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Fact and fiction on costs

The British government's Policy Innovation Unit appears to be swallowing whole at least some of the nuclear lobby's arguments that wind is costly and unreliable. But in a submission to the review comparing nuclear costs with wind, Windpower Monthly's technical consultant David Milborrow argues that nuclear and wind costs should be compared using the same financial parameters. Advocates of nuclear power tend to use long depreciation periods and low interest rates, he says This article accompanies the longer feature in this issue "Nuclear says wind is unreliable".

On evidence so far, the British government's Policy Innovation Unit (PIU) appears to be swallowing whole at least some of the nuclear lobby's arguments, particularly those on costs.

In its initial scoping note for the review, the PIU quotes the price for electricity generation from new nuclear plant of "around 4 pence/kWh" -- the figure claimed by the nuclear industry. The PIU, however, attributes its figure to a 1995 government review of nuclear power. This, however, used a range for lifetime nuclear generation costs of £0.0350-0.0575/kWh. At today's prices, that is £0.047-0.078/kWh, revealing that even at the lower limit nuclear's price comes in considerably higher than the PIU's four pence a kilowatt hour.

The misinformation does not stop there. The Department of Trade and Industry, in its submission to the PIU review, quotes a generating cost for nuclear of £0.025/kWh. It gets down to this price by assuming series construction of nuclear plant, long station lifetimes of 60 years and high load factors -- none of which nuclear has ever experienced. It then assumes soft financing terms that the wind industry has never been party to.

Fair comparison

In a submission to the review comparing nuclear costs with wind, Windpower Monthly's technical consultant David Milborrow argues that nuclear and wind costs should be compared using the same financial parameters. Advocates of nuclear power tend to use long depreciation periods and low interest rates, he says. "It is possible that government might arrange preferential financial terms for the nuclear industry. This is fine, provided the same terms are available to renewable energy."

Using capital costs for nuclear from a number of sources, including some actual construction costs, Milborrow demonstrates that if the same discount rates and depreciation periods are used for both nuclear and wind, onshore wind is competitive with the lower range of nuclear generation costs -- assuming wind speeds of 7.5 m/s, which are modest winds by UK standards. Offshore wind is cheaper than the upper end of the range of nuclear generation costs. He points out that as the offshore wind industry matures, its costs will fall towards the present day onshore level.

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