Solar vs Nuclear Costs

8/7/2019 Solar vs Nuclear Costs

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Solar and Nuclear Costs

The Historic Crossover

Solar Energy is Now the Better Buy

20101998 2015

COST

$

$

John O. BlackburnSam Cunningham

July 2010

Prepared for


2/18

Contents

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Backdrop or Change . . . . . . . . . . . . . . . . . . . . . . . . . 5

The Sun is Changing the Game . . . . . . . . . . . . . . . . . . . . . 5

Who Pays or New Nuclear? . . . . . . . . . . . . . . . . . . . . . . . . 7

Witnessing the Crossover . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Jobs and Manuacturing in NorthCarolina . . . . . . . . . 10

Is the Public Ahead o the Utilities? . . . . . . . . . . . . . . . . . 10

Financing Solar Equipment . . . . . . . . . . . . . . . . . . . . . . . . 11

What About Subsidies? . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14Appendix A: Methodology . . . . . . . . . . . . . . . . . . . . . . . . 17

Appendix B: Nuclear plant cost estimatesand upward revisions per reactor . . . . . . . . . . . . . . . . . . 18

Jh o. Bacbr, PhD, Pressr Emeritus Ecnmics and rmer Chancer, Duke University. Dr. Backburn has cnducted research int energyefciency and renewabe energy ver a perid mre than thirty years. He has authred tw bks and numerus artices n the uture energy, and

has served n the Advisry Bards the Frida Sar Energy Center and the Bimass Research Prgram at the University Frida. He has testifedbere the NC Utiities Cmmissin in severa utiity dckets n eectricity suppy and demand, energy efciency, and renewabe energy.

sa Cha, Masters Envirnmenta Management candidate, Duke University. Mr. Cunningham's pressina and academic interests arecused n picy appicatins natura resurce ecnmics. He is an Ecnmics and Envirnmenta Studies graduate Emry University.

nC WARn: Wa Awar & Rc nwris a member-based nnprft tacking the acceerating crisis psed by cimate change angwith the varius risks nucear pwer by watch-dgging utiity practices and wrking r a swit Nrth Carina transitin t energy efciency and

cean pwer generatin. In partnership with ther citizen grups, NC WARN uses sund scientifc research t inrm and invve the pubic in key

decisins regarding their we-being.

NC WARN: Waste Awareness & Reductin Netwrk

PO Box 61051, Durham, NC 27715-1051 919-416-5077

www.ncwarn.rg


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summARySolar photovoltaic system costs have allen steadily or decades. They are projected to all evenarther over the next 10 years. Meanwhile, projected costs or construction o new nuclear plantshave risen steadily over the last decade, and they continue to rise.

In the past year, the lines have crossed in North Carolina. Electricity rom new solar installationsis now cheaper than electricity rom proposed new nuclear plants.

This new development has proound implications or North Carolinas energy and economic uture.Each and every stakeholder in North Carolinas energy sector citizens, elected ofcials, solar pow-er installers and manuacturers, and electric utilities should recognize this watershed moment.

Solar and nuclear coStS the hiStoric croSSover 3

Solar-Nuclear Kilowatt-Hour Cost Comparison

0

5

10

15

20

25

30

35

1995 2000 2005 2010 2015 2020 202

Year

2010CentsperkWh

Solar PV Nuclear Solar Trendline Nuclear Trendline

Figure 1: the Hioric Croover solar phoovolaic co are fallig a ew uclear co are riig. 1

The Solar PV least-squares trendline is ft to data points representing the actual cost o producing a kilowatt-hour in the year

shown through 2010 and or cost projections rom 2010 to 2020. The nuclear trendline is ft to cost projections made in the year

shown on the x-axis o eventual kilowatt-hour cost i projects reach completion. See complete methodology in Appendix A.

NUClEAR

SolAR PV


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State law requires that the development o the electricity system ollow a least-cost path andthat available resources be added as necessary. Less expensive resources are to be added rst,ollowed by more expensive ones, provided that system reliability is maintained. Energy ecien-cy, wind power, solar hot water (displacing electric water heating) and cogeneration (combined

heat and power), were already cheaper sources than new nuclear plants. Thisreport illustrates that solar photovoltaics (PV) have joined the ranks o lower-cost alternatives to new nuclear plants. When combined, these clean sourcescan provide the power that is needed, when it is needed.

The states largest utilities are holding on tenaciously to plans dominated bymassive investments in new, risky and ever-more-costly nuclear plants, whilethey limit or reject oers o more solar electricity. Those utilities seem oblivi-ous to the real trends in energy economics and technology that are occurringin competitive markets.

Everyone should understand that both new solar and new nuclear power will

cost more than present electricity generation costs. That is, electricity costswill rise in any case or most customers, especially those who do not institute substantial energyeciency upgrades. Power bills will rise much less with solar generation than with an increasedreliance on new nuclear generation.

Commercial-scale solar developers are already oering utilities electricity at 14 cents or less perkWh. Duke Energy and Progress Energy are limiting or rejecting these oers and pushing aheadwith plans or nuclear plants which, i ever completed, would generate electricity at much highercosts 1418 cents per kilowatt-hour according to present estimates. The delivered price tocustomers would be somewhat higher or both sources.

It is true that solar electricity enjoys tax benets which, at the moment, help lower costs to cus-tomers. However, since the late 1990s the trend o cost decline in solar technology has been so

great that solar electricity is ully expected to be cost-competi-tive without subsidies within the decade. Nuclear plants likewisebenet rom various subsidies and have so benetted through-out their history.

