Why home energy efficiency is more cost effective and better for our economy than replacing our nation’s dying nuclear power plants.

Over the next 20 years, the power plants that produce one-third of the nuclear energy in the United States will reach the end of their operational lives. In the wake of the Fukushima disaster, other countries (Switzerland, Germany) are reconsidering their commitments to nuclear power. In the U.S., Michael Levi asks in this Slate article whether we can shift from nuclear to other fuel sources for our power generation.

But we’d like to present an alternative option to the discussion. If we use power more efficiently, particularly in our homes, we can avoid replacing these aging nuclear power plants entirely.

For half the cost of a new nuclear power plant, we can retrofit 1,600,000 homes for energy efficiency and save the same amount of energy. Retrofitting the houses would create 220,000 new jobs – that’s 90 times more jobs than you’d get from the replacement nuclear power plant.

Crunching the Numbers

To be clear, we at EnergySavvy are not anti-nuclear. We’re not pro-nuclear either. We’re just presenting the numbers in way that we hope can inform the national discussion.

  • In this comparison, a new nuclear power plant is expected to last 40 years and produce at the U.S. average of 12.3 billion kilowatt-hours (kWh) per year. The levelized cost of electricity for a new nuclear plant that we’re using is 8.4 cents per kWh, which includes the cost of financing, building and operating the plant for 40 years. The total cost for this plant and its power for 40 years is $41 billion.
  • Instead, if you want to retrofit enough houses to eliminate the need for 12.3 billion kWh per year, the calculation works like this: A typical electrically heated U.S. home uses 20,000 kWh per year, which can be reduced by 30% with a $12,000 energy retrofit, based on various industry estimates. You’d need to retrofit just over 1.6 million homes to equal the entire annual energy production of a nuclear power plant, for a total cost of just under $20 billion. Home energy efficiency improvements in electrically heated homes include upgrading the efficiency of the electric heating system, insulating and making air sealing improvements to the home’s building envelope, using solar hot water heating systems and replacing inefficient A/C units and appliances.
  • Job creation, in each case, looks like this: At peak construction, building a nuclear power plant would employ as many as 2,400 workers, eventually leveling out at around 400 to 700 long-term employees. For the home retrofits: According to Matt Golden, Policy Chair for Efficiency First, retrofitting 1,600,000 homes in a year would create roughly 220,000 jobs.

Caveats and Criticism

Of course, this kind of rough analysis uses many assumptions and can be subject to many criticisms. Let the discussion ensue:

  • What about the cost of storing nuclear waste forever? While the operating cost of a nuclear power plant includes the storage of spent nuclear fuel during its 40-year operational life, the cost of safely storing that fuel for thousands of years afterwards is not included in this analysis. If it were even possible to estimate, the relative cost effectiveness of home retrofits would look much, much better.
  • How do you really know what a new power plant will cost? We’re pretty solid on the home retrofit cost statistics, but the nuclear power plant cost calculations have a lot more uncertainty. Nuclear power plants typically take around ten years to build, so estimating the true cost is nearly impossible given fluctuating material prices, cost of capital and other unforeseen costs. Cost overruns for a nuclear reactor have averaged nearly 300 percent. The last nuclear power plant to go online broke ground in 1973 and wasn’t finished until 1996.
  • Why are we picking on electrically-heated homes? Thirty percent of U.S. homes (according to EIA’s 2005 statistics) use electricity for heating. Many more use natural gas or heating oil, and most energy efficiency efforts focus on achieving efficiencies with those fuels. The impending nuclear power plant “retirement boom” provides a great opportunity to think about getting more efficient with electrically heated homes.
  • Don’t nuclear power plants last longer than new furnaces? Nuclear plants have 40 year operational leases and can be extended for an additional 20 years. Different energy efficiency measures have different measure lives – LED light bulbs last less than 10 years, insulation and new furnaces can last for 30 years or more. For simplicity’s sake, we’re treating the measure lives of each option equally at 40 years.
  • This is a lot of houses we’re talking about. Yes. If we want to avoid replacing some or all of the nuclear power plants that are going to reach the end of their operational lives within the next 20 years, we have to start retrofitting houses at volume now so we’re ready when plants need to start shutting down.
  • Who pays for either of these two options? That’s a pretty complicated question and it certainly involves issues of rates and cost recovery within the utility regulatory field. We’re making the argument that investing in efficiency might be a better use of a utility’s resources than fully paying to build new nuclear power plants. Some innovative utilities are developing energy efficiency models that are increasingly cost effective, and work well for their shareholders and regulatory frameworks.

In the end, we don’t believe that any of these assumptions invalidate our conclusion that our country would be far better off increasing the efficiency of our housing stock through home retrofits over the next 20 years than replacing all our aging nuclear power plants. We can meet this impending energy challenge with half of the cost, create far more jobs and enjoy all the side benefits that come with going the retrofit route: healthier and more comfortable homes, lower utility bills for homeowners than what they would have paid, no increased burden of storing spent nuclear fuel for thousands of years.