Blackburn2010_Solar and nuclear cost Historic crossover_DukeUniversity

8/7/2019 Blackburn2010_Solar and nuclear cost Historic crossover_DukeUniversity

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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


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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 . . . . . . . . . . . . . . . . . . 19

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 919-416-5077www.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.

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 1) data points representing the actual cost o producing a kilowatt-hour in the year

shown through 2010 in the US, 2) 2010 costs rom North Carolina installers, and 3) national cost projections rom 2010 to 2020.

The nuclear trendline is ft to national 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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4 solar and nuclear cosTs

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 rstollowed 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 plantsThis report illustrates that solar photovoltaics (PV) have joined the ranks olower-cost alternatives to new nuclear plants. When combined, these cleansources can 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 oblivious 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 wil

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 in North Carolina are already oering utilities electricity at 14cents or less per kWh. Duke Energy and Progress Energy are limiting or rejecting these oers andpushing ahead with plans or nuclear plants which, i ever completed, would generate electric-ity at much higher costs 1418 cents per kilowatt-hour according to present estimates. Thedelivered price to customers would be somewhat higher or both sources.

It is true that solar electricity enjoys tax benets which, at the moment, help lower costs tocustomers. 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-competitive without subsidies withinthe decade. Nuclear plants likewise benet rom various subsidies and have so benettedthroughout their history.

Now the nuclear industry is pressing or more subsidies. Thisis inappropriate. Commercial nuclear power has been withus or more than orty years. I it is not a mature industry bynow, consumers o electricity should ask whether it ever wilbe competitive without public subsidies. There are no projections that nuclear electricity costs will decline.

Very ew other states are still seriously considering new nu-

clear plants. Some have cancelled projects, citing continuallyrising costs with little sign o progress toward commencingconstruction. Many states with competitive electricity markets are developing their clean energy systems as rapidly aspossible. North Carolina should be leading, not lagging, in theclean 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 importantturning 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 NC Solar Center.

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 in the U.S. rom 1998 to 2008.

According to researchers at the LawrenceBerkeley National Laboratory, solar photo-voltaic system costs declined rom $12 per in-stalled watt in 1998 to $8 in 2008 on average aone-third decline in ten years. In 2009 and 2010,costs declined more rapidly as module pricesell sharply, bringing the 12-year system costdecline to 50%. At mid-2010, based on guresprovided 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 systemscomes in at 1419 cents perkilowatt-hour, hence theaverage cost shown in Fig-

ure 1 o 16 cents.5 The pos-sibility o selling renewablecredits tilts the advantagearther in the direction osolar electricity.

Experienced industry ob-servers see photovoltaicsystem costs continuing to

decline in the coming decade as the industry rom cell makers to installers expands at a re-cord pace and moves rapidly along the typical

industrial 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 heating

accounts 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 theU.S., 429 MW was installed, with Caliornia andNew Jersey as the leading states. North Carolina installed 8 MW.

Cumulative worldwide installations at the endo 2009 passed the 22,000 MW mark. GermanySpain and Japan led in total installed capacitywith 9000 MW in Germany alone. The U. S gurestood at 1653 MW o which 1102 MW was inCaliornia and 128 MW in New Jersey. North

Carolinas share was 13 MW.7

The PV market is poised to explode worldwideas a least-cost way to generate electricityBy 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 industry is highlighted by the observation that eciency gains, combined heat and power, and

$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 h u.s., 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.


7/20


most o the solar supply is located at homes,businesses and public buildings, and is notsourced rom centralized power plants. Thepower industry and the energy economy as

a 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 or NorthCarolina customers in 2009 in order to coverpre-development costs o its proposed Leenuclear plant in South Carolina.

Utility CEOs are well aware o the enormousrisks and nancial commitments o this busi-ness strategy. That is why those who are stillconsidering new nuclear plants are seeking toshit costs to taxpayers through ederal loansand loan guarantees, and to electricity consum-ers through state legislation allowing immedi-ate recovery o planning and nancing chargesthrough electric rates.9 In normal circumstanc-es, they would accumulate these costs and re-cover them in rates once plants are completed

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 thebeginning. New nuclear plants, i constructed,

will continue to raise rates since their electric-ity will be more costly thanalternative sources wind,solar and combined heatand power generation. Nu-clear power is much morecostly than continued e-ciency gains in electricityuse.