Now the nuclear industry is pressing or more subsidies. Thisis inappropriate. Commercial nuclear power has been with usor more than orty years. I it is not a mature industry by now,consumers o electricity should ask whether it ever will be com-petitive without public subsidies. There are no projections thatnuclear electricity costs will decline.

Very ew other states are still seriously considering new nuclearplants. Some have cancelled projects, citing continually risingcosts with little sign o progress toward commencing construction.Many states with competitive electricity markets are developingtheir clean energy systems as rapidly as possible. North Carolinashould be leading, not lagging, in the clean energy transition.

We call on Governor Perdue, the General Assembly, the EnergyPolicy Council and the N. C. Utilities Commission to investigatethese matters and see or themselves that a very important turn-ing point has been reached.

An average North Carolina homeowner cannow have a solar electricity system installedor a net cost ranging rom $8,200 to $20,000or more, depending on how much electricitythe homeowner wants to generate.Photo courtesy NOVEM (Netherlands Agency for Energy

and the Environment).

Here in Nrth Carina,

sar eectricity, nce

the mst expensive

the renewabes, has

becme cheaper than

eectricity rm new

nucear pants.


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tHe BACkdRop FoR CHAngeElectricity supply systems all over the worldare acing the most rapid changes in their op-erating environments and technologies since

the ormative years o the industry. A tide ochange is sweeping over the industry, one thatchallenges industry managers to stay abreasto these developments or risk presiding overcostly anachronisms. The era o build plants,sell power is over; the rapid changes under-way require a more agile, many-aceted ap-proach to meeting energy demand in a respon-sible manner.

For thirty years, increasing the eciency oelectricity use has been known to be a asterand cheaper alternative to building new powerplants. Energy eciency advances are work-ing their way into the marketplace and intoconsumer habits so that electricity demand ishardly growing at all. The accelerated adop-tion o energy-saving methods in the buildingindustry, in the manuacture o appliancesand lighting, and in retrotting existing build-ings means that annual electricity demand inhomes, businesses and public buildings soonwill begin a slow decline.2 The partial electri-

cation o transportation will open new marketsor electricity, but when used in vehicles, elec-tricity is much more ecient than ossil uels.The overall additional demand will be modest,3and can be accommodated at o-peak times,or even better, powered by solar installations.

The emergence o wind power as a relativelycheap source o electricity has urther compli-cated lie or the traditional generating indus-try. Those who think it too intermittent to beuseul have had to revise their opinions as suc-

cessively larger amounts o wind power havebeen absorbed into many utility systems. Care-ul modeling has shown that penetrations o20%, climbing to 30%, o overall electricity us-age can be accommodated mainly by rear-ranging the management o existing generationequipment rather than by building extensivebackup acilities.4

Combined heat and power (cogeneration) haslong been a means o generating electricity by

burning a uel or a pri-mary use, then using theletover heat or otherpurposes. Industries using

process heat have oundthis benecial or years.Commercial buildings withheating and cooling loadsnow also nd it economi-cal. Unortunately, thishighly ecient technologyis under-utilized in NorthCarolina. By comparison,coal and nuclear plants areextremely inecient; they

waste large amounts o heat two-thirds o theenergy content o the uels and consumeenormous quantities o water in the process.

tHe sun is CHAnging tHe gAmeBy 2009, energy eciency methods, combinedheat and power, wind generation and solar wa-ter heating had all challenged the traditionalbusiness model o build plants; sell poweravored by the big North Carolina utilities. Allare cheaper and can be put into service much

aster than building new ossil and nuclearpower plants.

Now, in 2010, comes the nal blow to the oldway o doing business or utilities. In manyplaces around the world, and here in North Car-olina, solar electricity, once the most expensiveo the renewables, has become cheaper thanelectricity rom new nuclear plants.

Figure 2 tracks the downward trend in solar PVelectricity costs rom 1998 to 2008. According

to researchers at the Lawrence Berkeley Na-tional Laboratory, solar photovoltaic systemcosts declined rom $12 per installed watt in1998 to $8 in 2008 on average a one-thirddecline in ten years. In 2009 and 2010, costsdeclined more rapidly as module prices ellsharply, bringing the 12-year system cost de-cline to 50%. At mid-2010, based on gures pro-vided by North Carolina installers, large sys-tems can produce electricity at 1214 cents orless per kilowatt-hour, while the middle range

Wind energy can complementsolar to oset the intermittencyo each technology. Several statesare developing o-shore windalong the eastern seaboard.


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or residential systems comes in at 1319 centsper kilowatt-hour, hence the average costshown in Figure 1 o 16 cents.5 The possibilityo selling renewable credits tilts the advantage

arther in the direction o solar electricity.

Experienced industry observers see photo-voltaic system costs continuing to decline inthe coming decade as the industry romcell makers to installers expands at a re-cord pace and moves rapidly along the typicalindustrial learning curve. Figure 1 illustratesthese projections rom 2010 through 2020.Present mid-range costs are 1419 cents perkilowatt-hour or rootop solar electric sys-tems, and approximately 14 cents or commer-

cial-scale systems. Sector-wide costs in 2020are projected to be 7.5 cents per kilowatt-hour.6

Similarly, solar water heating has an avoidedcost advantage over heating water with elec-tricity rom a new nuclear plant. Water heatingaccounts or 1525% o a typical homeownerspower bill.

In 2009 more than 7,000 megawatts (MW) osolar generating capacity was installed in theworld, o which hal was in Germany. In the U.S.,

429 MW was installed,with Caliornia and NewJersey as the leadingstates. North Carolina in-

stalled 8 MW.

