solar power vs nuclear powerA new study reveals that nuclear energy and other traditional energy supplies like fossil fuels cost are and will continue to rise and not likely ever go back down.  Meanwhile, renewable energy has achieved a “downward cost curve” over the last decade, and they are likely to continue to fall in price.

by Bill Roth, Founder of Earth 2017 and Author of The Secret Green Sauce

“Commercial-scale solar developers are already offering utilities electricity at 14 cents or less per kWh. Duke Energy and Progress Energy are limiting or rejecting these offers and pushing ahead with plans for nuclear plants which, if ever completed, would generate electricity at much higher costs — 14–18 cents per kilowatt-hour according to present estimates.”

This is the research conclusion from a study entitled Solar and Nuclear Costs — The Historic Crossover authored by John O. Blackburn, PhD, Professor Emeritus of Economics and former Chancellor, Duke University.

The study’s premise is that traditional energy supplies including fossil and nuclear energy are experiencing what economists called “upward cost curves” or in other words, their costs keep going up and are not likely to ever go back down. However, the research claims of Blackburn/Cunningham are that renewable energy has achieved a “downward cost curve” over the last decade, namely that their prices have gone down and there is a strong likelihood that they will continue to fall in price.

The forces behind renewable energy’s downward price curve are technology innovation combined with the emergence of a global manufacturing base that is producing economies of scale (lower unit prices achieved from mass production efficiencies). See High Efficiency Solar Cells Can Be Made At a Much Lower Cost and See Leading the Charge to Make Solar as Cheap as Conventional Electricity.

Fueling this push for innovation and mass production is the emergence of a global renewable energy market with examples that include China’s recent announcement to increase their wind power supply by 50% beyond their world leading growth levels and Ontario’s success in attracting 8,000 MWs of solar development proposals from their feed-in tariff. Today wind power is price competitive on a kWh basis with coal fired power plants and tomorrow’s post will outline the facts behind the drop in the cost of PV utility-scale solar panels from approximately $6 per watt to less than $2 per watt in just five years.

While renewable energy has been achieving lower costs, fossil fuel prices are being driven higher by a combination of increasing global demand compared to global supply plus the higher risks facing fossil fuel suppliers as they increasing source supplies from high risk locations, either deep below the seas or from a foreign country with heightened profit expectations or political instability, or both. For example, coal prices have reached $100 per ton as China grows into a net coal importer and oil now trades in the $70-80 per barrel range. Only natural gas has been able to achieve price stability at around $4-5 per mmbtu as fracturing drilling technology creates an increasing, global supply of natural gas. The claim of the Blackburn/Cunningham study is that nuclear power also faces an escalating price scenario based upon their reference of a t study by Mark Cooper, Senior Fellow for Economic Analysis at the Vermont Law School’s Institute for Energy and the Environmenthat concludes “…a new nuclear plant will produce electricity at costs of 12–20 cents per kilowatt-hour (with a mid-range figure of 16 cents) at the plant site, before any transmission charges.”

A major issue that confronts an assessment of which energy supply is truly least cost is the confusing, lobbyist driven array of government subsidies that appears to have been given to every energy resource. This large quantity of taxpayer subsidies is distorting the consumer’s and voter’s ability to understand an energy resource’s “real cost” at the pump or meter. As a result, the debate on energy policy now includes fossil vs. nuclear vs. renewable energy advocates pointing fingers at each other over which fuel is the most subsidized. The Blackburn/Cunningham study also attempts to address this issue as to whether solar or nuclear is the greater beneficiary of taxpayer subsidies. The obvious answer is that taxpayers are subsidizing all energy sources and the obvious question is why?

What insight can be drawn from analysis like that of Blackburn/Cunningham? The first conclusion is that the future price of electricity is going to be much higher! The current average national price for retail electricity is in the 10 cents per kWh range. Energy prices from either solar or nuclear energy at their projected costs per kWh will drive consumer prices above current national averages!

The second observation not addressed by the Blackburn/Cunningham study is the need for an increased electricity supply. Yes, conservation is needed because the USA is an energy hog compared to other countries. U.S. Energy Information Agency statistics document that while we account for approximately 5% of the world’s population we consume approximately 21% of the world’s energy. A Jato Dynamics study found that “…33.9 percent of vehicles sold in the U.S. still fall within a 15 mpg to 20 mpg consumption bracket, compared with Europe where only 0.28 percent of vehicle sales in Europe fall within that bracket and only 0.63 percent of sales in Japan.” Conservation and energy efficiency is America’s least cost solution compared to the consumption of fossil, nuclear or renewable energy.

