ATOMIC POWER
What Does It Mean To Our Peacetime Economy?
by Herbert A. Simon
We ha\r© now entered fer,p Three of the atoaie age 0 Two years have
passed^, and few of the extravagant speculations in which the commsntators
indulged in the weeks after Hiroshima have yet been reaiizedo The boasb so
far has not taken mankind to Armageddon <= although current events offer
little comfort to those who would prefer to postpone this spectacular
event,, (fo the other hand* atomic energy applied to the purposes of peace
has yet neither ushered in the era of plenty nor realised the Utopian's
dream of a tro-hour work day0 Coal^ oil^, gas^ and water still supply th©
energy that drives the machines 0
Two years^ of course* is a very short time* No one familiar with
the numerous engineering problems that must be solved in reducing basic
scientific discovery to practical application has had any illusion that
an atomic power plant would become & reality "within such a short interval.
But what about the future? Although the time schedule still seems to be
a matter of speculation even among the atomic scientists^ the prospects
appear bright for a practical atomic power plant within five or ten years,
If this goal is actually realized (and assuming - optimistically <~ that
the bombs do net explode too soon)# what effects can we expect atomic
power to have upon otar eeoaoisy during the first generation after it has
been introduced?
Prophecy on matters of this kind is a risky business Perhaps th©
best the prophet can hope is thatjs before his predictions are proved by
events to be incorrect^ his prophecy will have been forgotten* He is not
always so lucky* The distinguished physicist* Robert A. HLlllkan* writing
in the pages of Science for September 2&g> 19280 was bold enough to predict:
"The energT available through the disintegration of radioactive^or any
other^ atoias may perhaps be sufficient to keep the corner peanut and popcorn man going jon a few street corners in our larger towns for a long time
yet to come* but that is all .... The energy supply to man in the past has
been obtained wholly from the sun* and a billion years hence hs will* I
think* be supplying all his needs for 3JLght* and warmth* and power entirely from the oun^o Professor Mtllikan°s billion-year estimate was quoted
in 1933 by President Hoover5 © Committee on Recent Social Trends; and^ now
that the estimate has proved some 999,999*975 years too long* it still remains for all to read in the clear tP® of that coaiaittee 0 s report*
One other prefaetory remark is in order0 Ihe estimates contained in
this paper are not based.on any "confidential** information about atomic
energy a The writer is not in possession of any such infoimation0 %e
fasts that will ba used as the basis for prediction are contained in two
published estimates of the? probable cost of producing electricity in an
atomic power plant0
One of these estimates was prepared by the staff of the Manhattan
Project and was published in Mr* Bernard Baruch*s initial report to the
l&iited Nation8 0 the other estimate was prepared by an unofficial group
at the University of California^ and it is based primarily on grmeral
engineering considerations rather than on "inside" information from the
scientists actually engaged on the atomic energy
In what fona mil atomies energy be used?
Three possibilities for the use of atomic energy haw been vddely
discussed? the generation of electric energy in an atomies power plantp
the use of direct h©at fron an atoadc pile# and the use of atomic energy
In some fora to propel vehlelea on land, sea^ or in airc
first of these possibilities is apparently the oae of most
diate practicability^, and it is perhaps not too optimistic to expect that
a pilot plant will actually be constructed within fiv© years 0 What problems
of desigpa are yet unsolved is a matter on which the public ©an only eonJeetureo
Blreet heat from an atomic pile might have important applications in
metallurgy and in the oentval heating of cities 0 It will be necesgsary to
devise materials^ for use in the structure of the pilep that will not disintegrate under a combination of high temperature and radioactive bcmbardmentp and to devise a method for transferring heat vdthout transferring
harmful radioa@tivity0
The possibility of powering automobiles*) trains* airplanes, or boats
with atomic eaeripr appears somewhat remote because of the shielding problem*
Until nuclear radiation can be blocked by something lighter than a fourfoot concrete ^11# we will have to rely on nore traditional £u®Xs for our
transportati on 0
Since ©lectri© 93i®2*g|? appears to be the most likely atomic product in
the near future;, iv® mil be primarily aon@siisied In on? discussion with this
parti euk . pplicati on 9
Atomic on©r^r is not free energy
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Some of the more extravagant predictions for the atomic era have
been based upon the misconception that ate dually-produced electricity
be virtually free eleetricityo This idea is entirely false 0
Any engineer knows that the cost of fuel is only a very snail part
of the cost of electricity0 We are already getting a substantial part
of our electricity from nfreew fuel - waterpower0 But before falling
water can b© transformed into electricity, dams must be built* generating
stations ©onstrueted^ transmission lines erectedo The interest on the
investment in these sferuoturse* their depreciation ajid obsolescence* and
their maintenance and operating costs must all be charged against the
electric energy that is generated 9 Even in a coal generating plant several
hundred miles from coal mines,, the fuel cost will amount to only about
2 mills per kilowatt hour generated out of a total generating cost of 4 1/2
tO diX mills o
la estimating the cost of atomic energy, the fuel cost can be neglected - regardless of the price of uranium -» since once the pile is on operation^ it will inanufa<s3tu?$ its ot<m fuel0 Hence* the important question is:
what will be the ©apltai investment and operating cost of an atomic plant
in comparison with coal and hydro-eleetrie plants?