The 2007 North Carolina legislation which es-tablished renewable and eciency standards

contains a provision to protect consumersrom a too-rapid rise in rates that might re-sult rom developing expensive renewablesources like solar electricity a solar costcap.10 It appears that what is needed insteadis a nuclear cost cap. Ratepayers are beingasked to pay up ront or nuclear electricitythat they may never get.

The North Carolina Utilities Commissionshould instead require the utilities to use rate-payers money or new solar electricity rom

which consumers can benet immediately.

Fr 3: Ra a Crca c braw fr ar pV, 20062015, u.s. darf 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 needs

a nucear cst cap,

nt the ne nw in

pace r sar pwer.


8/20


Since the much-heralded nuclear renaissancebegan during the past decade, cost estimatesor new nuclear plants have risen dramatically.Projects rst announced with costs in the $2

billion range per reactor have seen several re-visions as detailed planning proceeds and nu-merous design and engineering problems haveemerged. The latest price estimates are in the$10 billion range per reactor. Moreover, it willbe at least six years beore any plant could be-gin operating, and most projects are 10 to 12years rom possible completion. The Westing-house 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, projectedkilowatt-hour prices have skyrocketed accord-ingly. Studies which showed expected elec-tricity costs o 7 cents per kilowatt-hour have

been updated to show nuclear electricity costsexceeding 18 cents per kilowatt-hour. Transmission 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 Analysis 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 (with

a mid-range gure o 16 cents) at the plantsite, beore any transmission charges. Plantcost escalations announced by utilities sinceCoopers paper was published suggest that hislower gure is optimistic. Accordingly, we usehere a range o 1418 cents, with a midpointo 16 cents. The 18 cents upper gure makes

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


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our ndings somewhat more conservative. Asshown in Figure 1, by the time plants could bebuilt prices are likely to be much higher.

Clearly, new nuclear plants would generate pow-

er at a higher cost than solar electricity. Thesecosts have just reached this crossover point in

North Carolina in 2010, while nuclear costs con-tinue to rise and solar costs continue to 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 readily

choose 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 withsolar installations. An accidentwould be a small local aair, nota catastrophe.

Utilities like to argue that solarPV and wind are not a substitute

or baseload power rom coal and nuclearplants because the sun doesnt shine all thetime and the wind doesnt blow all the time.That argument, and indeed the distinction be-

tween intermittent sources andbaseload sources, is rapidly be-coming obsolete. Fortunately,solar energy is strongest duringperiods o daily and seasonalpeak demand, especially whensupplemented by ice storage inair conditioning systems.

When solar generated electric-ity is added to a power grid withwind, hydroelectric, biomass and

natural gas generation, along with existing stor-age capacity and smart grid technology, in-termittency becomes a very manageable issue.Numerous studies in various parts o the U.S.and elsewhere including most recently NorthCarolina have demonstrated this point.13

Indeed, even the head o the Federal EnergyRegulatory Commission now dismisses theneed or new coal and nuclear power plantsdue to advances in wind, solar and smart gridtechnology that mitigate problems o distance

and intermittency long associated with windand solar power.14

Hmewners and

businesses cud

readiy chse

n-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 2020.15

This window o time can

readily allow proven energy-saving programs, customercogeneration and renewableenergies to urther developtoward providing most o thestates electricity needs.

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 total

electricity 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. More

than 100 currently planned commercial-scalesolar 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 Countyand Duke Energys proposed Lee Station reac-

tors would generate jobs in Cherokee CountySouth Carolina although North Carolina cus-tomers would absorb 70% o the cost and risk.1

is tHe puBliC AHeAdoF tHe utilities?The North Carolina public seems to under-stand the many advantages o renewable energy and eciency investments. A recent polby Elon University showed that 80% o thepublic avored the development o solar and

wind power.20

Regrettably, neither Duke Energy nor Progress Energy seem interested in any additionasolar purchases beyond the miniscule (twotenths o one percent) and easily-reached solar requirement o North Carolinas RenewableEnergy and Energy Eciency Portolio Stan-dards enacted in Senate Bill 3 in 2007. Thatset-aside or solar had been intended as aminimum level that would help the industrydevelop, but the utilities have apparently

interpreted it as a maximum level beyondwhich they need not go. Solar installers com-plain that Duke Energy has turned down ahost o competitively priced proposals,andthat Progress Energy generally considers onlysmall-scale projects to meet its 0.2% solar requirement.21 The utilities apparently preerto pursue more expensive power rom newnuclear 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 alreadypay 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.

A recent p shwedthat 80% the pubicavred the devep-ment sar andwind pwer.


