Meanwhile, after an initial rush of enthusiasm proposals for new nuclear plants ran into economic reality. When the deadline set under the Nuclear Power 2010 program expired, twenty-six proposals had been received by the Nuclear Regulatory Commission. But by the beginning of 2011, more than half of these had been abandoned, and ground had been broken on only two sites, with a total of four reactors.
The nuclear renaissance was already tottering, but the disaster of Fukushima was the coup de grâce. It’s true, as nuclear advocates have argued, that the plants at Fukushima were old and that a disaster as big as the March tsunami was hard to plan for. No doubt the failures in cooling and containment systems that gave rise to the present crisis can be overcome and reactor designs modified to improve safety.
But safety doesn’t come cheap, and redesigns mean delays. With no prospect of any further increases in subsidies and loan guarantees, it seems likely that most of the proposals for new nuclear-power plants in the United States will be abandoned. And, if only for reasons of diversification and speed of construction, the lost Japanese reactors will probably be replaced by gas-fired plants, with some renewables. Meanwhile the Europeans, who were reconsidering nuclear power, have moved decisively in the other direction. Even China has scaled back its targets for nuclear construction and extended the timescale, effectively halving the proposed rate of construction. Such a modest program will not produce the scale economies and operating experience needed to generate a substantial reduction in the cost of nuclear power over the next two decades.
Meanwhile, the cost of PV has already fallen well below that of nuclear and is set to fall further. The average retail price of solar cells as monitored by the Solarbuzz group fell from $3.50/watt to $2.43/watt over the course of the year, and a decline to prices below $2.00/watt seems inevitable. For large-scale installations, prices below $1.00/watt are now common. In some locations, PV has reached grid parity, the cost at which it is competitive with coal or gas-fired generation. More generally, it is now evident that, given a carbon price of $50/ton, which would raise the price of coal-fired power by 5c/kWh, solar PV will be cost-competitive in most locations.
The declining price of PV has been reflected in rapidly growing installations, totalling about 23 GW in 2011. Although some consolidation is likely in 2012, as firms try to restore profitability, strong growth seems likely to continue for the rest of the decade. Already, by one estimate, total investment in renewables for 2011 exceeded investment in carbon-based electricity generation.
The stunning decline in the cost of PV has critical implications for the debate over climate policy. It is now clear that the cost of decarbonizing the economy, and the associated economic disruption, will be far lower than was suggested by previous estimates and even by many recent estimates that use out-of-date cost estimates. In this context, the continued adherence of most U.S. Republicans to conspiracy theories, in which the science of climate change is a cover designed to bring about radical economic and social change, is even more nonsensical than before. Perhaps 2012 will be the year when sanity finally prevails on this issue.
John Quiggin is the Hinkley Visiting Professor at Johns Hopkins University and an Australian Research Council Federation fellow at the University of Queensland. He is author of Zombie Economics: How Dead Ideas Still Walk Among Us (Princeton University Press, 2010).