all.
A smarter investment lies in renewable energy options – such as energy efficiency and wind power. Per dollar of investment, these technologies deliver far more energy than nuclear power. By directing our resources towards the most cost-effective solutions, we can make greater progress toward a secure, reliable and safe supply of electricity to power Iowa’s economy.
Nuclear power is expensive, with cost estimates on the rise.
- Iowa’s largest utility, MidAmerican Energy, anticipates that construction costs for a new 540 megawatt nuclear reactor in Iowa would range between $1-3 billion. MidAmerican calculates that a project on this scale would increase customers’ electricity bills by 10 to 30 percent – or $13.30 to $40.00 per month for a typical Iowa family.
- The design of MidAmerican’s proposed nuclear reactors has not been finalized, and is still undergoing review by the U.S. Nuclear Regulatory Commission (NRC). As a result, MidAmerican’s cost estimate for new nuclear reactors is speculative. Since 2005, cost estimates for building a new nuclear reactor have more than tripled.
- If delays and cost escalation drive up the price tag during construction, Iowa’s ratepayers would be stuck with the bill. Nuclear power already has a long history of cost overruns. Of 75 nuclear reactors completed between 1966 and 1986, the average reactor cost more than triple its original construction budget. Later-built reactors came in as much as 1,200 percent over-budget. New reactors are not immune – the French government-owned nuclear giant Areva is currently three and a half years behind schedule and 75 percent over budget on a new reactor project in Finland.
Previous failed investments in nuclear power have made private investors wary.
- Nuclear power has historically proven to be a risky investment. Of the 253 nuclear power reactors approved and funded in the United States, only 52 percent were ever completed. Of those, 21 percent were permanently and prematurely closed due to reliability or cost concerns.
- In addition to out-of-control construction costs, many of these investments failed because the electricity demand the plants were built to serve never materialized.
- Similar conditions exist today. Because of the lingering impacts of the financial crisis, and because of increasing efforts to improve energy efficiency, electricity demand overall has been leveling off. Nationally, the Electrical Power Research Institute shows factory and business electricity demand growing at only 0.7 percent annually, which is far lower than the average of 2.5 percent a year over the past four decades. In an era of increasing efficiency, households are anticipated to show a gradual decline in energy use by 0.5 percent annually over the next ten years – reducing the need for any new nuclear reactors.
MidAmerican Energy’s proposal to have Iowa’s citizens and businesses carry the financial risk of building a new reactor would be a bad deal.
- MidAmerican Energy is currently working to charge customers up-front to finance reactor construction.
- This charge would come without any guarantee of final cost, and without even a guarantee that the plant would ever deliver electricity at all.
- Decision makers in Florida, who authorized utilities to charge customers up-front to finance reactor construction in 2006, expressed regret after numerous rate hike requests by utility company Progress Energy.
Energy efficiency and renewable energy offer more cost-effective and less risky options to power Iowa’s economy.
- Iowa has huge potential to increase its energy efficiency. If Iowa follows through on plans to reduce electricity usage by 1.5 percent annually, by 2030, electricity consumption will fall nearly 30 percent below forecast levels, greatly reducing the need for any new nuclear reactors.
- In 2010, MidAmerican Energy’s efficiency program delivered actual, real electricity savings for a cost of just 5 cents per kWh. In comparison, electricity from a new reactor would cost as much as 10 to 30 cents per kWh and it would not be available until the end of the decade.
- Similarly, Iowa has huge renewable energy resources. Iowa is already the second largest producer of wind energy nationally with 4,375 megawatts of installed wind capacity. With over 20 percent of all the electricity generated in the state from wind turbines, Iowa ranks first in the nation for percentage of total energy produced from wind power, and second in the world.
- Still, Iowa has barely scratched the surface of its wind energy resources. An estimated 75 percent of Iowa is suitable for wind energy development with an estimated total wind resource of 570,000 megawatts. The Iowa Wind Energy Association has set a goal of producing 20,000 megawatts of installed wind energy by 2030, reducing the need for any new nuclear reactors.
Iowa energy policy should prioritize clean energy solutions – technologies that deliver safe, reliable and secure electricity supplies at a reasonable cost. Iowa’s leaders should:
- Protect citizens from unnecessary risks and costs by requiring any company proposing to build a new nuclear reactor to demonstrate that nuclear power generation would be more cost-effective than other ways to meet electricity demand, including energy efficiency.
- Ensure that energy companies and their shareholders, not ratepayer or taxpayers, bear all the financial risks associated with building a new nuclear power plant.
- Provide full opportunity for public input at every key point in the process of developing any new nuclear reactor.
- Speed energy efficiency efforts by raising the energy efficiency resource standard goals to reach 2 percent energy reduction below forecasted levels per year by 2020.
- Expand renewable electricity production to ensure that 30 percent of Iowa’s electricity supply comes from renewable resources by 2025.