Cumulative worldwideinstallations at the end o2009 passed the 22,000MW mark. Germany,Spain and Japan led intotal installed capacitywith 9000 MW in Germa-ny alone. The U. S gure stood at 1653 MW owhich 1102 MW was in Caliornia and 128 MW inNew Jersey. North Carolinas share was 13 MW.7

The PV market is poised to explode worldwideas a least-cost way to generate electricity.By comparison, no U.S. nuclear power plantshave been put into service in many years. Mostproposed reactors are in the range o 1100 to1200 MW.

The dramatic change acing the utility indus-try is highlighted by the observation that e-ciency gains, combined heat and power, andmost o the solar supply is located at homes,

$0

$2

$4

$6

$8

$10

$12

$14

$16

1998

n=39

0.2 MW

1999

n=180

0.8 MW

2000

n=217

0.9 MW

2001

n=1308

5.4 MW

2002

n=2489

15 MW

2003

n=3526

34 MW

2004

n=5527

44 MW

2005

n=5193

57 MW

2006

n=8677

90 MW

2007

n=12103

122 MW

2008

n=13097

197 MW

Installation Year

Ins

talledCost(2008$/WDC)

Capacity-Weighted Average

Simple Average +/- Std. Dev.

Fr 2: Fa a c fr ar pV, 19982008 (Wr, 2009).

These installed costs per watt o capacity, reported by the Lawrence Berkeley National Laboratory, are used tocompute kWh costs rom 19982008 in Figure 1.

Dramatic changes ace

the utiities as efciency-

cnservatin, cmbined

heat and pwer, and

mst sar pwer are

cated in hmes r

businesses, nt at

centraized pwer pants


7/18


businesses and public buildings, and is notsourced rom centralized power plants. Thepower industry and the energy economy asa whole are being driven toward this distrib-

uted power model.

WHo pAys FoR neW nuCleAR?A number o tradition-oriented utility execu-tives have persisted in pursuing nuclear plantlicenses. Some have even begun to raise ratesin the process, as Duke Energy did in 2009 inorder to cover pre-development costs o itsproposed Lee nuclear plant in South Carolina.

Utility CEOs are well aware o the enormous

risks and nancial commitments o this busi-ness strategy. That is why those who are stillconsidering new nuclear plants are seekingto shit costs to taxpayers through ederalloans and loan guarantees, and to electricityconsumers through state legislation allowingimmediate recovery o planning and nanc-ing charges through electric rates.9 In normalcircumstances, they would accumulate thesecosts and recover them in rates once plants arecompleted and actually producing electricity.

The economic irony is that rising rates inhibitthe projected demand on which the supposedneed or the plants is based. This is only the

beginning. Electricity rom new nuclear plants,i constructed, will continue to raise ratessince electricity rom nuclear plants is nowmore costly than alterna-

tive sources wind, solarand combined heat andpower generation. Nuclearpower is much more costlythan continued eciencygains in electricity use.

The 2007 North Carolina legislation which es-tablished renewable and eciency standardscontains a provision to protect consumersrom a too-rapid rise in rates that might re-sult rom developing expensive renewable

sources like solar electricity a solar costcap.10 It appears that what is needed insteadis a nuclear cost cap. We are being asked topay up ront or nuclear electricity that we maynever get.

The North Carolina Utilities Commissionshould instead require the utilities to use rate-payers money or new solar electricity romwhich consumers can benet immediately.

Since the much-heralded nuclear renaissance

began during the past decade, cost estimatesor new nuclear plants have risen dramatical-ly. Projects rst announced with costs in the

Fr 3: Ra a Crca c braw fr ar pV 2005 $ r wa a,20062015, u.s. dar f er.8

Total installed costs continue to decline or U.S. residential and commercial solar photovoltaic electricity. Crystalline silicon

module costs, which are the most signifcant portion o system cost, are expected to bottom-out around one dollar.

Nrth Carina needsa nucear cst cap,

nt the ne nw in

pace r sar pwer.


8/18


$2 billion range per reactor have seen severalrevisions as detailed planning proceeds andnumerous design and engineering problemshave emerged. The latest price estimates are

in the $10 billion range per reactor. Moreover, itwill be at least six years beore any plant couldbegin operating, and most projects are 10 to12 years rom possible completion. The West-inghouse AP 1000 reactor design, used in mostcurrent license applications, was being revisedor the seventeenth time by September 2009.(See Appendix B, Nuclear plant cost estimatesand upward revisions per reactor.)

Since capital costs represent some 80% o nu-clear electricitys generation costs, projected

kilowatt-hour prices have skyrocketed accord-ingly. Studies which showed expected elec-tricity costs o 7 cents per kilowatt-hour havebeen updated to show nuclear electricity costsexceeding 18 cents per kilowatt-hour. Trans-mission and distribution costs would raise thedelivered costs to residential customers to

22 cents per kilowatt-hour. This is twice theprice North Carolina residential customersnow pay to the big utilities.

In this analysis we ollow the work o MarkCooper, Senior Fellow or Economic Analy-sis at the Vermont Law Schools Institute orEnergy and the Environment (Cooper, 2009).Ater examining numerous utility estimatesand those o other analysts, he concludes thatnew nuclear plants will produce electricity atcosts o 1220 cents per kilowatt-hour (witha mid-range gure o 16 cents) at the plantsite, beore any transmission charges. Plantcost escalations announced by utilities sinceCoopers paper was published suggest that his

lower gure is optimistic. Accordingly, we usehere a range o 1418 cents, with a midpointo 16 cents. The 18 cents upper gure makesour ndings somewhat more conservative. Asshown in Figure 1, by the time plants could bebuilt prices are likely to be much higher.

