The RSIS Centre for Non-Traditional Security (NTS) Studies' Blog

The Hidden Costs and Risks of Nuclear Energy

Posted in Energy and Human Security by NTSblog on January 13, 2011

Increasing demands of energy have led many countries, particularly those in the rapidly developing Asia-Pacific to consider nuclear energy as the power supply of choice. This has raised a series of concerns – from issues of socio-economic feasibility and sustainability to geo-political risks of nuclear energy in the absence of effective global rules on sensitive nuclear technologies. Essentially, these boil down to the issue of hidden costs and risks, which have not been factored in by countries – whether with established or preliminary nuclear capabilities. These costs are as follows:-

Firstly, despite technological advancements that have made nuclear reactors significantly safer, the costs of risk management strategies are high. Investment capital costs constitute a full 60 per cent of the total cost of nuclear-generated electricity, compared to 25 per cent for operation and maintenance; and about 15 per cent for the fuel cycle. Natural uranium costs make up merely 5 per cent in this overall equation. These risks must be limited in order to facilitate an investment climate conducive for nuclear industries.

Secondly, there are tendencies to underestimate the various costs associated with nuclear energy. This is due to several factors:- (1) Limited availability of data that mostly originates from the UK and the US; (2) Nuclear planners’ discretion, whereby there is the tendency for them to accept nuclear plant manufacturers’ cost estimates and their inclination towards the choice of unrealistically low discount rates; or use accounting methods that actually shrink capital costs while overestimating the operating capacity of nuclear power plants (NPPs); and (3) Actual costs for NPPs decommissioning are fifteen times what has been regularly publicised.

Thirdly, and particularly in terms of addressing the likelihood of nuclear proliferation, is the issue of managing nuclear waste or spent fuel, which has dual use – (1) it can be used to provide additional fuel for nuclear plants; (2) it can be exploited to generate fissile material for nuclear weapons. While there have been technological advancements in processing spent fuel, the storage of spent fuel has yet to be resolved. Storage requires a location that ‘geologically stable… and be politically acceptable to the governing state (and to its neighbours) in terms of proximity to populations centres and to the movement of spent fuel itself.’ This is critical in countries that do not have the capacity to invest in reprocessing technologies or are initiating a nuclear program from scratch.

Finally, large investments into nuclear technology, which result in a small output in total energy demand may not make economic sense. Nuclear energy would possibly be an attractive option for large consumers like the US and China, even if it is a small percentage of mix. However, a relatively small consumer would need to weigh the investments and economic viability carefully before jumping onto the bandwagon.

Efficient management of nuclear energy thus would need to factor in these hidden costs. However, such high costs coupled with Southeast Asia’s geo-physical conditions, poor culture of safety and relative inexperience with nuclear energy management, countries in the region would be better off channelling their resources to harnessing renewable sources of energy.


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