Guest post by DV82XL. He is a Canadian chemist and materials scientist. For his previous article on the 2010 Nuclear Security Summit, see here, and on why an informed public is key to acceptance of nuclear energy, see here.
Unless you intend to design a nuclear reactor from scratch, you are going to have to accept whatever level of safety is designed into the one you buy. No original equipment manufacturer (OEM) is going to derate their product to cut costs for you. And that will go for things you will have to build yourself, like the containment, and spent fuel facilities. No one is going to risk their brand letting you install their product on a substandard site. But this is not where costs get out of control anyway.
Nor is it in operating safety protocols, which at any rate are tied into general plant integrity routines that must be done anyway. Ultimately cutting back in this area runs the risk of some failure occurring that might stop the plant from producing power, (i.e. stop making money) or causing harm to an employee. In other words most of this falls under housekeeping anyway.
The only place where costs can be controlled which is often (erroneously) referred to as safety issues, is unreasonable procedural nonsense during the initial build. Even this is not the real expense in and of itself, but it is the delays that these can cause that push cost overruns into the stratosphere. It is seeing that these do not get out of hand that is the real way to keep costs down. In any sane world too, most of these procedural issues would be properly referred to as Quality Assurance, or Quality Control (QC), as they would have little to do with real safety issues, but in the politically charged world of nuclear power plant (NPP) builds, the antinuclear forces spin these to security and safety issues their own ends.
Okay, so how to avoid this sort of pitfall? First and foremost there must be only one government agency/department/ministry/whatever, in charge of oversight, and it needs to be at the national level, and it needs to exercise eminent domain. Once the project has broken ground, it cannot be delayed by politics, or by lower levels of government. Some local water commissioner up for re-election cannot be permitted to bring the project to a halt while he grandstands demanding a second opinion on groundwater contamination, two years after the first one was done and approved. Similarly, abuses of the legal system by non-government organisations (NGO’s) have to be made impossible as well. Many of these like Greenpeace, are well aware of the financial dynamics of these builds, and are past masters at using the courts to get injunctions for the sole purpose of running up the costs, in the hope of getting a project cancelled. In fact they have been successful more than once with this tactic.
Next, the agency that does have oversight must operate under a rational set of rules. This is not as hard as it may seem. Most national aviation authorities have a time-tested set of protocols with with they administer their bailiwick, and they seem to be able to do it without disrupting the civil air transportation system unless they have very good reason. Nuclear regulators should have a similar set of rules, legislated into the laws that created them, so some commonsense prevails.
One of the cornerstones of transportation regulation (at least on the technical side) is the emphasis placed on the chain of responsibility. It is inculcated into everyone, from the first day you start, that every action is traceable, and every individual accepts unlimited criminal liability every time they sign off a job. Furthermore. it is made clear that your job is not in danger if you refuse to sign. If your supervisor is comfortable that the job is done right, and feels that you are wrong suggesting it is not – then he signs it off – and so on up the chain, until someone decides to take responsibility, or the job gets done again. The situation that cannot be allowed to develop is one where the regulator has to be involved at every step, and at every minor deviation. Yes, they should have independent on-site QA people, overseeing the quality process, but under no circumstances should the regulator need to sign off at every step.
How does this work? More to the point why does it work? It works because everyone is made to understand that they can be traced and tracked down, and will face charges if they are found to be responsible for shoddy/illegal work, if necessary years latter. This creates a culture where caution and attention to quality comes from the bottom up, rather than enforced from the top down. Small deviations will still be made, and time will be saved, but these will not be anything outside the comfort zone of all involved, and reason will prevail.
[aside: To give an example, for awhile I had a job clearing deviations for a group of Canadian subcontractors to a U.S. bus manufacturing firm. The client firm required strict adherence to their standards, or the signature of someone certifying the change was equivalent. The sort of deviations I was signing off were for things like using a paint with the colour “009876” instead of the standard “009875” a difference almost indistinguishable to the naked eye, for a bracket that would never be seen by the public. If they had not employed me, every change would have to go to engineering for approval, wasting time and money. However they hired me because I was expected to know which changes to let through and which need higher approval.]
