Environmental Effects

Economics of Nuclear Power

Case Study

Final Thoughts

Links of Interest

Economics of Nuclear Power

Many of the major ethical issues in the use of nuclear power revolve around economics. At the basic level, there are inherent, annual government expenditures being used for all aspects of the implementation of nuclear power. Money must be spent on the building, maintenance, disposal of waste, and disaster handling in each nuclear power plant. When these annual costs are multiplied by the large number of nuclear power plants in use in the United States today, the product is a large amount of government money being used on nuclear power. This section of our study will focus on the economic aspects surrounding the ethical issues in nuclear power.

Economic History

The initial motivation to create nuclear power plants was economic. “The oil price rises of 1973 made oil-fired generation uneconomic and the price of coal rose in response.” (Evans and Hope, 4) This rise in the price of the two major power sources of the time motivated the government to look for a cheaper source of power. According to Evans and Hope, without nuclear power, coal would be required to replace gas and fuel. This would create a large increase in the international coal trade that would require raising costs and prices to achieve equilibrium (4). This possible increase in the cost of coal coupled with the already sky-rocketing oil prices led to the use of nuclear power as an alternative power source. The wide spread use of nuclear power allows the continued use of coal where it is abundant without significantly increasing the international coal trade.

In the beginning this benefit of nuclear power seemed to outweigh its costs.

Physical Costs of Power

Nuclear power is more efficient than oil from the standpoint of power generated per unit of power used. Figure A is a break down of the costs of materials used to create one barrel of reactor fuel.

In 2004, the approx. US $ cost to get 1 kg of UO 2 reactor fuel

U 3O 8 :

8 kg x $45



7 kg U x $9



4.3 SWU x $105


fuel fabrication:

per kg


total, approx:

US$ 1110




Figure A (


This yields 3400 GJ thermal which gives 315,000 kWh, hence fuel cost: 0.35 c/kWh.

The total fuel cost is typically about one third of the cost for a coal fired power plant (

Another contributor to the cost of nuclear power is the internal cost of waste disposal. “For nuclear power plants any cost figures normally include spent fuel management, plant decommissioning and final waste disposal. These costs, while usually external for other technologies, are internal for nuclear power.” ( This implies that these costs are taken as costs to society, external costs, when dealing with other technologies. Pollution from coal and other forms of power is not paid for by the nuclear power, its cost is considered the damage to society. The fact that these costs are internal for a nuclear power plant implies that the plant spends money to deal with the costs instead of society paying for it. However, this implies that if the costs for nuclear power were treated as external costs, the damage to society would be too great; making it necessary for the costs to be external. Regardless, from a purely economic standpoint, these costs only result in about “10% of the overall cost per kWh.” (

In recent years, the overall monetary benefit of using nuclear power over alternative power sources has diminished. Figure B is a graph of the cost of nuclear power versus alternative power sources.

Figure B (

The graph shows that both nuclear and coal power plants continue on a steady decline and oil and gas power costs are on a recent incline due to decrease in resources. From an economic view, nuclear and coal power are the most cost effective power sources.

Accident Costs

Although governmental regulatory agencies and private companies work hard to take every precaution possible, when accidents do occur there is a large effect on the production of nuclear power globally and a devastating economic cost. If the accident is grave enough, a large cost can be inflicted on the local community surrounding the nuclear plant.

Even if there is little to no radiation released, the economic cost of lost production can be huge. When the Indian Point 2 nuclear reactor was temporarily shutdown, the average cost for replacement power was $800,000 per day or $35 million per month.1 All of this replacement power was bought from neighboring utilities at a 35% higher rate.2 With costs so high, it becomes a huge financial burden on the utility, causing the cost to be passed on to the consumer, “as part of its ‘fuel adjustment’ clause.”3 A Con Edison spokesman defined fuel adjustment as, “everything and anything that contributes to the configuration of costs.”4 Is it ethical for utilities to pass any cost alone onto customers even if utilities are directly responsible for price increases? Since many utility customers can only be serviced by one utility there is little to no competition among suppliers, which forces customers to pay almost any price. The only groups looking out for the customers' position are agencies like New Jersey’s Board of Public Utility Commissioners, who have the ability to take legal action that will help stop price increases.5 These agencies determine which costs are the responsibility of the utility and which are general cost changes that are self-serving to the utilities.

When analyzing the costs of nuclear power accidents, replacement power comprises a small amount of the total cost. Most of the cost comes from structural damage and radiation release, which can well exceed a base point of $1.5 billion.6 During the cleanup and reconstruction phase most plants remain non-operational for 4 years even if there are non-damaged reactors. Most if not all of the marginal costs of replacement will be passed onto consumers. Any nuclear accident will probably have a base clean-up cost of between $975 and $1034 million, which is excluding decommissioning and reconstruction costs and if there is any radiation leak to the surrounding area the plant will be closed indefinitely.7

Changes in national power production and changes in the cost of nuclear fuel are appropriate examples of an increase in the overall cost of power due to the fact that utility did not influence the price or take risks to health or safety. An example of where a company acted inappropriately was in 1976 where Con Edison took 120 days longer then scheduled to refuel a reactor and billed customers the additional costs. When reviewing the additional costs, New York State Public Service Commission spokesman Francis Rivett stated, “we later concluded that 54 days of the prolongation was due to mismanagement, and we ordered the company to refund, through the fuel adjustment clause, roughly $17 million in replacement power costs.”8 That was $17 million returned to customers because of the utility’s faulty management of the situation. Notice how the New York State Public Service Commission only found 54 of the 120 days the reactor was down due to bad management; the other 66 days were found to be outside of the utility's control and therefore was considered an uncontrollable cost that influenced the true cost of power production.

