There are only tradeoffs, part 2
Figure 1. Two Tradeoff Curves. Old tech in blue. New improved tech in orange.
The last piece on the tradeoff between nuclear cost and release frequency left an obvious question unanswered and a key implication unexplored.
The inexcusably omitted question is: what keeps a regulator whose only job is preventing releases from climbing ever higher on the cost curve? My only defense for this omission is the answer is pretty obvious. A nuclear regulator needs some nuclear to keep his job. So the rule becomes drive the costs up as far as you can without completely shutting down the application stream. The applicant must have some hope of getting approved with a design that will be able to compete with alternate sources of electricity. He can't push the applicant's perceived cost much higher than the cost of the alternatives to nuclear, without the applicant balking. The regulators have come up with a acronym for this constraint. It's called ALARA, As Low As Reasonably Achievable. Reasonably Achievable in this context means just competitive with the alternatives.
In NRC-like systems in which the applicant pays the regulator to review his application, the problem is exacerbated in an interesting fashion. The applicant becomes the direct source of the regulator's funding at $300 per man-hour. In a fully developed system, the applicant will be paying for scores of high priced bureaucrats. The total bill can easily run into hundreds of millions of dollars. But when the application is approved, this funding stops.1 The regulator will have to lay off dozens of friends and colleagues. He may even lose his own job.
The rational response is to strongly encourage applications. But once you have enticed an application, prolong the process just as long as you can. Continually reassure the applicant. ``It's looking good. We just need one more analysis." Lather, rinse, and repeat. An accomplished regulator can keep this process going for the better part of a decade.
If the regulator does a really good job of responding to his incentives, the overall result is a continuous trickle of applications and an occasional new plant, which ideally is barely competitive with non-nuclear power. My own view is the NRC has done a masterful job of execution.
There have been some missteps. One problem with ALARA is the costs of the other alternatives change. A fully depreciated nuclear power plant should have a marginal cost of less than 1 cent per kWh. But in the 1980's and 1990's, ALARA drove nuclear's OPEX plus fuel costs to more that 4 cents/kWh, still competitive with coal. Then fracking came along and fully depreciated nuclear could not compete with gas which had a fuel cost of 3 cents/kWh. We lost a bunch of plants prematurely. But I don't think you can blame the NRC for that. Nobody saw fracking coming.
But there is a far more fundamental problem with ALARA. We can discuss this in terms of the tradeoff frontier, Figure 1. I have shown the rather fuzzy ALARA constraint as a hatched rectangle. The regulator can push up into this rectangle, but no farther without shutting down new applications.
Over time, technological progress pushes tradeoff curves downward and to the left. Ocean transportation is both orders of magnitude cheaper and orders of magnitude safer that it was 200 years ago. In the last 60 years, coal plant thermal efficiency has gone from around 33% to close to 50%. 60 years ago coal was a mature industry. But nuclear, a brand new technology, has seen little improvement. For example, in the last 60 years, a period of remarkable technical progress, nuclear power's thermal efficiency has stagnated in the low 30's. Quite remarkable.
The problem is that under ALARA progress is unrewarded. On Figure 1, I've shown two tradeoff curves. The old technology is in blue, and a new cheaper, safer technology in orange. Although I have not shown it in the figure, if the new technology is implemented, society's optimum and the competitive market optimum will move down and to the left. The problem is the regulator's optimum changes hardly at all. The shift in the tradeoff curves just gives the regulator more room to push costs up. The investor is no better off with the new technology and its risks, than with the old. Therefore he sticks with the old.
Even if a Gates or the like is able to surmount all the hurdles and commercialize a truly better technology, we will end up at the regulator's optimum. There will be no reduction in nuclear's cost. Nuclear will continue to be a sideshow. Pro-nukes must disabuse themselves of the fantasy that some cheaper, safer technology will somehow change regulator incentives. That's stupider than thinking you can base a viable grid on wind and solar.
Actually, the plant will pay an annual fee to the NRC and some other costs. But that’s a far smaller cashflow and goes to a different part of the bureaucracy.