As it stands in most jurisdictions, nuclear builds do not allow for this sort of thing. Every change must go through the full process of being approved by all the stakeholders including the regulator, no matter how minor. Many of these are not safety issues, and if they are legitimate QC issues they shouldn’t need global approval. Worse, as can be seen in the trials Areva is enduring in Finland, a regulator with too much responsibility coupled with a lack of experienced people, does more harm than good.
If Australia wants to lower the cost of building NPPs to help make them cost competitive, the area to focus on is not lowering the safety threshold, (which at any rate is likely impossible) but by controlling runaway costs generated by counterproductive bureaucratic overhead, and closing the avenues that permit NGOs and others to practice barratry. At the same time the public needs to be constantly assured that quality and safety, while related, are not always codependent and must be managed separately to assure both objectives can be met.
Brave New Climate 
28 replies on “TCASE 11: Safety, cost and regulation in nuclear electricity generation”
DV82XL,
Thank you for your excellent post. Enjoy your sebatical and come back soon.
I agree with all you’ve said. I would like to comment on some of your points.
True. But we don’t have to buy NPPs from USA or Europe. We can buy them from Russia, India or Korea. If they cost less and their safety meets our requirements, then why not do so? We do not need 10 to 100 times the safety of coal.
True. But very difficult to achieve in Australia because the states are reluctant to give up their powers to the federal government.
The problem is not just during construction. It is for the life of the project. In Australia, each new government can change the laws that the previous government passed. So investors realise there is high risk that a future government will change the rules – e.g. to required more stringent safety regulations, perhaps with a another level of regulation. This would devalue the investment. The probability that this will happen means investors place a higher risk premium on investment in an NPP and therefore need a higher return on investment. I suspect that many people do not realise that this can be a huge cost. MIT says the investment risk premium for NPP in the USA is 26%. I expect it would be far higher in Australia.
I agree. However, again, our history of regulation of the aviation industry is rife with political interference. Australians will remember that frequently CASA (Civil Aviation Safety Authority) becomes embroiled in politics and this can last for years. It is relatively quiet at the moment but many will remember the corporatisation of CASA, the political appointments to the Board and CEO, union disruptions, the cost of safety arguments that lasted a decade as the new traffic control regime was established. Australia has a bad record of political interference and politicising its regulatory agencies. Other examples are political interference in the regulation of our uranium mines by the Chief Scientist.
I agree with what DV82XL says is the objective. But given the current state of politics I see it will be difficult to achieve in Australia. This is exactly why I feel we do have to raise all these issues and confront them. We do have to make it clear how all these sorts of “safety related” issues can double the cost of nuclear power in Australia. We have to tackle these issues head on. We have to get them out in the open and discuss them, not try to bury them.
This is exactly what will happen in Australia, in spades, if we don’t set out to stop it happening before we get started.
I agree wholeheartedly. So let’s ensure we get the debate on all this out in the open. Let’s not try to avoid it. People must be aware that the cost difference between excessive/bad “safety” regulations and appropriate regulations is very high. An AP1000 costs about $6000/kW in USA and about $1500/kW in China (rough figures off the top of my head).
Closing remark:
This is an enormously valuable contribution from DV82XL and I thank him for it.
I hope we can really take note of this and spread the word about what we need to do to try to get our NPPs at a cost as close as possible to the cost they are in say China, rather than the cost they are in USA and Europe.
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FYI, I just sent this email to all federal parliamentarians:
Dear MP,
Please, do not put a price on carbon in Australia, until:
1. There is an international agreement on pricing carbon and all (or most) of the major emitters have signed up to it, AND
2. Australia has removed all the impediments (all the government imposed market distortions) that prevent nuclear power competing on a level footing with other low CO2 emission technologies. Such impediments include:
a) banning nuclear power
b) regulations (such as safety) that discriminate against nuclear power compared with other electricity generating technologies
c) Renewable Energy Targets (RET)
d) Renewable Energy Certificates (RECs)
d) Feed in tariffs
e) subsidies and favourable tax treatment for renewable energy
f) subsidies and favourable tax treatment for coal mining and coal fired generation.
g) Sighting regulations that would disadvantage nuclear compared with other technologies. (Note that wind and solar are favoured despite their consequences).