Cost Advantage

The cost advantage of nuclear power over other forms of power generation depends greatly on your location and specifically the availability of other resources around you. As many of the resources needed for power is exhausted or their byproducts are outlawed, nuclear power becomes a much more attractive alternative. An example would be coal, which is only economically attractive in countries where carbon emissions are cost-free such as China , the USA , and Australia .9 In fact, if environmental and health costs are included into the price of power produced by coal its market cost would double.10 This places countries in a situation where either a large up front cost can be spent on building nuclear facilities or money can be saved by using resources available but will cause the environment to pay the ultimate price.

The initial investment required to build a nuclear power plant is more then often compared to coal or gas power plants because of the special needs in construction and the incorporated safety features. When comparing the overnight construction costs, “which is defined as the total cost for building the plant as if it were all paid in one go,” nuclear power costs $1000 to $2000 per kW, which is similar to wind plants and much more than gas plants at $500 to $1000 per kW.11

In the USA alone roughly $100 billion has been spent on nuclear power plants that were never completed or finished over budget.12 Most if not all of this cost will be placed on the public without their knowledge. Unfortunately, since the life span of a nuclear power plant is only around 35 years, the 82 reactors operating will need to be decommissioned by 2014. If decommissioning costs 9% to 15% of the initial capital costs,13 the total cost to decommission these 82 “nuclear reactors could reach $1 trillion.”14 Of all the costs listed above this does not even include the spent fuel disposal costs, which have totaled to $18 billion in the USA alone.15

Nations are placed in an awkward position when deciding between an expensive power source and a cheaper power source that will deplete natural resources. Richer nations are in a more flexible position to choose power sources like nuclear power or wind power, while poorer nations are forced to use power sources such as coal or oil which are going to pollute the environment and will increase in cost as resources become depleted. While utilities in the United States use hydroelectric, coal, oil, and nuclear power, our government seems to focus a great deal of resources on nuclear power, since in the past 50 years roughly $145 billion has been spent in federal research and development of nuclear power.16

Nuclear power may have its benefits but between construction costs, spent fuel disposal, and decommissioning cost they become way too pricy for many nations which are forced to use cheaper power sources that will cause greater environmental harm.

Economic Future

In the future it is unclear as to whether nuclear power will remain dominant in power generated per unit of money. This is largely due to the fact that “[the] future competitiveness of nuclear power will depend substantially on the additional costs which may accrue to coal generating plants.” ( It is highly possible that the costs that are currently considered external by coal power plants will be required to be dealt with internally. Since nuclear power internalizes these costs, they are already included in the overall cost breakdown (see Figure B). If coal were to internalize these costs as well, it is clear that the graph of coal cost would increase if it were to be extended into the years beyond 2001.

It is difficult to predict which power source will be the most monetarily beneficial in the future. Technology could advance in any or all of the sources for generation of electricity. While it seems that nuclear power is currently and could remain the dominant power source, there are other factors, economic and otherwise, that must be taken into account. The fact that the cost of waste disposal is internalized for nuclear power implies that if those costs were made external, the costs to society would be too great. In order to fully analyze the monetary benefit of nuclear power, the future of nuclear waste must be taken into account. The topic of nuclear waste disposal is still under political debate. Also, the cost of nuclear disasters has not been taken into account because it is not an annual cost incurred to produce electricity. The overall internal and external cost of these accidents must also be taken into account to make some conclusion about the monetary benefit of the use of nuclear power.


1 Suntum, Lisa. "The Cost of Nuclear Power." The New York Times 23 May 2005, Late ed.: A4.

2 Wald, Matthew. "Cost of Nuclear Power." The New York Times 6 Nov 1980, Late City Final ed.: B3.

3 Wald, Matthew.

4 Wald, Matthew.

5 Wald, Matthew.

6 Evans, Nigel.

7 Evans, Nigel.

8 Wald, Matthew.

9 The Economics of Nuclear Power. Uraniun Information Centre Ltd. 23 May. 2005 <>.

10 The Economics of Nuclear Power.

11 "NEA Publication." European Nuclear Society e-news . 10 May 2005 <>.

12 Pennypacker, Mary. "Nuclear Power Closing Cloud Cost $1 Trillion." New York Times 4 March 1988, Late City Final ed.: A38.

13 The Economics of Nuclear Power. Uraniun Information Centre Ltd. 23 May. 2005 <>.

14 Pennypacker, Mary.

15 The Economics of Nuclear Power.

16 Suntum, Lisa.