The Case for Nuclear Power Revised (an uncompetitive technology needs to go away)

“My old man built a nuke. I love them. But it’s hard to pretend that shale hasn’t killed them.”

– Frank Kukielka, Boston Energy Trading and Marketing, May 6, 2021.

… the prospects for the expansion of nuclear energy remain decidedly dim in many parts of the world. The fundamental problem is cost. Other generation technologies have become cheaper in recent decades, while new nuclear plants have only become costlier. This disturbing trend undermines nuclear energy’s potential contribution and increases the cost of achieving deep decarbonization.” Jan de Lange, Consultant and project manager, May 6, 2021

These LinkedIn comments were in response to a National Geographic article, “The Controversial Future of Nuclear Power in the U.S.” Author Lois Parshley states:

The majority of American nuclear plants today are approaching the end of their design life, and only one has been built in the last 20 years. Nuclear proponents are now banking on next-generation designs, like small, modular versions of conventional light-water reactors, or advanced reactors designed to be safer, cheaper, and more flexible.

“We’ve innovated so little in the past half-century, there’s a lot of ground to gain,” says Ashley Finan, the director of the National Reactor Innovation Center at the Idaho National Laboratory.

Yet an expansion of nuclear power faces some serious hurdles, and the perennial concerns about safety and long-lived radioactive waste may not be the biggest: Critics also say nuclear reactors are simply too expensive and take too long to build to be of much help with the climate crisis.

While environmental opposition may have been the primary force hindering nuclear development in the 1980s and 90s, now the biggest challenge may be costs. Few nuclear plants have been built in the U.S. recently because they are very expensive to build here, which makes the price of their energy high.

Jacopo Buongiorno, a professor of nuclear science and engineering at MIT, led a group of scientists who recently completed a two-year study examining the future of nuclear energy in the U.S. and western Europe. They found that “without cost reductions, nuclear energy will not play a significant role” in decarbonizing the power sector.

“In the West, the nuclear industry has substantially lost its ability to build large plants,” Buongiorno says, pointing to Southern Company’s effort to add two new reactors to Plant Vogtle in Waynesboro, Georgia. They have been under construction since 2013, are now billions of dollars over budget—the cost has more than doubled—and years behind schedule. In France, ranked second after the U.S. in nuclear generation, a new reactor in Flamanville is a decade late and more than three times over budget.

Government subsidies are attempting to revitalized a not-so-infant industry:

In the U.S., a company called NuScale has recently received design certification approval from the Nuclear Regulatory Commission for its SMR, the first and only company to do so. Its reactor is a miniaturized version of a traditional reactor, in which pressurized water cools the core where nuclear fission is taking place. But in the NuScale design, the whole reactor is itself immersed in a pool of water designed to protect it from accidental meltdown.

NuScale hopes to build 12 of these reactors to produce 720 megawatts at the Idaho National Laboratory as a pilot project. It’s been supported by the U.S. Department of Energy, which has approved up to $1.4 billion to help demonstrate the technology. NuScale plans to sell the plant to an energy consortium called Utah Associated Municipal Power Systems.

Last fall, the DOE awarded $80 million each to two companies working on advanced reactor designs intended in part to address this problem. The first, TerraPower, a startup founded by Bill Gates, is working on a sodium-cooled reactor that, instead of using its heat directly to drive a turbine and generate electricity, stores the heat in a tank of molten salt, where it can be tapped to generate electricity when needed.

The second grant went to a company called X-energy for a gas-cooled reactor that operates at very high temperatures, producing steam that would be suitable for industrial processes as well as generating electricity. That kind of “load-switching,” Finan and Buongiorno both say, can help nuclear reactors manage variable demand for electricity—while at the same time helping to decarbonize industry. Small reactors might even be sited right next to a factory that requires both heat and electricity. The high-level radioactive waste they produce, however, would need to be transported to a centralized location for management.

