ese hidden subsidies distort market choices that would otherwise favor less risky investments.
The most significant forms of subsidies to nuclear power have four principal objectives: Reduce the cost of capital, labor and land through loan guarantees and tax incentives; mask the true costs of producing nuclear energy through subsidies to uranium mining and water usage; shift security and accident risks to the public via the 1957 Price-Anderson Act and other mechanisms; and shift long-term operating risks such as radioactive waste storage to the public.
The report evaluates legacy subsidies that helped build the industry, ongoing support to existing reactors, and subsidies available for new projects. According to the report, legacy subsidies exceeded 7 cents per kilowatt-hour (C/kWh), well above the average wholesale price of power from 1960 to 2008. In effect, the subsidies were more valuable than the power the subsidized plants produced.
"Without these generous subsidies, the nuclear industry would have faced a very different market reality," said Doug Koplow, the author of the report and principal at the Cambridge, Massachusetts-based consulting firm, Earth Track.
"Many of the 104 reactors currently operating would never have been built, and the utilities that built reactors would have been forced to charge ratepayers even higher rates."
The industry continues to benefit from subsidies that offset its operating costs, which include uranium mining, cooling water, accident liability insurance, waste disposal, and plant decommissioning. The exact value of these subsidies, however, is difficult to ascertain.
According to the report, ongoing subsidies range from 13 percent to 98 percent of the value of the power produced. Even at the low-end however, subsidies account for a significant portion of nuclear power's operating cost advantage over competing energy sources.
Subsidies to new reactors could significantly exceed those enjoyed by the existing fleet. In addition to benefiting from ongoing subsidies to existing plants, the Energy Policy Act of 2005 introduced a new suite of subsidies for nuclear power. The report estimates that these subsidies could be worth between 4.2 and 11.4C/kWh, or as much as 200 percent of the projected price of electricity when these plants are built.
"All low-carbon energy technologies would be able to compete on their merits if the government established an energy-neutral playing field and put a price on carbon," said Vancko.
"Investing in nuclear power carries the unique risks of radioactive waste storage, accidents, and nuclear weapons proliferation that must be fully reflected in the technology's costs, which is not the case today."
Based on these findings, the report recommends that the federal government reduce subsidies to the nuclear power industry. If subsidies are necessary, the government should award them competitively to the most cost-effective low-carbon energy technologies. The report also recommends that the government modernize liability systems for nuclear power and establish regulations and fee structures for uranium mining, waste repository financing, and water usage that fully reflect the technology's cost and risks.
"After 50 years," said Koplow, "the nuclear industry needs to move away from government patronage to a model based on real economic viability. The considerable operational and construction risks of this power source need to be reflected in the delivered price of power rather than dumped onto taxpayers."
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