According to the "official" estimate presented by Baruch, the ©apital investment in an atomic generating plant vdll be about $325o per kilowatt
generating capacity. The California group arrived at the much more optimistie investment figure of $130 . per KW* Annual charges - interest,* depreciation* and obsolescence - of not less than 10 'per cent must be assessed
against this investment c. If we assume a load faetor of 50 per eent^ each
kilowatt of cgapaeity vdll generate 4*380 KWH of eleetricity per year0 With
and annual charge of $13 «> to 133 per KW, we get a generetlng cost - for
fixed charges alone - of 3 to ?o5 mills per KWHc, To this must be added
operating and maintenance charges of not less than 1 or 1»5 mills per KWH 0
Even if the more optioistls? Investment figure is the correct one^ we
see that our electricity vdll cost k to 4*5 mills per KWH at the generating
station; while if the more conservative estimate is correct* it will cost
So 5 to 9 mills o Pour asills is about the «?ost of electricity at our most
economical hydro stations* and that is not much below the cost of electricity generated from c©al at the mine (provided an adequate supply of eondens~
er water is available) <, Almost all generating stations of any size produce
electricity at a cost beloiir 9
Prom these figures^ it doss not appear that the "atomic revolution" is
going to be a very sweeping revolution after all* so long as atomic energy
is restricted to electric generation*, Of course^ we ean expect that a new
technology mil undergo a whole series of improvements* and that the cost
of building an atomic plant now may be substantially higher than it will be
15 years from now0 It is idle to speculate how rapid such improvement
will be, but the data now available do not give any grounds for believing
that atiwaie electricity will be generated at a cost much below 4 mills
per KWH in the visible future e
of cheap power
Econoaie effects
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Let us go one step furthar and assume that atomic power can actually be produced at a cost several mills lower than the present cost of
electricity0 How much would this mean to our economy? In 1944* about
230 billion KWH of electricity were generated in the United States, ineluding electricity produced by industrial establishments for their own use n
Each mill per KWH reduction in generating costs would therefore represent
a saving of |2B05 000,000 per year to the economya 1!he total national income in 1944 was $l60j,OQOpOOOjOQ00 Hence* the resources saved by each mill
of cost reduction could,, if applied to other uses,, increase our national
income by perhaps one-sixth of 1 per cento
Even an eight mill reduction in cost - a very unlikely eventuality would increase the national income by only 1 1/2 per eento Or, if we wish~
ed to consume this increased income in the fora of leisure rather than
products^ we could shorten our 40-hour week to a 39 1/2-hour week, or fcsk*
four days extra annual vacation 0 This is a very pleasant prospect* but
hardly an economic revolution
It may be argued that we hav® not considered the possible indirect
effects of the availability of cheap power0 If power were cheaper, it
could be used more freely in industrial proce&jes^ with a consequent increase in the productivity of each worker0 Moreoverj, products which,, like
aluminum require a great deal of electricity for their production would besome cheaper and could be substituted for more expensive products (e^g*,.