Figure 4: nuclear power geeraio co operaig reacor compared o propoed reacor(Cooper, 2009).


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Clearly, new nuclear plants would generatepower at a higher cost than solar electricity.These costs have just reached this crossoverpoint in North Carolina in 2010, while nuclear

costs continue to rise and solar costs continueto all.

We urther project that nuclear power romnew plants would deliver residential electricityat 22 cents per kilowatt-hour and commercialelectricity at 1819 cents per kilowatt-hour, a-ter adding transmission and distribution costs.Homeowners and businesses could readilychoose on-site solar electricity as a cheaperalternative to new nuclear power.

Witnessing tHe CRossoVeRSolar electricity has numerous advantagesother than cost. Rootop solar can be installedin a ew days. Small incremental gains in totalgenerating capacity start producing electric-ity immediately. One does not have to waitten years or huge blocks o new capacity tocome online. Solar panels leave no radioac-tive wastes. They do not consume billions ogallons o cooling water each year. There areno national security issues with solar installa-

tions. An accident would be a small local aair,not a catastrophe.

Utilities like to argue that solarPV and wind are not a substituteor baseload power rom coal andnuclear plants because the sundoesnt shine all the time and the

wind doesnt blow all the time. That argu-ment, and indeed the distinction between in-termittent sources and baseload sources, israpidly becoming obsolete. Fortunately, solar

energy is strongest during periods o daily andseasonal peak demand, especially when sup-plemented by ice storage in air conditioningsystems.

When solar generated electricity is added to apower grid with wind, hydroelectric, biomassand natural gas generation, along with exist-ing storage capacity and smartgrid technology, intermittencybecomes a very manageable is-sue. Numerous studies in various

parts o the U.S. and elsewhere including most recently NorthCarolina have demonstratedthis point.13

Indeed, even the head o theFederal Energy Regulatory Com-mission now dismisses the needor new coal and nuclear power plants due toadvances in wind, solar and smart grid tech-nology that mitigate problems o distance andintermittency long associated with wind and

solar power.14

Hmewners and

businesses cud

readiy chsen-site sar eec-

tricity as a cheaper

aternative t new

nucear pwer.

Fr 5: sar hvac

rrc a.11

In the Southeast, nuclear utilitiessometimes claim that our climateis not conducive to solar.12 How-ever, this region is second only tothe Southwest in solar potential.Note also that New Jersey is aU.S. leader in implementing solarpower, even though it has a lessfavorable solar resource.


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The utilities long range orecasts indicate thatneither Duke Energy nor Progress Energy pro-pose to open nuclear plants until ater 2020.15This window o time can readily allow proven

energy-saving programs, customer cogenera-tion and renewable energies to urther developtoward providing most o the states electricityneeds.

JoBs And mAnuFACtuRing in NorthCARolinAEmployment in North Carolina has more to gainrom investment in solar electric and solar wa-ter installations than rom the same amount oinvestment in nuclear plant construction andoperation by a actor o three.16 The solarpower industry is poised to bring in new pro-duction acilities and create good jobs distrib-uted across the state. All that is required is orthe N.C. Utilities Commission to enorce its ownleast cost requirements.

Environment North Carolina, citing data romthe U.S. and abroad, estimates that raising thestates solar power production to 14% o totalelectricity by 2030 would create 28,000 perma-

nent high-quality jobs.

17

Encouraging the manu-acturing o solar components in-state by ex-tending manuacturing tax credits, or example would raise the number o jobs created inthis scenario to over 40,000. All told, the so-lar industry could provide billions o dollars opositive economic impact or North Carolina.

Nationwide, 6,000 high-quality jobs were cre-ated in the solar sector in 2007, according tothe Solar Energy Industries Association. Morethan 100 currently planned commercial-scale

solar energy projects represent potential orroughly 56,000 megawatts o electric power,over 100,000 construction jobs and 20,000 per-manent jobs.18

The ederal 30% tax credit or installing solarpower eective through 2016 is expectedto create 440,000 permanent jobs in the U.S.and spur $325 billion o private investment inthe solar industry (Navigant, 2008).

By comparison, two new reactors proposed orthe Shearon Harris plant by Progress Energywould concentrate jobs around Wake County,and Duke Energys proposed Lee Station reac-

tors would generate jobs in Cherokee County,South Carolina although North Carolina cus-tomers would absorb 70% o the cost and risk.19

is tHe puBliC AHeAdoF tHe utilities?The North Carolina public seems to under-stand the many advantages o renewable en-ergy and eciency investments. A recent pollby Elon University showed that 80% o the

public avored the development o solar andwind power.20

Regrettably, neither Duke Energy nor Prog-ress Energy seem interested in any additionalsolar purchases beyond the miniscule (two-tenths o one percent) and easily-reachedsolar requirement o North Carolinas Renew-able Energy and Energy Eciency PortolioStandards enacted in Senate Bill 3 in2007. That set-aside or solar hadbeen intended as a minimum level

that would help the industry devel-op, but the utilities have apparentlyinterpreted it as a maximum level be-yond which they need not go. Solarinstallers complain that Duke Energyhas turned down a host o competi-tively priced proposals, and thatProgress Energy generally considersonly small-scale projects to meet its0.2% solar requirement.21 The utilities appar-ently preer to pursue more expensive power

rom new nuclear plants.We must be clear that new solar and nuclearelectricity costs are both above most presentNorth Carolina electricity rates. Rates rom thestates two largest utilities, Duke Energy andProgress Energy, are 10.5 cents per kilowatt-hour or residential customers and 67 centsor commercial customers, while customers omunicipal systems and cooperatives already

A recent p

shwed that80% the

pubic avred

the devep-

ment sar

and wind pwer


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pay rates as high as 18 cents. Most rates will goup; that is unavoidable, but they will rise muchless in an eciency-solar-wind electricity uturethan they will in a nuclear-electricity uture.

