1. Reactor Economics 2007 Jim Harding California Senate Energy Committee Hearing December 10, 2007 San Diego

2. Key Developments Near certain carbon controls Persistently high fossil fuel prices Growing government subsidies for non-carbon resources Possible loan guarantees Possible production tax credits The “China Effect” – concrete, steel, copper – up substantially since 2002 Nuclear supply chain moribund for two decades Electric industry restructuring Less certain cost recovery Transmission bottlenecks and lead time

3. Since 2002…

4. Steeper Curve Than in the Mid 80s

5. Pulverized Coal Gas (CCCT)Eastern IGCC WindNuclear Capital Cost ($/kW) 2438700279517004000 Total cost (cents/kWh) 5.86.8 7.18.9 CO2 Capture Cost ($/kW) 940470450NA Cost for CCS (cents/kWh) 6.22.83.4NA Cents/kWh12.09.610.27.18.9-9.8 Cents/kWh (credits $10-30) 6.2-7.97-7.77.1-8.77.18.9-9.8 Standard and Poor’s Assessment

6. Beware Old Studies, Particularly for Nuclear Power Studies GE/Westinghouse ($1000-1500/kW) University of Chicago ($1500/kW) World Nuclear Association ($1000-1500/kW) US Energy Information Administration ($2083/kW) Newer analyses disagree – S&P ($4000/kW), Florida Power and Light, Keystone report ($3600- 4000/kW), Moody’s ($5000/kW)

7. US Projections – Decades Ago Construction startEstimated OvernightActual Overnight% Over 1966-1967$560/kW$1170/kW209% 1968-1969$679/kW$2000/kW294% 1970-1971$760/kW$2650/kW348% 1972-1973$1117/kW$3555/kW318% 1974-1975$1156/kW$4410/kW381% 1976-1977$1493/kW$4008/kW269% Mark Gielecki and James Hewlett, Commercial Nuclear Power in the United States: Problems and Prospects, US Energy Information Administration, August 1994. Data is in 2002 dollars.

8. US Economics – Two Decades Ago Koomey, Jonathan, and Nate Hultman. 2007. “A Reactor-Level Analysis of Busbar Costs for US nuclear plants,” 1970-2005, forthcoming in Energy Policy

9. Recent Japanese Experience PlantMWeCODYen@COD2002$s/kW2007$s/kW Onagawa 3825Jan 20023.1 Billion24093332 Genkai 31180Feb 19944 Billion26433656 Genkai 41180Jul 19973.2 Billion19602711 KK 31000Jan 19933.2 Billion26153617 KK 41000Jan 19942.2 Billion26093608 KK 61356Jan 19964.2 Billion22903167 KK 71356Jan 19973.7 Billion19572707 Y 5 (SK)1000Jan 200417002352 Y 6 (SK)1000Jan 200516562290 Average23543257 Cost data from MIT 2003 Future of Nuclear Power study. Average does not include South Korean units.

10. Escalation Likely Worse for Nuclear Industry moribund in Western Europe, US, and Russia since TMI and Chernobyl Twenty years ago (US): 400 suppliers, 900 N- Stamp holders; today 80 and 200 Only one forge for large parts – Japan Steel Works; maybe Creusot Forge (France) Skilled labor and contractor limits Uranium production well below current consumption

11. Lifecycle Costs Cost CategoryLow CaseHigh Case Capital Costs 6.07.9 Fuel 1.62.0 Fixed O&M 1.31.8 Variable O&M 0.5 Total (Levelized Cents/kWh) 9.412.2 Costs are in real discounted 2007 cents/kWh

12. Tom Neff (MIT), Uranium and Enrichment: Enough Fuel for the Nuclear Renaissance?, December 2006.

14. Jeff Combs, President, Ux Consulting Company, Price Expectations and Price Formation, presentation to Nuclear Energy Institute International Uranium Fuel Seminar 2006

15. Fuel cycle stepsMITThis analysis Uranium$30/kg$300/kg Enrichment$100/SWU$140-340/SWU Fabrication$275/kg Disposal$400/kg Reprocessing$1000/kg$1500-2000/kg Fuel cycle cost Open0.5 cents/kWh1.6-2 cents/kWh Closed2 cents/kWh3.4-4.3 cents/kWh Differential4x2-3.5x Reprocessing Is Expensive

16. Efficiency and Renewables are Disruptive Technologies A disruptive technology is often cheaper than the operating cost of the existing system Demand is not limited to growth in service Efficiency resources cost less than operating costs for existing gas (or coal with carbon taxes); they pay for themselves with +3x more carbon savings per dollar Wind was disruptive from 2002-2005 and may be again Photovoltaics may soon become one Only disruptive energy technologies can grow fast enough to solve climate challenges

17. Rapid Worldwide Growth in Renewables

18. Efficiency Is A Resource = 22 Fewer 1 GW Plants Since 1970

19. Some Is Driven By Technical Innovation

20. Northwest Power Planning Council, Achievable Savings, August 2007 Codes, Standards, and Programs Are Also Needed

21. Historical Northwest Utility Programs Northwest Power Planning Council, Achievable Savings, August 2007

22. Figure 8 -Estimated ENERGY STAR CFL Market Share for the Northwest and U.S., 2000-2006 Sources: NW CFL sales 2000-2006: PECI and Fluid Market Strategies sales data reports; and NEEA estimate of an additional 1.5 million WAL-MART CFLs sold region-wide in 2006 (See Appendix A [Section 9.1.1] of MPER3 for more detail); U.S. and NW population estimates 2000-2006: U.S. Census 2004; U.S. market shares and non-CFL sales 2000-2005: Itron California Lamp Report (2006); U.S. market share 2006: D&R International (personal communication). Compact Fluorescent Market Penetration

23. The Bottom Line Twenty years from light water reactor technology will be roughly the same as it is today Efficiency resources, wind turbine technology, and photovoltaics are improving rapidly Take one example --- Nanosolar started by the Google founders, backed also by Swiss Re Building two 430 MW/yr thin film PV production facilities this year in Germany and California, using a technology they equate to printing newspapers Target price is $0.50/peak watt --- cheaper than delivered electricity price in most parts of the world The cheapest, least risk strategy is rapid development of efficiency resources