However, even with the anticipated benefits of conservation and energy efficiency, our country is entering a new wave of electrification that will increase the demand for electricity. Transportation electrification is emerging as a solution to both our dependence upon foreign oil, higher gasoline prices and the environmental consequences of fossil fuel consumption. The promise of transportation electrification is an electric car industry offering consumers a lower fuel cost per mile, acceleration and performance that is a car enthusiastic dream plus solutions to fossil fuel emissions and energy independence.

The shift to digital information is also a key driver in the growing demand for electricity. Digital information is the technology that is enabling the unprecedented labor productivity being achieved by Corporate America. The scale of these labor productivity gains are paradoxically generating higher profits even as Corporate America’s revenues face the headwinds of a global recession. Digital information is also transforming our every day life-experiences offering increased transportability and lower costs compared to the historical fossil-based carbon-based products sold through a retail outlet-centric supply chain consuming vast quantities of energy. While the digital age is producing “Cost Less, Mean More” results in the form of lower prices, increased benefits and positive environmental results, its backbone is electricity.

Digital age applications applied to our current electrical grid does offer the promise of a quantum leap in consumer conservation and more efficient use of energy. However, this will not be enough to satisfy the growing demand for electricity when we are recharging our electric cars while also running our businesses and homes off of a “cloud” of connected, smart computers and appliances. Voltage maintenance (best appreciated as lights dim and electric motors make unusual noises during extreme hot spells when electricity demand is so high that it stresses the electrical system) will challenge currently designed utility electrical systems as A/C compressors, refrigerator compressors, machine motors, computers and the electric car create a combined local load level that the electrical distribution systems was not designed to handle.

A re-engineering of the local distribution grid utilizing renewable energy supplies combined with enhanced distributed battery storage technologies plus smart grid technologies could address both voltage and supply issues. The public policy question confronting this scale of innovation is the utility industry’s 100 years of legacy law and rulemaking now operating through local, state and federal agencies, commissions and courts. This legacy system links utility profits to the utility building and owning assets, a logical linkage during the 1930-60’s when the technology benefits of large central power plants connected to a transmission grid were delivering annual rate decreases to consumers. In today’s applications of this legacy system the utility is often confronted with a tightrope walk between doing what is best for the consumer vs. what is best for the investor. For example, a utility profits from investing in approved power plants but does not profit from least cost energy purchased from a third party or from encouraging consumer conservation. In addition, regulatory oversight is very focused upon management’s cost prudence with little linkage between the level of profits a utility is allowed to earn and the utility’s achievement of customer satisfaction, system reliability, reduced environmental footprint and competitive pricing.

While the issue of nuclear vs. renewable vs. fossil technologies merit such commendable efforts of analysis as provided by Blackburn/Cunningham, the issue that would most enable a least cost analysis is rational economic public policy that aligns rather than divides business incentives behind creative, least cost innovations (including cost analysis that incorporates environmental/wellness cost/benefit impacts) that will enable the benefits of transportation electrification and the digital age.

This article originally appeared on triplepundit.com.


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Author: Bill Roth (10 Articles)

Bill Roth is President of NCCT and is the Green Business Coach for Entrepreneur.com. Bill has helped a broad range of companies in designing and implementing strategies, plans and projects that are profitable and green. Bill is also the founder of Earth 2017 and author of The Secret Green Sauce: Best practices used by actual companies successfully growing green revenues">The Secret Green Sauce. Follow Bill on Twitter @earth2017. Connect with Bill on Linkedin.

  • http://www.forwardenergysolutions.com/cemo.htm Energy monitor

    The most intriguing aspect of solar compared to fossil fuels or nuclear is that you do not have to purchase fuel (Unless the sun starts charging). This makes your only cost maintenance, which fossil fuel sources also have. Renewable energy sources make sense both financially and environmentally.

  • http://www.earth2017.com Bill Roth

    Here’s some new evidence I just found documenting a 10 cents per kWh price for solar achieved in China: http://bit.ly/arGGcO

  • http://www.attorneybayles.com Attorney Bayles

    We can discuss all day long about which is cheeper; however, I am concerned about who is truly representing the people on rate exchanges between alternative energy companies and energy distributers, like National Grid?

    Will Public Utilities commissionars across our country agree to rate hikes, simply because energy is alternative to oil, when evaluating the fairness and reasonabeness of distribution purchase agreeements?

