A Ticking Atomic Clock:
Nuclear Power vs. Efficient Homes

Why home energy efficiency is more cost effective and better for our economy than replacing our nation’s dying nuclear power plants.

Over the next 20 years, the power plants that produce one-third of the nuclear energy in the United States will reach the end of their operational lives. In the wake of the Fukushima disaster, other countries (Switzerland, Germany) are reconsidering their commitments to nuclear power. In the U.S., Michael Levi asks in this Slate article whether we can shift from nuclear to other fuel sources for our power generation.

But we’d like to present an alternative option to the discussion. If we use power more efficiently, particularly in our homes, we can avoid replacing these aging nuclear power plants entirely.

For half the cost of a new nuclear power plant, we can retrofit 1,600,000 homes for energy efficiency and save the same amount of energy. Retrofitting the houses would create 220,000 new jobs – that’s 90 times more jobs than you’d get from the replacement nuclear power plant.

Crunching the Numbers

To be clear, we at EnergySavvy are not anti-nuclear. We’re not pro-nuclear either. We’re just presenting the numbers in way that we hope can inform the national discussion.

  • In this comparison, a new nuclear power plant is expected to last 40 years and produce at the U.S. average of 12.3 billion kilowatt-hours (kWh) per year. The levelized cost of electricity for a new nuclear plant that we’re using is 8.4 cents per kWh, which includes the cost of financing, building and operating the plant for 40 years. The total cost for this plant and its power for 40 years is $41 billion.
  • Instead, if you want to retrofit enough houses to eliminate the need for 12.3 billion kWh per year, the calculation works like this: A typical electrically heated U.S. home uses 20,000 kWh per year, which can be reduced by 30% with a $12,000 energy retrofit, based on various industry estimates. You’d need to retrofit just over 1.6 million homes to equal the entire annual energy production of a nuclear power plant, for a total cost of just under $20 billion. Home energy efficiency improvements in electrically heated homes include upgrading the efficiency of the electric heating system, insulating and making air sealing improvements to the home’s building envelope, using solar hot water heating systems and replacing inefficient A/C units and appliances.
  • Job creation, in each case, looks like this: At peak construction, building a nuclear power plant would employ as many as 2,400 workers, eventually leveling out at around 400 to 700 long-term employees. For the home retrofits: According to Matt Golden, Policy Chair for Efficiency First, retrofitting 1,600,000 homes in a year would create roughly 220,000 jobs.

Caveats and Criticism

Of course, this kind of rough analysis uses many assumptions and can be subject to many criticisms. Let the discussion ensue:

  • What about the cost of storing nuclear waste forever? While the operating cost of a nuclear power plant includes the storage of spent nuclear fuel during its 40-year operational life, the cost of safely storing that fuel for thousands of years afterwards is not included in this analysis. If it were even possible to estimate, the relative cost effectiveness of home retrofits would look much, much better.
  • How do you really know what a new power plant will cost? We’re pretty solid on the home retrofit cost statistics, but the nuclear power plant cost calculations have a lot more uncertainty. Nuclear power plants typically take around ten years to build, so estimating the true cost is nearly impossible given fluctuating material prices, cost of capital and other unforeseen costs. Cost overruns for a nuclear reactor have averaged nearly 300 percent. The last nuclear power plant to go online broke ground in 1973 and wasn’t finished until 1996.
  • Why are we picking on electrically-heated homes? Thirty percent of U.S. homes (according to EIA’s 2005 statistics) use electricity for heating. Many more use natural gas or heating oil, and most energy efficiency efforts focus on achieving efficiencies with those fuels. The impending nuclear power plant “retirement boom” provides a great opportunity to think about getting more efficient with electrically heated homes.
  • Don’t nuclear power plants last longer than new furnaces? Nuclear plants have 40 year operational leases and can be extended for an additional 20 years. Different energy efficiency measures have different measure lives – LED light bulbs last less than 10 years, insulation and new furnaces can last for 30 years or more. For simplicity’s sake, we’re treating the measure lives of each option equally at 40 years.
  • This is a lot of houses we’re talking about. Yes. If we want to avoid replacing some or all of the nuclear power plants that are going to reach the end of their operational lives within the next 20 years, we have to start retrofitting houses at volume now so we’re ready when plants need to start shutting down.
  • Who pays for either of these two options? That’s a pretty complicated question and it certainly involves issues of rates and cost recovery within the utility regulatory field. We’re making the argument that investing in efficiency might be a better use of a utility’s resources than fully paying to build new nuclear power plants. Some innovative utilities are developing energy efficiency models that are increasingly cost effective, and work well for their shareholders and regulatory frameworks.