the light metals for iron and steel) e
Itie above argument is correct only when important qualifications are
attached to it 0 It is true that there is a very close relation between
the productivity of an economy and the amount of power consumed per worker;
but mechanization involves not merely a substitution of mechanical power
-oi* hand labor but a substitution of mechanical power and power machinery
for hand labor0 The cost of the mechanized process is not merely tha cost
of the power consumed^ but; in addition, the fixed and operating charges
for the power machinery and other capital plant required 9
How far it is profitable to mechanize depends on how large are these
overall costs. Since in most manufacturing processes fuel and power represent less than 5 per-cent of the value of the product* it is not often
that a moderate reduction in power costs will make mechanization profitable
where it has not been before 0 Once power rates have reached a moderate
the amount of capital available in an economy for investment in machinery
will be far more important than the cost of power In determining how
much power will be consumed 0
a mere relikewise, it is hard to find illustrations of cases where ntly
to lead
sufficie
duction in power costs will cheapen the final product in
case of alto large-scale substitution for other products. Evenonly the
one-fifth of the
uminum, the cost of electricity probably represents r cost
this incost of the producto A 50 per cent reduction In powe pricsefor
of the produstry wiild permit only a 10 per cent reduction in the
duct o
Atomie energy; is avaiil.able everywhere
rtant charThus far no mention has been made of one of the most impocan
be prot - it
acteristics of electricity generated in an atomie plan
is wantedo Hydroduced at about the same cost at virtually any place it
or large charges must
electric power must be used very near the damsite -from
coal stations must
be incurred for transmitting it elsewhere o Power
e it can be had
bear the cost of transporting the coal from the mine, henc
ds 0 In the
at moderate cost only within a limited radius from coal stfiel
without costo
atomic plants the fuel can be transported anywhere almo
erences in the availOnly local differences in construction costs and Diffthe
lead
ability of condenser water ~ if that is required by r0 plant - can
to major differences in the cost of producing the powe
ughout
The present location of industry in the United States andofthro
coal and
sits
the world is closely dependent upon the location of depo
raw materials are
iron and of developed water power sites o In some casesproc
d where cheap
carried long distances (e0go# alumina) in »>rder to be fferesse
ence to geography,
power is available 0 Atomic power^ because of its indi
of industry and
might permit a far more flexible pattern for the location
e be
might permit industrialisation in areas where this would not otherwis
feasibleo
Here again* caution is needed in assessing the possibilities?
ywhere" outIn the first place, atomic power will be "available everiona
l control
side the United States only if a workable ie&eiae of Internat
pt it0
can be devised and if the individual nations are persuaded to acce
In the second place, important segnents of heavy industry would# ir*
any casej, continue to be attracted to the iron mining regionso
industries (e0 go»
In the third placep even now there are many importantand
which are
textiles) in which power costs are relatively unimportant
6
often located in areas with fairly high power rates*
In the fourth place* coal is used as a chemical as well as a fuel;
and electricity could not be substituted for it, without other changes in
technology^ in some of its uses* For example* it is highly problematical
whether electrical reduction of iron ore could compete with blast furnaces
even if electricity were very cheaj>c Several theoretically possible methods
of electrical reduction o.T ore to sponge iron are known, but their practicability lias by no means been demonstrated*,
Industrialization of backward countries
Almost all the trbaekwardw countries of the world today are looking
to industrialization as the primary solution £or their problems of poverty
and over-population* But in most instances, the maximum rate at which this
industrialisation can proceed will be limited more by the scarcity of skills
and technological knowledge and of the capital needed to £rdld factories
and machinery than by the lack of power resources* China 8 s coal supply
would last at least 300 years* and Indians 80 years,? even at the American
per capita rate of consumption, and their supplies will last far longer at
the lower consumption rates that these countries are likely to achieve^
To be sure, there are exceptions/, Even before the war* the expansion
of Japanese industry was pressing against the limits of the coal supply,,
and the best hydroelectric sites had already been almost fully developedo
South America is very deficient in coal; and although there are great potentialities for hydroelectric development^ the favorable waterpower sites are
hundreds of miles from the principal areas of industrial development 0 Coal
eould be imported cheaply by water; but* since very large amounts of foreign
exchange would be required to pay for this coal* a major industrialization
based on imported coal appears beyond the financial reach of these eountid«a
In India o although the aggregate coal supply is large* it is mostly concentrated in the northeast, near Calcutta^ and atomic power would very greatly
facilitate the industrialization of the southern and western parts of the
peninsulao These examples serve to indicate that the development of a practicable atomic power plant, even though unable to produce electricity much
below the cost at favorably located coal or waterpower stations^ may be of
considerable import&nee in the industrialisation of areas of this kind.
If these estimates of the significance of atomic power seeai too conservative, if we are convinced that a technological innoi^it&csn of such a
radical kind must of necessity bring about equally radical changes in our
economy^ we must remember that these predictions refar to a limited area
of application -' the use of the atomic pile to produce electricity**
If effects of really revolutionary scope are to appear^, they will most
probably come about through the Invention of entirely new applications of
the atond© pils (just as the effects of the internal combustion engine and
ware prottead through such inventions as the automobile and
the radio) rather than simply through a cheapening of power<» Already,
one of these applications has appeared on the scene - it antedated, in
fact the invention of the self-sustaining pile«> I refer to the use of
radioactive tracers in biological research and medicine*, This application
and others yet to be discovered seem far more likely to produce the Atomic
Revolution than does the production of cheap electricity<>