    In Rhode Island, an off shore wind farm purchase agreement with National Grid was initially found to be not “commercially reasonable” by the Public Utilites Commission. That the rate increase was over-reaching and not appropriate for Rhode Island businesses and consumers. http://www.pbn.com/detail/48839.html

    The response was met with distain by the Governor. His overwhelming desire to have this project pushed through was met when the General Assembly changed the law regarding the meaning of “commercially reasonable.”

    In a second hearing the commissioners were forced to change their decision in favor of the wind farm project rate exchange.

    http://www.blockislandtimes.com/view/full_story/9134231/article-Wind-farm-decision-entangled-in-legal-issues?instance=home_news_1st_right

    Is this political manuvering really fair to the people? Will alternative energy groups and projects be pushed on the public without protections?

    http://www.huffingtonpost.com/2010/08/11/block-island-wind-farm-proposal-approved_n_679267.html

    Apparently, the state AG, Patrick Lynch, believes a grave injustice was committed by the General Assembly when the law was changed. Lynch is fighting the decision to change the meaning of “commercially reasonable” in Supreme Court.

    http://www.ri.gov/press/view/11361

    Different alternative energy choices and decisions are being made. Are they being made in fairness and for the benefit of the people, or are they being pushed through by big business and political decision makers for personal reasons?

    I understand alternative energy is important and a very good goal, indeed. But allocation of risk in contracting rate exchanges is a balance that must always be considered.

    In my opionin, the consumer’s shoulders must not bear the majority of risks born by the expanse of alternative energy supply source business.

    (I do not promote any law firm, legal postion, legal strategy or negotiation group or tactic; however, I found this ppt presentation an interesting discussion regarding PPA Purchase Agreements and the complexity of renewable energy risk allocation and trends: http://www.stoel.com/Files/PPAPurchaseAgreementsHolmesHillMartin.pdf)

  • http://www.earth2017.com Bill Roth

    Anthony, thank you for your well thought out and documented response. Much appreciated. We are very aligned on one key point, Government Subsidies. EVERY energy resource now has them in the U.S. How can a consumer determine the real cost of energy at the pump or meter? And a question, recently raised by Gil Friend of Natural Logic, is when after 100+ years of fossil energy subsidies and 60+ years of nuclear subsidies is it enough?

  • Alex Adams

    You don’t have to be a scientist to draw the obvious conclusion. Solar energy is more cost effective long term. Our civilization and survival increasingly depends on it.

  • Brian Whary

    In terms of cost, a determinations has to be made as to what kind of costs we are considering. Sure, solar and other renewable energy sources will have a higher upfront cost until efficiencies of scale can be realized, and I think they are, but, in the long run, renewable energy will have a lower overall cost because it is sustainable. Sustainability is key! The decision must be made whether we will base our energy future on long-term sustainability or base our decision making on the short-term gains that come with continued energy dependance.

    Money spent developing an extremely inefficient corn-based ethanol development program is good for farmers in the US Midwest in the short run, but bad for the fact that that money could be better spent developing more efficient ehtanol production program such as Algae. Algae is more than 10 times as efficient at producing ethanol than is corn, yet it hasn’t hit the radar yet because of the corn lobby. Once again short-term thinking (an politics) at work…

    In my opinion, politicians and regulators have to be ready to make (and sell) the hard choices and consumers will have to be ready to absorb the higher costs associated with freeing this nation’s depenance on foreign and domestic resources. There is no substitute for clear thinking on this issue.

    Brian Whary

  • http://www.earth2017.com Bill Roth

    Thank you all for your contributions.

    Brian, thank you for your observation of upfront vs life of asset costs.

    Another key cost is externalities. We all know there are costs like having Boots On The Ground to protect oversea oil and environmental consequences that are very real costs, but they are not reflected today at the meter or pump. Enabling consumers by providing them at the meter and pump with the total, unsubsidized, cost of various energy options seems to be a key step for all us to understand which energy resource is truly the cheapest.

  • http://atomicinsights.blogspot.com Rod Adams

    The biggest challenge that solar energy has is that it cannot be controlled by human beings. No matter how clever the engineering or the science, the sun sets every single day on a schedule that is predictable enough to set accurate clocks. When the sun is not there, neither is the power. That means that the expensive and materials intensive collectors sit idle.

    It is also not a matter of just day and night. Solar energy promoters love to tag their systems with a “capacity” figure that is only available at NOON on a CLEAR day near the equator. At all other times and locations, the system will produce less power – a function of the sine of the sun’s elevation angle and a factor that accounts for the energy filtering provided by clouds, rain, dust, and bird droppings.