In the end, we don’t believe that any of these assumptions invalidate our conclusion that our country would be far better off increasing the efficiency of our housing stock through home retrofits over the next 20 years than replacing all our aging nuclear power plants. We can meet this impending energy challenge with half of the cost, create far more jobs and enjoy all the side benefits that come with going the retrofit route: healthier and more comfortable homes, lower utility bills for homeowners than what they would have paid, no increased burden of storing spent nuclear fuel for thousands of years.

About Scott

Scott Case has expertise in online marketing technologies and software product management from five years at aQuantive, where he led product management and marketing for Microsoft/aQuantive's ad serving tools. Scott has a BA in Economics and Political Science from Williams College and an MBA from the MIT Sloan School of Management.
  • Anonymous

    It’s not about nuclear versus coal, it’s about energy efficiency as a energy resource. Vermont has already demonstrated its success by reducing its energy demand over last four years via energy efficiency. Energy efficiency is cheaper, faster and better than any type of power plant.

  • Jennifer Chiodo

    While I admire the thought behind this comparison, it seems like it might be missing the fact that nuclear power plants are base-load generators.  In order to offset them, we can’t just eliminate the same “volume” of power that they produce annually, we have to replicate their relative constant generation profile through a combination of efficiency, renewable generation and potentially other more traditional new generation.  The challenge is for the efficiency & renewable energy industry to develop a package of cost effective measures and generation that will truly offset the base-load generation of a nuke plant.  Electric heat savings can do that for a portion of the year in regions with higher heating degree days, and building shell improvements will yield savings in the summer for homes with air conditioning, though not with the same load profile.  What happens in the shoulder season during which there may be little residential space conditioning savings to offset the reduced generation and larger commercial consumers still need power, solar panels may not be generating much and wind resources are intermittent?

  • Anonymous

    From EnergySavvy: We’ve gotten a few questions about the $41 billion figure for a new nuclear power plant – so it seems pretty clear that we didn’t do a very good job explaining it.

    Since the home retrofit route involves upfront costs that “generate”
    power over the lifetime of those efficiency measures for free (e.g. once attic insulation
    is in place, it generates free kWh savings for its lifetime), we felt that the
    right comparison cost on the nuclear side was to use the levelized cost of energy
    (LCOE) for a new plant. The nuclear plant’s LCOE, which boils down the capital
    costs, debt service and ongoing operational costs into a constant per kWh
    number for a new power plant, is $8.4 cents per kWh according to this MIT paper: http://web.mit.edu/nuclearpower/pdf/nuclearpower-update2009.pdf

    On average, according to the EIA ( http://www.eia.gov/tools/faqs/faq.cfm?id=104&t=21 )
    a nuclear plant produces 12.3 billion kWh per year. Over a 40 year life – the same
    period used to calculate the LCOE – 12.3 billion kWh per year * 8.4 cents per
    kWh * 40 years = $41 Billion. By the way, this LCOE does not incorporate costs
    beyond the plant’s life (chiefly, the ongoing storage of nuclear waste and
    other cleanup).

    There are obviously lots of variables and lots of assumptions being made
    in these calculations, but the main point that we’re making with these cost
    figures is that the upfront overnight cash cost of a nuclear plant (probably $10
    B) is not the right number to use because you have to continue to pay for the
    energy it generates – and you don’t have to continue to pay for the energy that
    the efficiency measures “generate”.

    Scott Case
    EnergySavvy

  • Paul Moore

    I have to agree with Ms. Chiodo. The absence of a reliable baseload would result in rolling brownouts or blackouts in peak air conditioning seasons.  Sad as it might be, most Americans would rather pay twice as much for their electricity than live without their A/C.

    I would like to note that nuclear power only provides about 20% of the US electrical supply, not one third, as indicated in the article.  I must also take
    objection to the estimate of “90 times more jobs.”  According to the article, retrofitting
    1.6 million homes would create 220,000 jobs for ONE YEAR (i.e., 220,000 man-years of labor), while the
    nuclear plant would create up to 2,400 jobs for ten years of
    construction, followed by 400-700 jobs for the next 40 – 60 years (ignoring the fuel supply chain and regular plant upgrades and modifications). Since
    this equates to roughly 55,000 man-years of labor, it looks like the efficiency option would only create 4 times more jobs.

