Fact Check: Is nuclear power more expensive than renewables? Verdict: mostly incoherent
Not even wrong
A fable about apples
Imagine you regularly buy apples from the grocery store, at 1 euro a kilo. Your neighbor has a few apple trees in his backyard, so the following dialog ensues:
Neighbour: Hey, I can provide you with cheaper apples! Only 50 cents a kilo!
You: That sounds great. So, when I need apples, I can come to you instead of going to the grocery store?
Neighbour: Well, yes… No… It depends… You see…
You: Yes, what?
Neighbour: Sometimes I have apples, sometimes I don’t. But, when I have apples, I will come and drop them off at your house for 50 cents a kilo.
You: So, if I want apples and you have them, I can buy them at 50 cents? It still sounds pretty good, though. I can always go to the grocery store if you’re out of them.
Neighbour: For me, that is too risky. You see, apples spoil quite quickly, especially because I don’t have all the equipment to store them.
You: What is your proposal then?
Neighbour: You sign an apple delivery contract and when I have apples, I will deliver them to you. It’s still a big advantage because it’s only 50 cents and you are paying a full euro!
You: Well, what if I need apples when you don’t have them?
Neighbour: In a pinch, you can still run to the grocery store.
You: What if you have apples and I don’t need them at the moment? I might even be on holiday.
Neighbour: Nature is unpredictable, I will deliver when I have them. If you don’t need them at the time, that’s a shame, but it is hardly a catastrophe.
You: This seems to lead to a lot of wasted apples. If you leave a crate of apples on my door and it’s spoiled by the time I get home, who is responsible for cleaning up?
Neighbour: Unfortunately, that would be you. The neighbor across the street runs a cleaning company, though, they might help.
You: Well, of course, but even cleaning my porch one time is going to eat all my savings, plus it’s extra work for me to organize all of this... Thank you, neighbor, I appreciate the friendly offer, but while I would be happy to occasionally buy your apples, I don’t think it’s a good to sign a long-term contract.
Neighbour: But my offer is 50% cheaper than the grocery store! How can you choose to depend on more expensive apples?! It makes no sense.
You: I’m still going to pass, though.1
The electrical grid is always in balance
It is one amazing fact about the electrical that the amount of power being put into it and the amount of power being drawn are the same. There is no storage in the grid (unlike the water distribution grid where there are multiple points where water accumulates).
The question how much does a certain amount of energy cost? is a meaningless one. A meaningful one question is how much does energy cost right now, at 9:15 am on Wednesday March 9th? which is different from the same question asked an hour later. Now, residential consumers normally have contracts whereby some intermediary company takes on the variance in wholesale price and resells it to the consumer at a fixed price (or quasi-fixed, different evening/weekend rates are a common feature).2
However, the real cost is the variable one and this is why it doesn’t even make much sense to ask about what solar and wind costs. When the sun is shining brightly and wind is blowing strongly (but not too strongly), you get one answer; but in the evening, solar is infinitely more expensive than nuclear and multi-day periods with little wind are a common occurrence. Solar and wind are like the neighbor with the apple tree: cheaper when they are available, but not always available.
Obviously, it’s great that solar has gotten so cheap and we should take advantage of that, but when price comparisons that compare one type of price with another3 are made one must not be fooled into simplistic conclusions such as “we should never opt for more expensive nuclear when cheap solar exists”: Solar is only cheap sometimes, other times (at night), its cost is infinite.
Around the year 2010 there was a big fad where this type of contract was common with delivery of food from a farm at relatively low cost and very fresh with the proviso that one would receive whatever was available. I mostly remember it as a time when friends and neighbors were always trying to get rid of a crate of kale or carrots. Eventually, it fell out of fashion, partly because of the huge amount of resulting waste. Funnily enough, just before the pandemic, I heard a young guy pitch exactly this idea for a company. He did not seem to be aware that it had been tried and failed.
While we don’t often think about it this way as it comes bundled with a contract to connect to the power grid, this is a financial product that households buy: a long-term option contract on electricity. It is probably a very good financial product for most households and in fact, de-financialization of the household electrical market can lead to disaster.
A more technical point is that claims that solar is cheap without subsidies are often wrong because while they are not receiving monetary subsidies anymore — which is excellent! — they are often still receiving a very important subsidy in that the grid is contractually obliged to pay for renewable energy even if nobody wants it and it costs money to get rid of it (which is how you get negative energy prices).