FinAnCing solAR equipmentEven though long-term energy savings beginimmediately with rootop solar energy, anupront investment is required. Would-be so-lar buyers need nancing; they need accessto loans at reasonable rates o interest andmonthly payments that are manageable. Todate, some o the best nancing programsare the plans under which local governmentsborrow at tax-exempt rates, lend those undsto homeowners or solar equipment installa-tions, then collect the periodic payments withthe tax bill. Should the homeowner sell theproperty beore the loan is paid o, the solarsystem obligation remains with the property.This arrangement, the PACE (Property As-sessed Clean Energy) loan, originated in Berke-ley, Caliornia in 2008 and has spread rapidlyacross the country since then. In August 2009the North Carolina General Assembly gave au-thority or local governments to use this plan

but none has yet been announced.22

The emerging solar industry in North Carolinamust credit the constructive role played in re-cent years by NC GreenPower, an independentnonprot organization approved by the NCUtilities Commission that supports solar PVand other renewable energies by providing amarket or small-scale residential generation.Owners o small (less than 10 kW) solar PVsystems can sell their electricity to the grid ata guaranteed subsidized rate o 19 cents per

kilowatt-hour. This guarantee has not only cre-ated demand or PV systems rom a rst waveo consumers, it has also helped small-systemowners secure nancing by reducing the vari-ability and duration o system payback.

An arrangement in some states allows allsolar users to eed excess power to the grid,then buy it back at night at the same retailrate. In this way, the grid becomes an impor-tant storage mechanism, and many homes

and businesses can thereore sel-supplya high percentage o their total electricityneeds. Although on-site storage is not in-cluded in prices shown in this report, somehomeowners choose to add batteries so thatsolar electricity can be used when the sun isnot shining.

WHAt ABout suBsidies?As pointed out in the summary above, solarand nuclear costs given here refect the coststhat would actually be paid by consumers.They are net o a variety o nancial incentivesor each technology. This is as close as onecan get to an apples to apples comparison(see note 6). In the solar case, the incentivesare ederal and state tax credits. Nuclear pow-er incentives or subsidies are rarely collatedand published, so they are dicult to express

as costs per kilowatt-hour. Among the nuclearsubsidies:

The nuclear industry insists on taxpayer in-

surance against catastrophic accidents. The

Price-Anderson act caps the liability or an

accident at a level that now totals approxi-

mately $11 billion, which would be distrib-

uted among all reactor owners. Federal stud-

ies estimate that the damage rom non-worst

case accidents could exceed $500 billion.23

Various programs are growing around the nation thatallow rootop solar customers essentially to pay or

their systems through monthly energy savings.Photo courtesy Evergreen Power, Ltd.


12/18


Ten billion dollars has been expended over

two decades to license the Yucca Mountain

repository or used commercial uel rods,

but in 2010 the Obama administration is at-

tempting to cancel the project. That wastedsum was accumulated through utility bills,

so it was included in the kilowatt-hour cost

o nuclear power. To date there are no cred-

ible plans or cost estimates or managing

this highly radioactive waste or thousands

o years, but much or all o the outlay will be

borne by the ederal taxpayer.

The Department of Energys 2011 budget re-

quest includes $1.8 billion or nuclear power

44% o all energy R&D. This amount is

lower than in previous years, but high or a

decades-old industry that operates so e-

ciently, according to its supporters.24

The nuclear industry, well aware o the eco-nomic and nancial disasters o the 1980s, al-ready has successully transerred some costsand risks to consumers. It will not proceedwithout ederal loans, or at least loan guaran-tees, or the enormous borrowing that wouldbe necessary. This is because the nancing in-

stitutions, Wall Street in the popular press,will not lend or nuclear projects without tax-payer backing. This risk transer is necessarydue to scores o project cancellations and loandeaults experienced during the rst genera-tion o reactors.25

Credit rating agencies are weighing in on theuncertainty that nuclear development projectswill convert mountains o debt into viable in-vestments. A 2009 Moodys report warns outure rate shocks or electricity consumers

resulting rom bet-the-arm nuclear endeav-ors.26 The Institute or Southern Studies reportedthat as o July 2009 two o the 17 proposednuclear projects have had their constructionbonds rated as junk status and 13 others arerated as just one step above junk.

Most utilities have cancelled or delayed proj-ects due to soaring cost estimates, myriad de-sign problems, growing uncertainty about li-censing and construction and increasing

competition by clean technologies that arenow cheaper. For example, Entergy CEO WayneLeonard, in explainingwhy he suspended license

applications to build ournew reactors in Missis-sippi and Louisiana, saidthere are too many risksthe utility cannot control,especially uncertainty inconstruction costs.27

Still, many utilities hope to build new nuclearplants mostly with public money:

In 2005, the Bush administrations energy

bill included $18 billion in new subsidies, in-cluding loan guarantees, to incentivize utili-

ties to seek licenses or new nuclear plants.

This year the Obama administration went

several steps arther, upping the loan guar-

antee total to $54 billion, and quietly agree-

ing to even lend taxpayer unds or Plant

Vogtle. The Georgia plant might become the

frst project to receive a license possibly

late in 2011 to construct and operate a

new plant.