    I
    am more irritated that the graphic compares supply vs demand, as if we
    should pick one option or the other. It seems similar to the
    comparison of buying a new hybrid car (and living 100 miles from your
    office) or getting a new job closer to your home (and driving a Hummer).
    Why don’t we compare different supply options (coal, nuclear, etc.)
    and different energy efficiency options?   If we picked the nuclear plant
    and a realistic, incremental energy efficiency program, we could get
    the best of both worlds – long term jobs and cleaner energy (compared to fossil fuels, which are responsible for roughly 66% of the US energy supply  http://www.eia.gov/cneaf/electricity/epm/epm_sum.html). 

    For those of you keeping score, hydro is responsible for 8.2% of supply, and other renewables like solar and wind provide the remaining 5.2% of our electricity.  By closing down the nuclear plants and improving efficiency per this plan, total energy consumption would decrease, but Fossil fuel use would not decrease.  The amount of CO2 generated would not decrease. 

    For those of you afraid of the risk of radiation from a release at a nuclear plant, consider this: a 1000 MW coal plant (comparable to a typical nuclear unit) releases an average of 5.2 tons of Uranium, including 74 pounds of highly radioactive uranium-235, each year (because it is naturally found in coal).  That’s enough U235 to recreate the “Little Boy” every other year.  This doesn’t include the radon, thorium, and other naturally occurring radionuclides, not to mention mercury, arsenic, lead, and dozens of other toxins that are continuously spewed into the atmosphere, coal ash dumps, and groundwater.  (http://www.ornl.gov/info/ornlreview/rev26-34/text/colmain.html)

  • Anthony junior

    great article , this idea could get all the unemployed construction workers back doing something they are good at.
    it makes sound sense to concentrate on making building (dwellings houses )more efficient at holding on to the heat you pay for first before spending money on solar panels , geothermal pumps etc.

  • RussellLowes

        I also very much appreciate this approach. Nukes are going to cost a lot more than you have indicated. The last big batch of nukes in the U.S. was finished in 1988. According to the NRC’s study on nuke costs, the average cost was about $3100 per kilowatt of installed net capacity (net design electrical rating). In 2010 dollars that’s about $5714. In 2022 (the first year they might get one of these reactors completed), assuming a 4% inflation, that would be $9148. If you factor in 2 other data bases, which I have done, the 2022 dollar average is $8834 per kilowatt, a bit lower than the pro-nuclear government agency projection.
        That $8834 times the average size of a new nuke at about 1,350,000 kilowatts, times 14% capitalization rate (fixed charge rate) gives a levelized cost per year of $1.67 billion per year for just the capital payback (principal, interest, fees and taxes). Over 30 years (the typical utility plant payback schedule) the costs would be $50.09 billion. Add to that the lower costs of fuel and operation and maintenance.
        However, just the capital payback of $1.67 billion comes to 16.6 cents per kilowatt-hour over 30 years, or if you use the 40 year lifespan projection, 12.4 cents per kilowatt-hour. This projects an 85% average lifespan capacity factor, which is generous. That 12.4 cent capital payback plus 1.5 cents for fuel, 2.3 cents for fixed operating and maintenance and .5 cents for variable O&M give a production cost of 16.75 cents per kilowatt hour. Add to that transmission and distribution of 7 cents per kilowatt-hour and you get 23.7 cents per kilowatt-hour average price per customer.
       The industry is doing the same low-balling it did in the 1970s and 1980s. Hence they project ridiculously low costs per kilowatt-hour, like 8 cents for production. That’s how they get these things built. Don’t fall into  that trap.
       For more info on nuke and other energy costs, see http://www.SafeEnergyAnalyst.org.

  • Steve

    How
    is Paying the bill? it seems to me that all these numbers look impressive and I
    agree creating a more efficient home is always the best way to go not everyone
    has the 12k? to pay. I am not sure but I was thinking that the EPA required scrubbers
    would catch most of the pollutions. As for CO2 I was thinking that mother
    nature had us all beat. As for global warming being man made, I could be wrong
    but I  was thinking global warming started
    just before the Ice age ended. And wasn’t the earth covered densely with CO2
    that animal life could not exist? I see a majority of this issue is being used
    to line peoples packets. It seems that in a day where people are not working
    and can’t afford to take money from the table, One would think we would focus
    on long term employment such as start buying American good, they are saver and
    in the long run greener. Bring back manufacturing and build power plants to support
    those jobs. This will lead to people having the money to invest in their homes.