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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 planbut none has yet been announced.22

The emerging solar industry in North Carolinamust credit the constructive role played inrecent years by NC GreenPower, an indepen-dent nonprot organization approved by the

NC Utilities Commission that supports solarPV and other renewable energies by provid-ing a market or small-scale residential genera-tion. Owners o small (less than 10 kW) solarPV systems can sell their electricity to the gridat a guaranteed subsidized rate o 19 cents perkilowatt-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 andbusinesses can thereore sel-supply a highpercentage o their total electricity needs. Al-though on-site storage is not included in pric-es shown in this report, some homeownerschoose to add batteries so that solar electric-ity can be used when the sun is not 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 expressas 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

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 wasted

sum was accumulated through utility bills,

so it was included in the kilowatt-hour cost

Various programs are growing around the nation thatallow rootop solar customers essentially to pay ortheir systems through monthly energy savings.Photo courtesy Evergreen Power, Ltd.


12/20


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 costs

and risks to consumers. It will not proceedwithout ederal loans,or at least loan guaran-tees, or the enormousborrowing that wouldbe necessary. This isbecause the nancing in-stitutions, Wall Streetin the popular press,will not lend or nuclear

projects without taxpayer backing. This risk

transer is necessary due to scores o projectcancellations and loan deaults experiencedduring the rst generation 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 consumersresulting rom bet-the-arm nuclear endeav-ors.26 The Institute or Southern Studies report-

ed that as o July 2009 two o the 17 proposed

nuclear 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, myriaddesign problems, growing uncertainty aboutlicensing and construction and increasingcompetition by clean technologies that arenow cheaper. For example, Entergy CEO WayneLeonard, in explaining why he suspended

license applications to build our new reactorsin Mississippi and Louisiana, said there aretoo many risks the utility cannot control, especially uncertainty in construction 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 guaran

tee total to $54 billion, and quietly agreeing

to even lend taxpayer unds or Plant VogtleThe 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 additiona

Construction Work in Progress measures

that create an automatic pass-through o

costs to consumers without Duke Energy or

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 the

The utiities are turning

dwn r imiting sar

prpsas priced at rates

wer than pwer rm

new nucear pants.


13/20


Database 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, to

raise 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% by2020.

New Jerseys Energy Master Plan earlier

called or 3200 MW o wind capacity and

1500 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 wind

energy to be protable and preerable to risk-

ing investments in new nuclear acilities. In

act, Duke Energy considers itsel a leader in

clean technologies, and indeed is developing

signicant solar and wind energy projects

but those projects are in other states where

Duke must compete or market share.

For many years the U.S. nuclear power indus-

try has been allowed to argue that there is

no 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 the

critical global transition to clean, aordable en-

ergy. Building new nuclear plants would com-

mit North Carolinas resources in a way that

impedes the shit to clean energy or decades.

We must make decisions now that allow us to

look back at the spring o 2010, when solar en-

ergy became cheaper than new nuclear plants,as the time when North Carolina changed its

uture.


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notes

1 Cooper, Mark. The Economics o NuclearReactors: Renaissance or Relapse? Institute

or Energy and the Environment, Vermont LawSchool. June 2009.

Wiser, Ryan, Galen Barbose, Carla Peterman,and Naim Darghouth. Tracking the Sun II:The Installed Cost o Photovoltaics in the U.S.rom 19982008. Lawrence Berkeley NationalLaboratory, October 2009. .

Projected solar electricity costs, 2010 to 2020,were based on:Bradord, Travis. Solar Revolution: The Eco-

nomic Transormation o the Global EnergyIndustry. MIT Press, September 2006.Denholm, Paul, Robert M. Margolis, and KenZweibel. Potential Carbon Emissions Re-ductions rom Solar Photovoltaics by 2030.Tackling Climate Change in the U.S.: Potential

Carbon Emissions Reductions rom Energy

Efciency and Renewable Energy by 2030.Ed. C. F. Kutscher. CH-640-41271. Boulder, CO:American Solar Energy Society, 2007. 91-99.

International Energy Agency. Technology

Roadmap, Solar Photovoltaic Energy.May 2010.

Teske, Sven, Arthouros Zervos, ChristineLins, and Josche Muth. Energy [R]evolution:A Sustainable Energy Outlook. EuropeanRenewable Energy Council and GreenpeaceInternational. June 2010. 15 June 2010.

United States Department o Energy Solar

Energy Technologies Program. Solar EnergyIndustry Forecast: Perspectives on U.S. SolarMarket Trajectory. 27 May 2008. 11 June 2010.