Some in Congress want to do even more. A

new analysis conducted or Friends o the

Earth shows that tax breaks totaling $9.7 bil-

lion to $57.3 billion (depending on the type

and number o reactors) would come on top

o proposed subsidies totaling $35.5 billion

in the Kerry-Lieberman bill. I this bill suc-

ceeds, nuclear plant owners might essential-

ly bear no risk.28

In 2007, North Carolina joined other south-

eastern states in passing legislation that al-lows power companies to pre-charge cus-

tomers or some o the costs o licensing

and building nuclear plants. Duke Energy

has signaled that it will soon seek even more

transer o nancial risks to North Carolina

customers, apparently through additional

Construction Work in Progress measures

that create an automatic pass-through o

costs to consumers without Duke Energy or

The utiities are turning

dwn r imiting sar

prpsas priced at rates

wer than pwer rm

new nucear pants.


13/18


Progress Energy having the costs reviewed

in a rate case beore the utilities commission.

North Carolinas current approach does notare well in comparison with that o otherstates. Twenty states have renewable porto-lio standards o 20% or more, compared to our12.5%. The ollowing examples are rom theDatabase o State Incentives or Renewables& Eciency.29

Hawaiis goal of 40% renewable power is

supplemented by an eciency goal o 30%

by 2030.

California, which will meet its 20% goal in

2010 or 2011, has an executive order, now

about to be reinorced by legislation, toraise this to 33% by 2030. This commitment

to renewable energy, added to existing hy-

droelectric output, will bring the states

renewable electricity to nearly hal o total

generation.

Colorado was ahead of schedule to meet its

20% goal, which was then raised to 30% by

2020.

New Jerseys Energy Master Plan earlier

called or 3200 MW o wind capacity and1500 MW o solar capacity all by 2020. In

2010, the solar requirement was increased

to approximately 4000 MW.

Alaska has adopted a renewable electricity

goal o 50%.

New York seeks a 15% efciency gain and a

30% share or renewable electricity by 2015.

Maines renewable electricity goal is 40% by

2017.

One reason North Carolina and most south-eastern states are lagging is that their utilitiesare granted monopoly service areas, whichexclude competition and create captive cus-tomer bases. In such regulated states, utili-ties are succeeding with legislative eorts totranser the nancial risks o nuclear plant con-struction to ratepayers, as noted above.

ConClusionMany U.S. utilities are nding solar and windenergy to be protable and preerable to risk-ing investments in new nuclear acilities. In

act, Duke Energy considers itsel a leader inclean technologies, and indeed is developingsignicant solar and wind energy projects but those projects are in other states whereDuke must compete or market share.

For many years the U.S. nuclear power indus-try has been allowed to argue that there isno alternative to building new nuclear plants.This is just not true. It is time or the news me-dia and the public to see the compelling evi-dence that clean, ecient energy is the pathorward and to make sure their elected repre-sentatives hear this message repeatedly.

North Carolina aces an opportunity to join thecritical global transition to clean, aordable en-ergy. Building new nuclear plants would com-mit North Carolinas resources in a way thatimpedes the shit to clean energy or decades.

We must make decisions now that allow us tolook back at the spring o 2010, when solar en-ergy became cheaper than new nuclear plants,

as the time when North Carolina changed itsuture.


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notes1 Cooper, Mark. The Economics o Nuclear Reac-

tors: Renaissance or Relapse? Institute or Energyand the Environment, Vermont Law School. June2009.

Wiser, Ryan, Galen Barbose, Carla Peterman, andNaim Darghouth. Tracking the Sun II: The InstalledCost o Photovoltaics in the U.S. rom 19982008.Lawrence Berkeley National Laboratory, October2009. .

Projected solar electricity costs, 2010 to 2020,were based on:Bradord, Travis. Solar Revolution: The EconomicTransormation o the Global Energy Industry. MITPress, September 2006.

Denholm, Paul, Robert M. Margolis, and Ken

Zweibel. Potential Carbon Emissions Reductionsrom Solar Photovoltaics by 2030. Tackling ClimateChange in the U.S.: Potential Carbon Emissions Reduc-tions rom Energy Efciency and Renewable Energyby 2030. Ed. C. F. Kutscher. CH-640-41271. Boulder,CO: American Solar Energy Society, 2007. 91-99.

International Energy Agency. Technology Road-map, Solar Photovoltaic Energy. May 2010.

Teske, Sven, Arthouros Zervos, Christine Lins, andJosche Muth. Energy [R]evolution: A SustainableEnergy Outlook. European Renewable EnergyCouncil and Greenpeace International. June 2010.15 June 2010 .

United States Department o Energy Solar EnergyTechnologies Program. Solar Energy IndustryForecast: Perspectives on U.S. Solar MarketTrajectory. 27 May 2008. 11 June 2010.

Also consulted were:Appleyard, David. PV Global Outlook: A BrightFuture Shines on PV. Renewable Energy World,4 June 2010. 14 June 2010 .

China Still Holds Commanding Lead in GlobalClean Tech Race. GreenBiz.com. 16 March2010. 7 June 2010 .

Helman, Christopher. A Competitive Boost orSolar Energy. Forbes.com. 25 November 2009.7 June 2010 .

Kerastas, John. Solar: The race or the lowestcost per watt. Green Manuacturer. 2010. 10 June2010 .

