January 19, 2015 6 Comments
Georgia Power is building a nuclear power plant. That would be good if they foresaw making a legitimate profit from it. It doesn’t sound like it.
Georgia Power says the Vogtle project creates lots of jobs and buys lot of building materials. The same could be said about the construction of a large pyramid. The question should be about the value of the costly project verses other things that might have used the labor and materials.
So how does a society choose between alternative uses of resources? Under market conditions with unhampered price signals, consumers decide with their spending what uses should be made of resources.
That’s not how the decision to build the Vogtle nuclear plant was made. Instead, the drivers were lobbying on the state and federal level for special government favors that would never be granted voluntarily by consumers. The academic term for this is rent-seeking; the more everyday term is cronyism.
Given all the special treatment from government for nuclear plants, it is doubtful they could be built under market conditions. Natural gas and coal, with far less up-front costs and competitive variable costs, are the capacity-of-choice for competitive markets.
That’s pretty much what always seems to happen when things are built for political purposes.
It has some good features, I think, such as the use of heated water from the plant for domestic heating, which works well in an urban area. I think they are going to have difficulty finding enough pelletized straw to burn, although the fact that the UK has prohibited burning straw in the field (last I knew that was the most efficacious way to release nitrogen back into the soil, not that the greenies ever cared about that) but pelletizing on that scale is not an inconsiderable process.
From the website it sounds reasonably OK to me but £325 million without a detailed plan (they haven’t sited their generating station yet, or completed detailed environmental surveys). So there is still a lot of room for the price tag to grow, and unintended consequences to strike.
In addition, it looks to me like they are relying heavily on academics, and rent-seeking government contractors and politically connected people generally. I saw no mention anywhere on the website that they thought anybody, anywhere would make a profit, not even the wheat farmers (switchgrass, anyone?).
My best guess at the moment (I haven’t even close to enough information for an opinion) is that it’s not a bad idea but they’ll not get it done in 30 years and the budget will treble (at least).