Nuclear power has been and is noncompetitive, government-dependent, and a false solution to Malthusian worries (from running out of fossil fuels to running out of climate. The history of nuclear generation reveals how government subsidized the technology from the beginning–and consumers paid dearly for nuclear capacity. Recent experience in the U.S. has been horrendous, yet their is the perennial hope that new designs and new generation technology is coming to the rescue. To which the critic can retort: why believe you now? Fossil-fueled power generation is improving too–and cheap natural gas has sidelined nuclear for an indefinite future. Fact is, nuclear generation is the most complicated, risky, and expensive way to boil water.

In a MasterResource post nine years ago, the comments section was dominated by a discussion of nuclear versus natural gas-fired combined-cycle plants. Rod Adams of Atomic Insights argued that nuclear was competitive against natural gas–I argued the opposite.

The natural gas extraction boom was underway but still young. (Today, Adams is well aware and respectful of the hydraulic fracturing and horizontal wells.) But note how a Malthusian view of resources was held by him back in 2011, a bogeyman that always pops up to support uneconomic technologies.

Rod Adams   •  
@Robert – I do not assume that natural gas will remain at $4 per million BTU…. What will keep gas prices at $4 per million BTU as regulations are tightened as a result of the damage being caused by short-cuts in hydraulic fracturing? What will keep gas at $4 per million BTU if the economy recovers? What will keep gas at $4 per million BTU if the rate of consumption increases for power generation to replace shuttered coal plants being forced out of the market by Chesapeake funded “Coal is filthy” campaigns and nuclear plants like Indian Point, Oyster Creek, Vermont Yankee and Pilgrim that are all under significant pressure by natural gas funded opposition groups?

I am sure that you are well versed in the law of supply and demand and can find the charts that show the history of natural gas price volatility. One more thing – in many of the places where coal plants are being forced out of the market, there is NO cheap natural gas available because no one ever built any gas pipelines to supply areas that had plenty of cheap coal.

The American Public Power Association has computed that they would need about $700-800 billion in infrastructure investments for pipelines and new transmission lines to replace coal generation with natural gas. Quite a few of the owners of those facilities are interested in small modular reactors (<300 MWe/unit) that do not need an extensive fuel infrastructure in order to operate in the same place as the old coal plants. That kind of siting would allow the nuclear plants to make use of existing water resources and transmission corridors.

I replied to Adams:

$4/MMBtu natural gas is the result of a technological boom, and the gas industry is desperately trying to get transporation demand for natural gas (NAT GAS ACT) to increase prices. One can get long-term fixed gas prices to lock-in, say, $5-$6 gas to show the banks for financing. Yes, new infrastructure is needed to complete the drilling boom, but that is happening too.

Nuclear is just not competitive to gas whatever way you slice it. Are you willing to eliminate the loan guarantees that Obama is pushing for nuclear (yes, the $18 billion is his deal now) and let the market decide? Anyone willing to build a ‘spec’ nuclear plant based on natural gas being expensive in the future?

Another part of the argument between us concerned the “true” cost of nuclear given all the safety regulations. Adams wrote:

The problem with your logic is that you ignore all of the things that “the market”, which is made up of numerous thinking human beings, has done to make nuclear power uneconomic. Nuclear energy’s competitors have helped to erect as many barriers as they can imagine to hinder nuclear energy development and raise its costs.

When you break it down into straightforward technical analysis, nuclear fission is simply a very reliable source of heat that can be substituted for the heat generated by hydrocarbon combustion in very similar thermodynamic “heat engines”. In fact, there have been several cases of power plants – like the Ft. St. Vrain reactor – that started their lives as nuclear heated plants that were later converted into power plants with a hydrocarbon heat source.

If that is the case, then a critical thinker might ask why nuclear energy systems would be all that much more expensive than hydrocarbon combustion systems. It is certainly not because they need a more extensive fuel transportation infrastructure, more emission control systems, or more extensive fire/explosion damage response teams.