Also consulted were:Appleyard, David. PV Global Outlook:A Bright Future Shines on PV. RenewableEnergy World, 4 June 2010. 14 June 2010.

China Still Holds Commanding Lead in GlobaClean Tech Race. GreenBiz.com. 16 March

2010. 7 June 2010 .

Helman, Christopher. A Competitive Boostor Solar Energy. Forbes.com. 25 Novem-ber 2009. 7 June 2010 .

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

2 Caliornia began a serious eort to increaseenergy eciency in the 1970s and neverstopped. As a result, its per capita electric-ity consumption has barely changed in theyears since. The average annual eciencygain is around 1.5%. Other states, start-ing later, have achieved similar results.Nationwide, building codes are makingcommercial and residential buildings

more energy-ecient. Federal, state andlocal government buildings are receiv-ing special attention. Stimulus unds haverecently been applied to weatherizationprojects. North Carolinas building codedecreased the electricity consumption onew residences by 19% and urther tight-ening measures are nearing adoption.

3 The Chevrolet Volt, by no means the mostenergy-ecient vehicle, is expected togo ve miles on 1 kilowatt-hour the

equivalent o 180 miles per gallon.

4 Iowa now generates 17-20% o its electricityrom wind turbines. Some o this capacity issold out-o-state and the rest is integratedinto the state energy mix.

Zavadil, Robert. National TransmissionIssues or Wind: A Perspective. EnerNexCorporation. Nebraska WindPower 2009,9-10 November, 2009.


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Powerpoints/Monday%20Track%20A/Transmission%20issues/Zavadil/National_Wind_Transmission_Issues_-_A_Perspective_-_RZ.ppt>.

GE Energy, Western Wind and Solar Integra-tion Study. Prepared or The National Renew-able Energy Laboratory. May 2010. .

5 Wiser, Ryan, et al. Tracking the Sun II:The Installed Cost o Photovoltaics in theU.S. rom 1998-2008. Lawrence BerkeleyNational Laboratory, Environmental En-ergy Technology Division. October 2009.

6 Solar PV cost per watt or per kilowattgures are translated into kilowatt-hourcosts with respect to the ollowing param-eters: 18% capacity actor, 25-year periodo cost amortization, and 6% borrowingrate. Both the 30% Federal and 35% NorthCarolina tax credits have been appliedwhere appropriate. See Appendix A or athorough explanation o methodology.

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

Solarbuzz. 2010 Global PV IndustryReport. 2010.

REN21: Renewable Energy Policy Net-work or the 21st Century. Renew-ables Global Status Report. 2009

8 United States Department o Energy, SolarEnergy Technologies Program. Solar En-ergy Industry Forecast: Perspectives on U.S.Solar Market Trajectory. 27 May 2008.

9 The rate increase that Duke Energy sought inits 2009 ling was approved in part and tookeect on 1 January, 2010. The costs soughtto be recovered contained $160,000,000related to the two proposed reactors atthe William Lee site in South Carolina.

10 N.C. Session Law 2007-397, Senate Bill 3.

11 United States Department o Energy, NationalRenewable Energy Laboratory. Solar Pho-tovoltaic (PV) Resource Potential. 29 April2003. 9 June 2010 .

12 Newkirk, Margaret. Solar industrychallenges Georgia Power. The AtlantaJournal-Constitution. 13 June 2010. 21 June2010 .

13 Eastern Wind Integration and TransmissionStudy, 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 Loadswith Solar and Wind Power in North Carolina:Dealing with Intermittent Electricity Sources.Institute or Energy and EnvironmentalResearch. March 2010.

Similar studies are underway at StanordUniversity and in Europe.

14 OGrady, Eileen. U.S. utilities, regulatordisagree on generation. Reuters. 6 May2009. 23 June 2010.The nations top power industry regulator

on Tuesday suggested that U.S. utilities dont

need to build big nuclear or coal-fred power

plants to fll the nations uture power supply

needs. Instead, Jon Wellingho, chairman o

the Federal Energy Regulatory Commission,

said uture electricity demand growth can bemet with a low-emission supply rom wind,

solar and other renewable sources, combined

with more efcient use o all sources o

electricity. We have the potential in the

country, we just have to go out and get it,

Wellingho said at a briefng with reporters

at the American Wind Energy Associations

conerence in Chicago, monitored by telephone.


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15 Progress Energy Carolinas IntegratedResource Plan. Progress Energy Carolinas,Inc. 1 September 2009.

