The Associated Press has just published an analysis of the insurance costs and coverage for reactors around the world. The results as reported in the Kansas City Star today:
Nuclear dilemma: Adequate insurance too expensive
By JUERGEN BAETZ
From the U.S. to Japan, it’s illegal to drive a car without sufficient insurance, yet governments have chosen to run the world’s 443 nuclear power plants with hardly any insurance coverage whatsoever.
Japan’s Fukushima Dai-ichi nuclear disaster, which will leave taxpayers there with a massive bill, highlights one of the industry’s key weaknesses – that nuclear power is a viable source for cheap energy only if plants go uninsured. The plant’s operator, Tepco, had no disaster insurance.
Baetz looks at the situation in a number of countries, including Germany:
The cost of a worst-case nuclear accident at a German plant, for example, has been estimated to total as much as euro7.6 trillion ($11 trillion), while the mandatory reactor insurance is only euro2.5 billion ($3.65 billion).
“The euro2.5 billion will be just enough to buy the stamps for the letters of condolence,” said Olav Hohmeyer, an economist at the University of Flensburg who is also a member of the German government’s environmental advisory body.
One estimate by a German think tank shows that coverage for every euro1 trillion ($1.5 trillion) in estimated damages would theoretically cost annual insurance of euro47 billion ($68.5 billion).
In Switzerland, the situation is even worse:
In Switzerland, the obligatory insurance for nuclear plants is being raised from 1 to 1.8 billion Swiss francs ($2 billion), but a government agency estimates that a Chernobyl-style disaster might cost more than 4 trillion francs – about eight times the country’s annual economic output.
The results of under-insurance is an artificially low price for nuclear power:
Increasing the liability coverage to, say, euro100 billion ($146 billion) would lead to a premium of about euro3.20 ($4.67) per kilowatt hour, according to Bettina Meyer of the Berlin think tank Green Budget Germany.
“A worst-case scenario could lead to the closure of New York City for years, as happened at Chernobyl … leading to almost unthinkable costs,” University of Pennsylvania’s Howard Kunreuther and Columbia University’s Geoffrey Heal said in their 2009 study.