No, the reason that nuclear energy systems are so darned expensive is that people have mistakenly been told that the very tiniest amount of radiation is dangerous enough to spend hundreds of millions in multiple layers of protection. It is because they have been mistakenly told that nuclear plants are somehow more vulnerable than all of the rest of our society’s infrastructure to potential attack by “terrorists” and need an average expenditure of $300 million or so in “security boundaries” and an annual expenditure of $30 million or so in security forces.

Even with all of those artificially raised barriers, nuclear fission is pretty darned competitive against hydrocarbon combustion when fuel prices are in the range of $7-10 per million BTU and beats it hands down at prices higher than that. The primary advantage is that fission fuel costs an average of 60 cents per million BTU, even when you add in ALL of the costs, including long term storage.

In markets where nuclear is an option, there is virtually no oil being burned to produce electricity because $100 per barrel is equivalent to about $17-20 per million BTU depending on the grade of oil. It is not lack of “free markets” that encourages countries like the UAE, Saudi Arabia, Iran and Russia to be pushing hard to increase their supply of nuclear energy; it is simple market economics. They want to stop burning oil, a product that has a market value of $17-30 per million BTU, to produce electricity when there is an option that competes favorably with $7-10 per million BTU.

In countries where nuclear is an option and the people have not been hypnotized into believing that it is somehow more dangerous than highly combustible (and explosive) natural gas, logical businessmen will not avoid nuclear in favor of LNG that is currently selling for an average world price of $15-20 per million BTU. They will not avoid nuclear in markets where the price of pipeline gas is, by contract, linked to the price of oil. They might, however, reluctantly follow the edicts of governments full of politicians that have been purchased by Russian natural gas suppliers.

Your misunderstanding of history (or your political leanings) are also exposed by your characterization of the $18 billion loan guarantee program as “Obama’s”. That program and that original number was passed in the Energy Policy Act of 2005, more than three years before President Obama was elected.

“The market” does not make decisions. Individual human beings with assets, analysis, and vision do. I concur that, so far, the individual choices of the people who operate large utility companies in the US have been to shy away from nuclear in the years since June 2008 while natural gas prices here have been suppressed to a level that is about 1/3 of their level in most developed nations around the world.

However, there are individuals who have made a different choice and decided to invest in nuclear energy because of its natural advantages and its potential for future market success. If that was not true, I would not have the day job I have today as part of the team that is designing the B&W mPower(TM) reactor. (I speak only for myself and not for my employer.)

To which I argued:

I am not a big nuclear fan because it is wildly uneconomic versus $4/MMBTU natural gas, and banks will not support it in the free world. Not that nuclear has a very high up-front capital cost versus fossil-fuel-fired plants, and that debtors was certainty that those costs can be paid back, which means long-term fixed-priced contracts. Until voluntary purchasers sign such agreements (and they will not), then such projects are uneconomic.

Obama’s proposed $18 billion loan guarantee for new nuclear is another tell tale sign of nuclear’s plight in a competitive market.

I welcome nuclear power if and when it is economical in the markeptlace. May it improve and improve and improve until the market (not me and Mr. Adams) decides to build reactors. Until then, it is a backstop technology in the U.S. and many other areas of the world.

Libertarian Solution?

Along with Rod Adams, another commentator wrote:

If libertarians were willing to get rid of nuclear regulation and place nuclear on a level regulatory playing field with fossil fuels, as well as guarantee the right of private property owners to operate their plants once built, then I am relatively certain the nuclear community would be willing to dump loan guarantees and Price Anderson.

To which I would say, no way. The economics of nuclear, never competitive, are super-noncompetitive with natural gas where long-term prices well below $4/MMBtu can be locked-in for the life of the plant.

Without monopoly ratebase incentives, what profit-driven private entity would build a nuclear plant over a gas-fired plant? What insurance company would insure it? Is there an example of a true nuclear merchant plant?

Conclusion

Where are we today with nuclear power? Certainly, the beyond dismal saga of the Vogtle Nuclear Power Plant.

The post The Case for Nuclear Power Revised (an uncompetitive technology needs to go away) appeared first on Master Resource.

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January 15, 2022 at 01:03AM

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