     

    One
    last note. If power companies only had 2 or 3 approved nuclear designs they
    would be save, cheaper and faster to build than every company submitting their
    own design. Have of the time and money is spent on soft cost and regulations. Better
    known as the great pay off to a bunch of stuffed shirts. Its time to think of
    the people first and not the special interest groups

  • http://www.facebook.com/gabefair Gabriel Fair

    It would be great if we could like this on facebook or +1 it 

  • Anonymous

    I see Jennifer’s point.  Something to consider:  wind, but mostly solar is so abundant, that we cannot at this point store all the energy one could collect from a solar panel, say.  The limiting factor is not the energy source (i.e “what happens when its cloudy?” “what about when the wind stops blowing?”)  Rather the limiting factor is in the storage.  If we bring more renewables like solar and wind online, then I would argue the market would then begin to drive innovation in energy storage technologies.    We have to have a paradigm shift in the way we think about energy.  From a baseload model to an abundance model.  Energy efficiency has a large role to play in our future, especially when it comes to rebuilding our economy and providing jobs.  Not to mention being cautious when it comes to carbon dioxide emissions and peak oil.

  • Anonymous

    http://www.forbes.com/sites/williampentland/2011/08/12/profile-of-an-energy-revolution-japan/?feed=rss_home

    We
    are capable of making radical changes in our mainstream energy economy
    very rapidly. The conventional wisdom would suggest it takes years and
    probably decades to make such dramatic shifts. What Japan has managed to
    do in weeks suggests the conventional wisdom has dramatically
    underestimated society’s ability to tolerate sudden and severe shifts in
    our energy economy without having the sky fall.

  • http://pulse.yahoo.com/_QCZ3CBYASWA3FLYCZCOCLSSM2Q Alex Hn

    $41 billion is a wierd figure to trying to explain something. How about the $14-18 billion for two AP1000s?

    It’s dead simple, either you use:

    Nuclear
    $14-18 billion for 17.3 billion kwh per year

    or you use:

    Retrofit
    $34.6 billion for 17.3 billion kwh per year

    What is bad is comparing money through different times frames because time change the value of money.

    The best way is to compare respective capital costs of both options. Retrofit is $2 per kwh and nuclear power is $0.81 to $1.04 per kwh.

    You can also compare operating cost, and life duration of the investment, but nuclear power comes really good into theses categories with 2 cents per kwh for operation and 40-60+ for lifespan. http://www.eia.gov/cneaf/electricity/epa/epat8p2.html

  • http://pulse.yahoo.com/_QCZ3CBYASWA3FLYCZCOCLSSM2Q Alex Hn

    ” If we bring more renewables like solar and wind online, then I would
    argue the market would then begin to drive innovation in energy storage
    technologies.”

    Not necessarily. If the value of the alternatives is better, alternatives will be developped instead. If you build more Ladas, that dosen’t mean people will buy more.

    Gas turbines backup is cheaper then storage. So, forget about batteries, it’s cheaper using gas, the market will go into gas.

    Furthermore, if we weren’t forced to use wind power, we could just use baseload gas turbines instead. Wind power with gas backup cost more then gas baseload. The reason is simple, gas backup is inefficient therefore gas baseload turbine are more economic. [1]

    Wind power and solar have their upsides, but setting to bar too high dosen’t help, let’s try 20% wind power first, we’ll see after were we’ll be.

    [1] http://www.wind-watch.org/documents/wind-integration-incremental-emissions-from-back-up-generation-cycling-part-i-a-framework-and-calculator/

    “The general conclusion is clear: industrial wind power does not
    produce the claimed benefits of reductions in fossil fuel consumption
    and CO2 emissions when up-and-down backup generation inefficiencies are
    taken into account.”

  • Retnemmoc

    Energy efficiency may be better than building a new Nuclear Fission power station, but the electricity still has to come from somewhere, and I’d rather it not be fossil fuels producing it while polluting the environment. Also something this article doesn’t take into account is the continued development of fission power. With time, the fission plants may become viable to replace. One issue I have with this article is that it is talking about ‘nuclear power’ when it means ‘nuclear fission power’, which is misleading as Fusion power is an area of nuclear power currently being explored, and is slightly different (and hopefully better) compared to fission.

  • Lilly Munster

    The baseload argument for nuclear just doesn’t pass the smell test. We need some sort of baseload generation to make up for what can’t be generated by solar/wind at certain points. Nuclear is impossible to throttle up or down like you can with a natural gas plant. Gas is more flexible. This idea of sticking us with nuclear for baseload doesn’t make sense. We could do find with more renewables and gas or other older tech for baseload that doesn’t include nuclear. There is a nuclear plant in Canada that will likely be shut down because it is losing money. It generates a flat amount of power and sometimes they don’t need that much. They lose money when they have to sell it on the open market.