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Come Saturday Morning: Dirty Energy’s Decline

Wind speed map of US. Credit:

I saw this the other day in my inbox:

According to the latest “Energy Infrastructure Update” report from the Federal Energy Regulatory Commission’s Office of Energy Projects, 1,231 MW of new in-service electrical generating capacity came on line in the United States in January 2013 — all from wind, solar, and biomass sources.

This represents a nearly three-fold increase in new renewable energy generating capacity compared to the same month in 2012 when wind, solar, and biomass provided 431 MW of new capacity.

In other words, all of the new energy generation in the US last month came from clean and renewable energy — wind, solar, hydro, geothermal, et cetera — and none of it came from coal, oil, or nuclear power.

Why is this happening, even as the extremely heavily-subsidized dirty-energy industries dump tens of millions of dollars in TV ads alone designed to make you feel impressed by their great size and importance and alleged necessity? Because Wall Street (joining its European counterparts) is gradually realizing that dirty energy as a source of electricity is a sucker’s bet:

…Investing in and lending to emissions-intensive companies, though profitable in the short-term, will expose banks to future carbon-related credit and investment risks. For example, an electric utility that extends the life of an aging coal plant faces risks from future greenhouse gas regulations. It also faces competitive threats from peer companies that switch to natural gas or renewable generation options that are currently or will soon be cost-competitive with coal. Over the long term, the utility’s investors and creditors will bear the financial risks from coal-fired generating assets that may be stranded by a carbon-constrained economy. These risks have already begun to materialize for some electric utilities and have prompted a wave of coal plant closures in the U.S. 8

But, you say, what about nuclear power? Isn’t Wall Street in love with that? Actually, no — it turns out that Wall Street started backing away from nukes decades ago, even with the Get Out of Jail Free card known as the Price-Anderson Act as a backstop. As Christian Parenti stated back in May of 2008:

The fact is, nuclear power has not recovered from the crisis that hit it three decades ago with the reactor fire at Browns Ferry, Alabama, in 1975 and the meltdown at Three Mile Island in 1979. Then came what seemed to be the coup de grâce: Chernobyl in 1986. The last nuclear power plant ordered by a US utility, the TVA’s Watts Bar 1, began construction in 1973 and took twenty-three years to complete. Nuclear power has been in steady decline worldwide since 1984, with almost as many plants canceled as completed since then.

All of which raises the question: why is the much-storied “nuclear renaissance” so slow to get rolling? Who is holding up the show? In a nutshell, blame Warren Buffett and the banks–they won’t put up the cash.

“Wall street doesn’t like nuclear power,” says Arjun Makhijani of the Institute for Energy and Environmental Research. The fundamental fact is that nuclear power is too expensive and risky to attract the necessary commercial investors. Even with vast government subsidies, it is difficult or almost impossible to get proper financing and insurance. The massive federal subsidies on offer will cover up to 80 percent of construction costs of several nuclear power plants in addition to generous production tax credits, as well as risk insurance. But consider this: the average two-reactor nuclear power plant is estimated to cost $10 billion to $18 billion to build. That’s before cost overruns, and no US nuclear power plant has ever been delivered on time or on budget.

As Dieter Helm, an Oxford professor and leading economic expert on energy markets, has found, there never has been and never will be a nuclear power program totally dependent on the market.

Gee, imagine what the American solar industry would be like if the Federal government paid for 80% of the costs of each new solar install — and gave the industry boatloads of tax credits to boot? We’d probably all be driving on these by now.

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