White Paper - 03. Perform a macroeconomic cost-benefit analysis of nuclear energy.

Page / - last modified by Ad Min on 2021/04/24 22:49

03. Perform a macroeconomic cost-benefit analysis of nuclear energy.

last modified by Ad Min

on 2021/04/24 22:49

Table of Contents

We believe that the Dutch government can make a commitment at a relatively low cost by financing a large part of the initially needed capital. Since the government is 'in the same boat' as the private operator, the latter can be sure that the government does not change its mind halfway through. From a social point of view, such a commitment is desirable because of the CO2 reduction that, especially in later years will bring a great deal of prosperity.

Nuclear energy when considered from a financial/economic point of view is characterised by high initial costs (capital intensive) and a long operational lifespan (we account for 60 years) with constant energy production at very low marginal costs. Given the long project & build-time required, every private company will demand a clear commitment from the government. Usually, this commitment is difficult to make concrete, or (in the case of guaranteed prices) is awfully expensive for society. That’s why many studies conclude that nuclear energy comes at high costs.

We believe that the Dutch government can build trust by showing a clear commitment—at a reasonably low cost—by financing a large part of the initially needed capital for a new nuclear power plant. Since the government then shares the same risk as the private operator, the latter can be sure that the government does not change its mind halfway. From a societal point of view, such a commitment is desirable because of the CO2 reduction that—especially in later years—will bring a lot of prosperity. After all, in the short term (10 years) we can still make large (efficient) steps with wind and solar energy, but in the medium term a technology is needed that can deliver energy constantly and reliably. The price for CO2 emissions of the 'next best alternative' (e.g. natural gas) will eventually be so high that the long-term yields (in tons of CO2 equivalent) more than make up for the initial investment in nuclear due to the high social return.

Dr. Rogier Potter van Loon analysed the costs of this loan for the government—in a recent article—and quantified the social benefits. This leads to a positive business case for Dutch society, with a social return of 9.3% over a period of 65 years. Expressed in terms of today's CO2 prices, this implies a subsidy of (only) 5€ per ton (well below the ETS and SDE++ price). Finally, a sensitivity analysis shows that the business case remains (very) positive even with changing assumptions and parameters.