Duke Energy Carolinas Integrated

Resource Plan (Annual Report). DukeEnergy Carolinas, Inc. 1 September 2009.

16 Garrett-Peltier, Heidi. $1 Million = Morejobs or green industries. PoliticalEconomy Research Institute, Univer-sity o Massachusetts Amherst.

17 Madsen, Travis and Elizabeth Ouzts.Working With the Sun: How Solar PowerCan Protect North Carolinas Environmentand Create New Jobs. Environment NorthCarolina, Research & Policy Center.May 2010. 11 June 2010.

18 Navigant Consulting, Inc. EconomicImpacts o Extending Federal Solar TaxCredits. 15 September 2008. 22 June 2010.

19 Duke Energy serves approximately 2.4 mil-lion customers across 24,000 square miles oNorth Carolina and South Carolina. O thistotal, roughly 70% o Duke Energys ratepay-ing customers reside in North Carolina.

20 Elon University Poll. 1 March 2010. 21 June2010. .

21 Downey, John and Susan Stabley. DukeEnergys solar eort clouding growth?Charlotte Business Journal28 May 2010, 1+.

22 North Carolina PACE Financing. PACEFinancing PACE Program Inormation.2010. 17 June 2010 .

23 Brookhaven National Laboratory. SevereAccidents in Spent Fuel Pools in Supporto Generic Saety Issue 82. NUREG/CR-4982.1997.

24 The U.S. Department o Energys Fiscal Year2011 Budget Request. Analysis by RobertAlvarez, Senior Scholar, Institute or PolicyStudies. February 2010.

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

26 The Institute or Southern Studies. Nuclearplans hurting power companies credit

ratings. July 2009. 15 June 2010.

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

28 Koplow, Doug. Massive tax subsidies tonuclear in Kerry-Lieberman legislation.

Friends o the Earth. 17 June 2010. 22 June2010. .

29 DSIRE: Database o State Incentives orRenewables & Eciency. 22 June 2010.


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Appendix A: metHodology

The 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 public

research organizations most notably the Lawrence Berkeley National Laboratory. Present in-

stalled costs or solar generating capacity were calculated by collecting installed cost data rom

North Carolina installers. Future cost projections were sampled rom published industry analyses

and third-party studies (see citations or Figure 1). The authors made urther projections rom

2010 to 2015 by applying a regular rate o decline to the Department o Energy Solar America

Initiative 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 to

Appendix B or the purpose o comparing this conservative estimate o nuclear price escalation

to 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 generates

electricity output. A reasonable industry standard or North Carolina is 18%, given the states

solar 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 tracking

device. Beore kWh calculations were made, the authors adjusted actual generating capacity by

a derating actor (15%) to refect the line-loss that occurs when a central inverter converts direct

current (DC) to alternating current (AC) or use. 15% is a consensus derating actor, although

interviewed 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. The

amortization actor, or given parameters borrowing rate (i) and amortization period in years (n),

is calculated:


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

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

iAmortization Factor =

1 (1 + i)n


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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 to

reach a net cost per kWh.Example: 3 kW residential solar installation, $6/watt installed cost, 6% borrowing rate, 25-year

amortization 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 net

production 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 made

in 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


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Appendix B: nuCleAR plAnt Cost estimAtesAnd upWARd ReVisions peR ReACtoR

u aprjc

Racrpa

yar fea

RacrCaac (mW)

C r Rac-r (B $)

Frida Pwer & lightTurkey Pint (Fl)

22007 1550 9.00

2010 1550 12.51

Prgress EnergyShearn Harris 2 & 3 (NC)

22008 1100 2.20

2008 1100 4.60

Prgress Energylevy (Fl)

22009 1105 8.50

2010 1105 11.25

CPSSuth Texas Prject

22007 1358 7.10

2009 1358 9.10

S. Carina Eec. & GasV.C. Summer (SC)

22008 1117 4.90

2009 1117 5.70

2010 1117 6.25

Duke EnergyWiiam lee (SC)

22005 1117 2.003.00

2009 1117 5.60

PPlBe Bend (PA)

12008/09 1600 4.00

2010 1600 13.0015.00

TVABeente (Al)

22007 1100 7.10

2008 1100 8.75

Atmic Energy Canada, ltd.Daringtn*

22007 1200 3.48

2009 1200 12.96

Cnsteatin EnergyCavert Cis (MD)

12005 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 estimates as supporting evidence to the Cooper report.


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