This article illustrates the sort of problems that would cause nuclear energy to be more expensive in Australia than it should be.
Also see the first comment (by me)
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DV8,
Great post! Most of us are going to miss you.
The USA has been taking the wrong road on nuclear issues for a long time. Just a few examples; Jimmy Carter banning re-processing (PUREX etc.); the failure to licence the LILCO nuclear facilities; and in more recent times, problems with license renewals (e.g Vermont Yankee).
On top of the failure to support nuclear power plants, successive administrations have shut down 90% of research reactors in the USA and those of us trying to get funding for new ones are not getting anywhere.
I don’t expect things to change in the USA; NPP leadership is passing to Russia, China and India. When it comes to defence strategy, Australia is content to operate what amounts to a sub-set of the US strategy. Clearly, such an approach would be hopeless in NPP matters as the USA is no longer interested in a leadership role.
Should Australia look for a nuclear partner other than the USA or develop its own approach to nuclear power?
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Damn. I’m flattered that this was considered FFP material, so I guess I will have to answer Peter’s last, as he leaves several questions open.
I don’t know where you get the idea that Russian, Indian or especially Korean NPP are somehow inherently less safe by design than Western offerings. Even the Russian RBMK types (which at any rate are no longer being built) have been modified to preclude another Chernoby style failure. Modifications have been made to overcome deficiencies in the 12 RBMK reactors still operating in Russia and Lithuania. Among other things, the danger of a positive void coefficient response has been eliminated. Automated inspection equipment has also been installed in these reactors.
The other class of Russian reactors under attention for safety upgrades is the first-generation of pressurized water VVER-440/230 reactors. These were designed before formal safety standards were issued in the Soviet Union and they lack many basic safety features. Eleven are operating, under close inspection, in Bulgaria, Russia, Slovakia, and Armenia. Later Soviet-designed reactors are much safer and the most recent ones have Western control systems or the equivalent, along with containment structures.
Now there is a great deal of international coordination on nuclear safety standards under the auspices of the World Association of Nuclear Operators (WANO). In practical terms this has been the most effective international means of achieving very high, standardized, levels of safety. Its four major programs are: peer reviews; operating experience; technical support and exchange; and professional and technical development. WANO peer reviews are the main proactive way of sharing experience and expertise.
As a consequence, while there may be some savings realized by the purchase of a non- Western reactor, it will be from lower labour costs, and other business efficiencies – not lower safety standards.
At any rate I find the notion of lower safety standards to reduce costs myopic at best, if it would lead to higher risk-management costs (insurance) over the long term.
It is no different in Canada and the United States yet both have a single federal regulator for civil nuclear matters.
This is not different from any other jurisdiction in the world, and it has caused problems. However I cannot see how lowering standards is going to ward off the temptation of future governments to tighten them; in fact I would suspect quite the opposite. On the other hand a smooth running regulator would likely show that no interference is necessary.
Again, this is nothing new and similar issues abound elsewhere, yet NPPs get built notwithstanding in those other places. Politics is dirty business, no matter where you are, but again I ask how is lowered standards going to ameliorate the impact of these conditions?
Look – I know little (and if the truth be known) care less about internal Australian politics, as no doubt most of you aren’t interested in Canadian politics. Obviously those of you that live in Oz have a better grip on things and what would work for you. and what won’t. My suggestions in the (what is now) the lead article where general, and would be the ideal situation, anywhere, however as in all things of this nature, there will be compromises to fit things into local politics. The real point, and maybe I should have limited my remarks to it, is that real safety in nuclear reactor design and operations is not a source of elevated expense per se, and thus no real savings can be realized reducing them, regulation and public opinion notwithstanding. It is the perception and propaganda that ALL conformance/quality aspects of NPP builds are perforce safety issues, (and unweighed ones at that) which is the source of cost overruns, and are avoidable.