2 Caliornia began a serious eort to increase energyeciency in the 1970s and never stopped. Asa result, its per capita electricity consumptionhas barely changed in the years since. The aver-age annual eciency gain is around 1.5%. Otherstates, starting later, have achieved similar results.Nationwide, building codes are making commercialand residential buildings more energy-ecient.Federal, state and local government buildings arereceiving special attention. Stimulus unds haverecently been applied to weatherization projects.North Carolinas building code decreased the elec-

tricity consumption o new residences by 19% andurther tightening measures are nearing adoption.

3 The Chevrolet Volt, by no means the most energy-ecient vehicle, is expected to go ve miles on1 kilowatt-hour the equivalent o 180 miles pergallon.

4 Iowa now generates 17-20% o its electricity romwind turbines. Some o this capacity is soldout-o-state and the rest is integrated into the stateenergy mix.

Zavadil, Robert. National Transmission Issuesor Wind: A Perspective. EnerNex Corporation.

Nebraska WindPower 2009, 9-10 November, 2009..

GE Energy, Western Wind and Solar IntegrationStudy. Prepared or The National RenewableEnergy Laboratory. May 2010. .

5 Wiser, Ryan, et al. Tracking the Sun II: TheInstalled Cost o Photovoltaics in the U.S. rom1998-2008. Lawrence Berkeley National Labora-

tory, Environmental Energy Technology Division.October 2009.

6 Solar PV cost per watt or per kilowatt gures aretranslated into kilowatt-hour costs with respect tothe ollowing parameters: 18% capacity actor, 25-year period o cost amortization, and 6% borrowingrate. Both the 30% Federal and 35% North Carolinatax credits have been applied where appropri-ate. See Appendix A or a thorough explanation omethodology.


15/18


7 Solar Energy Industry Association. U. S. SolarIndustry Year in Review. 2009.

Solarbuzz. 2010 Global PV Industry Report. 2010.

REN21: Renewable Energy Policy Network or the

21st Century. Renewables Global Status Report.2009

8 United States Department o Energy, Solar EnergyTechnologies Program. Solar Energy IndustryForecast: Perspectives on U.S. Solar MarketTrajectory. 27 May 2008.

9 The rate increase that Duke Energy sought in its2009 ling was approved in part and took eecton 1 January, 2010. The costs sought to be recov-ered contained $160,000,000 related to the twoproposed reactors at the William Lee site in SouthCarolina.

10 N.C. Session Law 2007-397, Senate Bill 3.11 United States Department o Energy, National

Renewable Energy Laboratory. Solar Photovoltaic(PV) Resource Potential. 29 April 2003. 9 June2010 .

12 Newkirk, Margaret. Solar industry challengesGeorgia Power. The Atlanta Journal-Constitution.13 June 2010. 21 June 2010 .

13 Eastern Wind Integration and Transmission

Study, prepared or the National RenewableEnergy Laboratory, Enernex Corporation.January, 2010.

Western Wind and Solar Integration Study,prepared or the National Renewable EnergyLaboratory, GE Energy. May, 2010.

Blackburn, John. Matching Utility Loads withSolar and Wind Power in North Carolina: Dealingwith Intermittent Electricity Sources. Institute orEnergy and Environmental Research. March 2010.

Similar studies are underway at Stanord Univer-sity and in Europe.

14 OGrady, Eileen. U.S. utilities, regulator disagreeon generation. Reuters. 6 May 2009. 23 June 2010.The nations top power industry regulator onTuesday suggested that U.S. utilities dont need tobuild big nuclear or coal-fred power plants to fllthe nations uture power supply needs. Instead, JonWellingho, chairman o the Federal Energy Regula-tory Commission, said uture electricity demandgrowth can be met with a low-emission supply romwind, solar and other renewable sources, combined

with more efcient use o all sources o electricity.We have the potential in the country, we just haveto go out and get it, Wellingho said at a brie-ing with reporters at the American Wind EnergyAssociations conerence in Chicago, monitored bytelephone.

15 Progress Energy Carolinas Integrated ResourcePlan. Progress Energy Carolinas, Inc. 1 September2009.

Duke Energy Carolinas Integrated Resource Plan(Annual Report). Duke Energy Carolinas, Inc.1 September 2009.

16 Garrett-Peltier, Heidi. $1 Million = More jobs orgreen industries. Political Economy ResearchInstitute, University o Massachusetts Amherst.

17 Madsen, Travis and Elizabeth Ouzts. Working

With the Sun: How Solar Power Can Protect NorthCarolinas Environment and Create New Jobs.Environment North Carolina, Research & PolicyCenter. May 2010. 11 June 2010 .

18 Navigant Consulting, Inc. Economic Impacts oExtending Federal Solar Tax Credits. 15 Septem-ber 2008. 22 June 2010 .

19 Duke Energy serves approximately 2.4 millioncustomers across 24,000 square miles o NorthCarolina and South Carolina. O this total, roughly70% o Duke Energys ratepaying customers residein North Carolina.

20 Elon University Poll. 1 March 2010. 21 June 2010..

21 Downey, John and Susan Stabley. Duke Energyssolar eort clouding growth? Charlotte BusinessJournal28 May 2010, 1+.

22 North Carolina PACE Financing. PACE Financ-ing PACE Program Inormation. 2010. 17 June2010 .

23 Brookhaven National Laboratory. SevereAccidents in Spent Fuel Pools in Support oGeneric Saety Issue 82. NUREG/CR-4982. 1997.

24 The U.S. Department o Energys Fiscal Year 2011Budget Request. Analysis by Robert Alvarez,Senior Scholar, Institute or Policy Studies.February 2010.