    When you run all of the numbers, it is apparent that solar collectors, even if they cost as little as a thin layer of glass, will never produce power at a controllable price. They will never power automobiles that carry any real weight at a reasonable speed and they will never power aircraft, ships or trucks. They have NO impact on the use of oil, coal and natural gas.

    That is why so many oil companies have been promoting solar energy for the past 4-5 decades. It is a distraction.

    For more details on the particulars of Cooper’s study, you can read what I wrote at

    http://atomicinsights.blogspot.com/2010/07/gullible-reporting-by-new-york-times-on.html

    or

    http://atomicinsights.blogspot.com/2010/08/tamping-down-spread-of-nc-warn.html

    Rod Adams
    Publisher, Atomic Insights

  • http://crudeoiltrader.blogspot.com Crude Oil Trader

    Cost, safety, environmental concerns will all have to be dealt with. We need it ALL. Or we will starve.

  • Leonel E. Nava

    I have something to say in regards to all the argumentation you guys have posted here.

    Guys, it’s not about which is cheaper than other, or which technology has less environmental impact, or which one has less support from government. Its all about a simple and very important concept. Supply and demand.
    When you are in home and you want to take a shower, or prepare your food, or just read, you flick the switch and there you have it , like magic, you have it, electricity !!! We need to make sure we have a secure base load supply. This one needs to be reliable at anytime of the day, and to may knowledge there is not single source of renewable energy , besides hidropower, that could overcome this “little” detail. No wind, no solar power!!!!

    Understanding the current trends of electricity consumption, it is fair to say that no single source of energy, or generation technology alone could satisfy the demand for electricity, in an economical and environmental friendly manner, in the foreseeable future. Furthermore, all these technologies have advantages and disadvantages, “there’s no such thing as a free lunch”. Solar energy has lots of environmental, and health problems related to manufacturing problems, people do not talk about.

    Everybody needs to know what what is all the technology about and be aware of all these different issues, and need to put them in perspective when it comes the time to define what technology for electricity generation should used.

    Everyone will have still their favorite technology. You may love it , or you may hate it.
    But none of them alone will supply all the base load demand for electricity projected for the next 30 years. What we need is a synergy of technologies. Synergy is the way to go, and Nuclear Energy has a “HUGE” role to play!

    • Eamonn McCormick

      I agree 100% with Leonard’s perspective. The real question revolves around synergy. Nuclear OR Solar is not necessarily the best way to pose the question. The real question revolves around “AND” instead of “OR”. The reality is we need to make best decisions based on our needs that is best combination of renewable and non renewable resources. A simple Solar vs Nuclear clouds the real question of how to move forward in a practical way given that it will be an ever changing mix of resources.
      I have set up a group called “renewable plus” to promote exactly what Leonard suggests which is an approach to synthesize multiple energy sources into a dynamic combined product called renewable plus. Just look out to the Renewable Plus group if you want to contribute to that conversation
      thanks Eamonn

  • http://www.earth2017.com Bill Roth

    Thank you all for your valuable insights.

    With the election results it now appears Washington’s focus will be upon developing an inclusive national energy portfolio. One key issue that should be included in this process is the massive subsidies ALL energy resources now receive. Is this sustainable in the face of trillion dollar plus budget deficits?

    Another key issue is price clarity at the meter and pump. Is this too much of a political hot potato? At the same time, can a free market work if consumers do not see in the price of what they are buying the full cost of their consumption decisions, including the costs created from a negative trade balances, a lack of Energy Independence and health/environmental consequences?

    Please continue to add to this valuable decision. Thanks!

  • Eduardo Santamaria

    I´m agree it´s no question to choose between Nuclear or Solar, what we have to do it´s to find an energy-mix, including renewable energies, gas, coal and oil. In order to avoid the carbon footprint and due to increasing prices in oil and gas the mix in the future has to be a bigger part in renewable and decreasing the percentage in fossil fuels. Just reverse the current situation.

  • http://www.21stcenturytelecominc.com William A. Branham

    A new study reveals that nuclear energy and other traditional energy supplies like fossil fuels costs are and will continue to rise and not likely ever go back down. Meanwhile, renewable energy has achieved a “downward cost curve” over the last decade, and they are likely to continue to fall in price -Bill Roth, Founder of Earth 2017 and Author of The Secret Green Sauce.