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In this context, it was interesting to note AREVA’s Anne Lauvergeon’s sniping comment, “was like buying a car without air bags and safety belts”, about the Korean APR-1400 reactor when KEPCO won the bid to build those four new reactors in the UAE. The reason? The Korean’s undercut the French by about half. She doesn’t seem to get it, which is maybe why the nuclear renaissance is still in the dark ages in Europe. Some details here:
http://www.businessweek.com/globalbiz/content/mar2010/gb2010032_184992.htm
and
http://www.modernpowersystems.com/story.asp?sectioncode=83&storyCode=2055698
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Sorry, the 2nd link in my post above (now edited) regarding the Koreans undercutting the French was this:
http://www.modernpowersystems.com/story.asp?sectioncode=83&storyCode=2055698
To quote:
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DV82XL:
I am greatly heartened and reassured by your post and response to Peter. I hope that this will finally end the squabbling surrounding this issue.
From my perspective, your absence from BNC (temporary, I hope) will be missed as I have have learned a lot from you on technical issues pertaining to nuclear matters and have quickly come to trust what you say.
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DV82XL is leaving? Did I miss something?
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DV82XL
I didn’t mean to say that. I agree there is little difference, perhaps none, in their safety. What I was trying to say, and I have said on other threads recently (eg Open Thread 4) is that nuclear is plenty safe enough no matter where we buy it from. Therefore, what we need to concern ourselves with is how can we procure nuclear at least cost, not the safest. Most of our emphasis should be on how to achieve least cost, not on arguing about how to get more safety. I say “more safety” because if we cannot remove “safety” from being a political football, the political parties will be competing to guarantee that their plan offers the highest level of safety and the other party cannot be trusted to provide safe nuclear. That will be the inevitable result of allowing safety to become an issue in the political battles ahead.
Australia is not in the same boat as the other countries you are referring to. For one thing we don’t have nuclear yet so it will be much more expensive for us to get started unless we can find smart ways to benefit from where others are at – eg remove all the redundant regulation. Secondly, we have abundant, good quality coal, near surface and near the population and industrial centres. So for nuclear to compete it will have to be much cheaper than in Canada, USA, Europe or Japan.
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Douglas Wise,
It will be really great if you ever stop your digs too, if you ever do!
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Peter:
I think I have never disagreed with what you have been trying or meaning to say on the safety/cost issue, merely that the way you have expressed it has been very easy to misinterpret and thus given hostages to fortune.
DV82XL has cut the Gaudian Knot and I gather that we both entirely agree with his position. Can we now let this matter lie and make peace?
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Good post, DV82XL, thx. Very to the point – too bad politicians so rarely get the point!
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This editorial is interesting and topical. http://www.theaustralian.com.au/news/opinion/green-loans-a-blueprint-to-waste-taxpayers-money/story-e6frg71x-1225889563527
It relates to the article by DAV2XL and the comments on this thread. It illustrates the sort of problems we face in Australia when the government tries to get the public sector to administer even very small programs, let alone replace the generation system, or regulate a nuclear power industry. It should be clear from this editorial article that public sector involvement needs to be minimised or the cost to the public will be enormous. It should also indicate that we are going to have a major problem trying to set up a regulatory system for nuclear power that does not have all the problems DV82XL alluded to and more!
It should also, hopefully, indicate where we need to focus our attention if we want to bring nuclear to Australia at a competitive cost.
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barry: the article you sent us to above (thanks) says this:
KEPCO statistics show that the cost of building its APR-1400 reactor in Korea is $2,300 per kilowatt, at least a fifth cheaper than its French or Japanese equivalent.
You say the koreans undercut the French by half?
Peter: didn’t read your article yet but it’s interesting to hear you say that public sector involvement needs to be minimized when the Korean company (KEPCO) referred to above in Barry’s reference is a state run company.
but perhaps you are criticizing public sector involvement in Australia only.
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Greg,
Perhaps you need to read the article. Put it together with what DV82XL said in the lead article and you might then understand why nuclear is so much cheaper in Korea than in USA, Europe, and Canada – and would be even more exensive in Australia if we allow our governments and public sector to be involved like many here believe they should be. We need to worlk ou how to prevent the problems DV82XL has explained so well. How can we do that?