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25 United States Nuclear Regulatory Commission.2009-2010 Inormation Digest. NUREG-1350,Vol. 21. August 2009.

26 The Institute or Southern Studies. Nuclear plans

hurting power companies credit ratings. July2009. 15 June 2010 .

27 Entergy says nuclear remains costly. Reuters.25 May 2010. 15 June 2010 .

28 Koplow, Doug. Massive tax subsidies to nuclearin Kerry-Lieberman legislation. Friends o theEarth. 17 June 2010. 22 June 2010. .

29 DSIRE: Database o State Incentives or

Renewables & Eciency. 22 June 2010.


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Appendix A: metHodologyThe conclusions o this report depend upon a cost per kilowatt-hour comparison between elec-tricity generated by nuclear reactors and solar photovoltaic systems both net o subsidies.The authors o this report have implemented a methodology to derive kilowatt-hour (kWh) costs

rom project installation costs in a transparent manner.

Historical installation costs (per watt) were collected rom solar industry sources and publicresearch organizations most notably the Lawrence Berkeley National Laboratory. Present in-stalled costs or solar generating capacity were calculated by collecting installed cost data romNorth Carolina installers. Future cost projections were sampled rom published industry analysesand third-party studies (see citations or Figure 1). The authors made urther projections rom2010 to 2015 by applying a regular rate o decline to the Department o Energy Solar AmericaInitiative base projections or 2010. Dollar amounts are reported in 2010$.1

For kWh prices o nuclear generated electricity rom 20012008, the authors rely on the Cooper(2009) study o nuclear price trends. Nuclear kWh price projections rom 20092020 are made by

applying a 1.67% annual price level increase to the average o Coopers 2008 projections.2

Reer toAppendix B or the purpose o comparing this conservative estimate o nuclear price escalationto recently observed trends.

The authors derived solar cost per kWh using the ollowing calculation:

Capacity actor indicates the percentage o hours in a year that a solar installation generateselectricity output. A reasonable industry standard or North Carolina is 18%, given the statessolar insolation prole. This gure will vary slightly as a unction o site and module specics including shading, roo pitch, and whether or not the photovoltaic unit includes a sun trackingdevice. Beore kWh calculations were made, the authors adjusted actual generating capacity bya derating actor (15%) to refect the line-loss that occurs when a central inverter converts directcurrent (DC) to alternating current (AC) or use. 15% is a consensus derating actor, althoughinterviewed installers cited rapid improvement in inverter eciency and/or the use o micro-inverters on the back o each PV panel both o which are limiting line-loss to less than 10%and as little as 3%.

Amortization actor refects the annual payment due on each borrowed dollar o investment. Theamortization actor, or given parameters borrowing rate (i) and amortization period in years (n),is calculated:

Capital costs or solar generation were calculated with a 6% borrowing rate and a 25-year amor-tization period. Standard solar modules are warrantied or 25 years.

A 30% Federal tax credit and a 35% North Carolina tax credit were applied to the capital cost toreach a net cost per kWh.


Project Cost ($) Amortization FactorCapital Cost ($ per kWh) =

Generating Capacity (kW) Capacity Factor (%) 8760 hours

iAmortization Factor =

1 (1 + i)n


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Example: 3 kW residential solar installation, $6/watt installed cost, 6% borrowing rate, 25-yearamortization period, 18% capacity actor, 15% derating actor.

Taking 30% and 35% Federal and state tax credits yields a net system cost o $8,190 and a netproduction cost o 15.9/kWh.

1 The U.S. Department o Commerce Bureau o Economic Analysis reports that the index or gross private domes-tic investment has increased rom 89.947 in 2000 to 106.623 in 2009 (base year 2005 = 100). Projections madein 2005$ were adjusted to 2010$ using the 6.623% increase in the price o gross private domestic investment.

2 The same BEA report indicates an annual 1.67% price increase rom the year 2000 index to the year 2009 index.

$18,000 0.078227= 35.0Cents / kWh =

(3 kW 0.85) 18% 8760 hours

Appendix B: nuCleAR plAnt Cost estimAtes

And upWARd ReVisions peR ReACtoRu aprjc

Racrpa

yar fea

Racr Caac(mW)

C r Racr(B $)

Frida Pwer & light

Turkey Pint (Fl)2

2007 1550 9.00

2010 1550 12.51

Prgress Energy

Shearn Harris 2 & 3 (NC)2

2008 1100 2.20

2008 1100 4.60

Prgress Energy

levy (Fl)2

2009 1105 8.50

2010 1105 11.25

CPS

Suth Texas Prject2

2007 1358 7.10

2009 1358 9.10

S. Carina Eec. & Gas

V.C. Summer (SC)2

2008 1117 4.90

2009 1117 5.70

2010 1117 6.25

Duke Energy

Wiiam lee (SC)2

2005 1117 2.003.00

2009 1117 5.60

PPl

Be Bend (PA)1

2008/09 1600 4.00

2010 1600 13.0015.00

TVA

Beente (Al)2

2007 1100 7.10

2008 1100 8.75

Atmic Energy Canada, ltd.

Daringtn*2

2007 1200 3.48

2009 1200 12.96

Cnsteatin Energy

Cavert Cis (MD)1

2005 1600 2.00

2007 1600 5.00

2008 1600 9.60

*Project cancelled due to cost escalation.

NOTE: Utilities have been reluctant to disclose nuclear plant estimates, and have done so on dierent bases. Some

include fnancing costs and escalation during construction; some are not at all current. We have used these estimatesas supporting evidence to the Cooper report.

Documents

Solar vs Nuclear Costs