Read the article and join the dots.
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Greg,
Since you didn’t read the article I expect many others didn’t either. So here are some extracts:
the scheme’s lack of checks and balances had drawn “every shark and shonk in Australia.”
Coming on top of the deadly pink batts debacle, the litany of failures of policy and process set out in the reports are a blueprint for what not to do
The reports demonstrate that an ambitious, centralised, big-government approach, in which the bureaucracy dispenses taxpayer-funded largesse and takes on the role of service provider, will almost certainly end in tears.
Greater stability in senior staffing is also important, with the high turnover of assistant secretaries in the role of Green Loans branch head, 11 officers in 22 months, contributing to a serious lack of leadership.
So weak were the budget controls in the Green Loans program that the eventual cost of one contract, for logistics, was 19 times higher than the original contract price.
KPMG uncovered lack of supervision and probity and poor contract management and record-keeping. The Financial Management Act was breached repeatedly, most services procured for the scheme were obtained without open competition and in 75 per cent of those cases, only one supplier was approached. Many contracts had 50 per cent of the contract amount payable at the time of signing. The review also found prima facie evidence of “contract splitting,” with work from the same supplier split into separate components to avoid authorisation from senior management and competitive tendering processes.
In its review, … described a culture of “working around financial controls”.
Auditors found that assessors reviewing households’ energy and water efficiency were paid 33 per cent more than budgeted
staff in the Green Loans program did not have adequate training in the tasks they were required to perform.
in February, after allegations of favourable treatment for certain companies, the government axed the loans component of the scheme.
The audit was announced in April, a day after the government axed its $2.45 billion insulation scheme, which was plagued by fraud and safety problems.
Both schemes, undoubtedly, have compromised Labor’s reputation for service delivery. Nor is it clear what environmental benefits the programs have delivered. One of Australia’s leading authorities on energy in homes, Associate Professor Terry Williamson, of Adelaide University’s School of Architecture and Urban Design, predicted that the roof insulation scheme would result in more energy being used, higher bills and greater greenhouse emissions. In a report commended by the Productivity Commission, Professor Williamson said insulation usually had a detrimental effect, with many householders who installed striving for even greater comfort, increasing their use of airconditioning or heating, an effect known as “comfort creep”.
My question to those who think Big Government is the answer: How do you think these problems (systemic incompetence in the government) would scale up if “Big Government” was to implement a nuclear program in Australia?
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More “Big Government” cock-ups listed in this article yesterday: “Loans scheme joins long list of botched jobs”
http://www.theaustralian.com.au/news/nation/loans-scheme-joins-long-list-of-botched-environmental-programs/story-e6frg6nf-1225889566276
Add to these:
$43 billion National Broadband Network, a government owned, union controlled, broadband monopoly for Australia, with the minister being able to exert his/her control over what information is to be censored / banned (as he has demonstrated he wants to do with his censoring of cites to protect the innocent) – sounds a bit like China, eh?
The Resource Super Profits tax fiasco that has led to a permanent racketing up of our sovereign risk (which means nuclear and all other investments will be more expensive from now on)
The Federal Government’s Health take-over commitment: it morphed into a 60%funding commitment. Government will now fund 60% of hospital costs but they will continue to be managed by the incompetent and bloated bureaucracies in the state Health systems. The Federal government is giving away the money with little control. What a disaster this is.
The Building Education Revolution: $16 billion funding authorised, $11.5 billion spent so far, over $5 billion wasted. That’s nearly 50% wasted. What do you think nuclear would cost if we scale this sort of management incompetence up to a “Big Government” run nuclear implementation?
Renewable Energy Targets, Feed in Tariffs, subsidies for renewable energy: subsidising wind power through the Renewable Energy Certificates is providing a 100% subsidy – doubling the cost of electricity. In fact it is worse than this, because the consumer also has to pay for the grid upgrades; these costs are not charged to the renewable energy generator. They are buried and we all pay. The subsidies to solar PV owners are about 1000% – i.e. ten times the cost of conventional electricity.
And the biggest demonstration of government incompetence of all: The ETS or “The Carbon Pollution Reduction Scheme” as Labor tried to spin it. That would have been the greatest disaster of all.
Hopefully most people are starting to get an understanding of what is causing the cost of nuclear to be higher in the western democracies than in China and Korea. I hope people can see that if we don’t find a way to overcome the sorts of problems that our system of government inevitably apply to regulation of safety for nuclear power in Australia, our costs for nuclear power will be in the stratosphere – which is exactly what Greenpeace, ACF, WWF, Green Party, and the gas, coal and renewables industries want.
Therefore, I’d urge BNC contributors to move on to trying to work out what we would need to do (practical suggestions) to implement nuclear in Australia at a cost less than coal.
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Regarding the article Barry linked to http://www.businessweek.com/globalbiz/content/mar2010/gb2010032_184992.htm, who noticed the last line:
What will be the cost of doing so?
What is the reason for doing so, given that Gen IIs are 10 to 100 times safer than coal, and Gen III are safer still? Why is Europe demanding even greater safety?
Given the way the political debate is likely to proceed in Australia (as evidenced by the discussion on BNC), what is the likelihood that Australia will demand even greater safety than the Europeans – “the greatest safety in the world!”. Oh yea! And the greatest cost too!
And for what reason? What benefit.
I’ll tell you the benefit. The benefit is for the fossil fuel industry and the renewable energy advocates who do not want nuclear on Australian shores no matter what. That is the benefit requiring ridiculous levels of “safety”.
But no doubt, those that want it will stick to their guns
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One aspect of NPP safety is resistence to failure during earthquakes. Probably not a problem in Australia (or UAE) but of much greater concern in other locations.
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I see no prospect of a fourfold increase in non hydro renewables by 2020. That is despite State FiTs, the federal solar subsidy, RECs, green loans and the REDP scheme that has funded yet-to-succeed geothermal. So I guess Australia’s stationary energy will remain 92% fossil fuelled , if not more, til 2020 and beyond.
I have to agree with Peter that claims that NP is too expensive sound hollow. It doesn’t seem to be too difficult to find a few billion dollars when they want to. My neighbours and I in SW Tas got satellite internet as we were judged to live in a ‘black spot’. Then they laid a fibre optic cable 500 metres away that went though a deserted forest. The wastage is staggering.
My suggestion for a nuclear construction authority for Australia is to appoint some heavy hitters. Bob Hawke, Peter Cosgrove, Bob Carr, Ziggy Switkowski and our own Barry Brook. All blokes I notice. The idea is to present a formidable force to the obstructionists.
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Peter said (slightly off topic)
Well that figure is now out of date post-the-deal with Telstra. as it will cost a good deal less. Moreover, only about 10% 0f that were state funds — the rest was in guarantees which were always to be taken up privately. The state will probably make a return of about 6% per annum after it is flogged off.
As for censoring — that is a red herring. It has been punted into a post election review process and it seems the ISPs are to do the heavy lifting on this if anyone does.
Now abandoned in favour of MRRT. The big miners are happy with the new arrangements. There was no “sovereign risk” issue. This was always simply a bargaining chip in the haggling over what would be paid. As Sundance’s executive board found out, real risk issues come in a variety of forms and fleeing to Africa isn’t always a good idea. NPPs were never affected by RSPT as it was purely to do with taxing windfall profits.
As this blog is aimed at nuclear power rather than a debating forum for Liberal Party talking points I am going to resist the temptation to continue knocking over his warmed over electioneering. I do however think it amusing that having accused me of wanting to use the nuclear issue to impose my Marxist beliefs on others, Peter uses the nuclear issue to articulate extremely tendentious Liberal special pleading here.
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Fran,
You seem to have missed the point. The point I was making is that the government is incompetent at managing even small programs, as these many instances demonstrate. If they cannot manage these small programs, how could they manage bringing nuclear to Australia at a cost less than coal. Under the sort of government we have now, the costs would be through the stratosphere.
That is why I am urging BNC contributors to focus on what we should do to bring nuclear to Australia at a cost less than coal. And this is why I keep emphasising that safety is not the problem. Cost is. It will be cost, due to incompetent government, driven by those who want to keep talking about the risk of blowing up Sydney, that will prevent movement on getting clean electricity to Australia. Or perhaps I should say, “continue to prevent us getting clean electricity in Australia”.
By the way several of your points are wrong and/or simply irrelevant distractions.
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“You seem to have missed the point. The point I was making is that the government is incompetent at managing even small programs, as these many instances demonstrate.”
One of the key reasons is that there is no “transubstantiation” that occurs when people move from the private to the public sphere. If they were greedy and sociopathic before, they’ll still be greedy and sociopathic as politicians; they’ll just have less incentive to produce a good outcome and more power to affect a bad outcome.
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[…] This article describes the sort of regulatory impediments that make nuclear expensive where the regulatory environment is inappropriate. These are what we must avoid. https://bravenewclimate.com/2010/07/08/tcase11/ […]
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Now Peter expounding Russ Limbaugh talking points is kind of off topic.
Public Power has been proven to be far more efficient cost wise than the private variety. Federal power agency TVA had no problem financing its nuclear build with a 3% bond while Florida Power needs loan guarantees and a 12% discount rate.
Many public owned operations are far more efficient than their private counterparts.
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Seth,
You may be correct, but I just can’t see how we could do it in Australia. We have moved progressively away from that approach over the past 20 odd years, starting with the Hawke-Keating reforms in the 1990’s. They broke up the state owned electricity generators to expose them to competition. They were in a mess at the time. All states except NSW sold off their electricity assets (or most of them). NSW’s electricity system is now a complete basket case. It is controlled by the unions and they have fought against and prevented efficiency improvements for decades. There is no way that the states can get the money to maintain their electricity assets. So NSW is now in the process of selling off its electricity assets too – the last of the states to do so. So I can’t see how state owned enterprises could get the capital to bring nuclear to Australia. I might be wrong but I need convincing. By the way, I have been listening to the arguments you are putting for a long time, by people who know a lot about it.
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What do we have to do to get clean electricity?
1. educate the population to reduce the irrational fears about nuclear energy
2. Establish a regulatory environment that has a low impact on the cost of electricity
3. Remove the investor risk premium
4. Avoid/Remove/Offset the ‘First of a Kind’ costs
How?
1. Establish a “Clean Energy” faculty in at least one university in each state
2. Establish “Clean Power Australia” – a government funded agency, that is independent of political interference, like the Reserve Bank of Australia. The terms of reference for ‘Clean Power Australia’ will be something like:
a. Define how Australia should proceed to get clean energy at a cost that is cheaper than dirty energy, (fund research as necessary to achieve this objective)
b. Develop detailed implementation plans
c. Provide policy advice to government
d. Establish and oversee the Australian regulatory authority for clean power.
3. The government shall remove investor risk premium by:
a. Removing all anti-competitive regulations such as RET, RECs, FiT, subsidies, tax and other incentives
b. Removing all legislative bans on nuclear and all other disincentives
c. Legislating that any future changes of laws or government regulations, implemented by any level of government, that disadvantage the generator will be compensated.
d. The government will have a large stake in the success of the ventures. This is necessary to convince the investors that the government will act to prevent public disruption. Delays will cost the government. Best practice risk management is for the party that is best able to control the risk to carry that risk. So, all cost of delays caused by public disruption, union strikes, etc will be compensated by the government.
4. The government shall carry the ‘First of a Kind’ costs. The justification for doing so is:
a. We have been doing so for renewable energy forever
b. Society caused the delay in implementing nuclear, so society, not just the users, should carry this cost
c. Society wants the clean energy, not just the users, so society should carry this cost
d. Society wanted the cheap coal fired power in the past and has now changed its mind. It wasn’t the users who changed their mind. So society should carry the cost of the change.
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COSTS OF NUCLEAR POWER PLANTS — WHAT WENT WRONG?
http://www.phyast.pitt.edu/~blc/book/chapter9.html
This might be of some use even if it has been posted before. :)
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