Tale of two Chinas – One surging forward, one retreating

Two stories caught my attention this morning. One came from the Taipei Times, one from the Beijing Review.

The first one focused on a future energy supply prognostication from an American “expert” who has a light educational and professional background in energy technology, manufacturing, engineering, economics and market dynamics. The second one documents recent progress and future planning in a nation led by technologists with a demonstrated record of sustained successes in implementing previous plans.

The Taipei Times report, Nuclear power not cheap, being phased out: expert led with the following two paragraphs.

Former US Nuclear Regulatory Commission chairman Gregory Jaczko yesterday said that nuclear energy is playing an increasingly insignificant role in electricity generation worldwide, and that, contrary to popular belief, it is actually more expensive than a range of methods of energy generation.

At a news conference in Taipei, Jaczko said that the future for nuclear power generation in the US and worldwide is one of “decreasing use and eventual phase-out.”

Atomic Insights readers will understand why I mentally discounted the contents of that story before completing the first sentence.

Dr. Greg Jaczko is not an expert in any topic relevant to predicting the future use of nuclear energy around the world. Thinking, concerned people in Taiwan deserve to know some things about Jaczko that are not included in his publicist’s press kit.

Jaczko is a political animal whose only professional experience before being appointed to the Nuclear Regulatory Commission was serving as a staffer for Representative Ed Markey and Senator Harry Reid. In both jobs, his portfolio included supporting their well-known campaigns against the use of nuclear energy, most likely in return for substantial political support from promoters of competitive energy sources like liquified natural gas, coal and fracked or imported oil.

Using a skillful manipulation of Senate rules, Senator Reid convinced President Bush to appoint him to be an NRC Commissioner. Soon after his inauguration, President Obama followed through on a deal made early in his campaign for Senator Reid’s election support and promoted Jaczko to be the Chairman of the Commission.

Jaczko initiated a number of actions during his seven years on the NRC that added both cost and schedule uncertainty to nuclear plant operations, new nuclear plant design and licensing, and new nuclear plant construction.

He declared unilateral authority on shaky legal grounds in the wake of the tsunami that wiped out the backup power supplies at Fukushima Daiichi units 1-4, severely damaging all four units. He did not keep his fellow Commissioners involved or informed, isolating himself from colleagues with education and professional experience relevant to accident evaluation and response.

Even though no one who was outside of the gates of the Fukushima Daiichi facility was exposed to a harmful dose of radiation, Jaczko initiated a worldwide panic by claiming — without any evidence — that the Unit 4 spent fuel pool was dry and on fire. Based on that imaginary scenario, he recommended the evacuation of all Americans within 50 miles of the facility.

He was asked to resign from his job as NRC Chairman after all four of his fellow commissioners informed the President that he had created a hostile work environment. As predicted by Atomic Insights at the time of his resignation, Jaczko has spent the last several years parlaying his politically appointed position as a former Chairman of the Nuclear Regulatory Commission into a career as a professional antinuclear speaker for hire.

There is one part of Jaczko’s evaluation of the future prospects of nuclear energy that is correct. Under rules that he helped to create, nuclear energy projects contain too much schedule and cost uncertainty to attract financing. New projects will not be started without revising the rules. Some projects that are already underway may not be completed unless some rules are reinterpreted. Many operating plants may stop operating long before they are worn out due to escalating requirements that provide no additional safety or performance benefits.

One gross conceptual error that Jaczko and his fellow travelers have made, however, is in their continuing belief that the United States of America has much influence left in the rest of the world. No other country operates under the same rules that Jaczko and a series of similarly disposed closet antinuclear activists have written and imposed on the US nuclear industry.

In early May, several weeks before Jaczko appeared in Taipei and gave his negative prognostication about the future of nuclear energy in the US and the rest of the world, the Beijing Review published a story titled The Year of Nuclear Power: 2015 sees a surge of several new nuclear power projects in China.

That story, instead of pointing to analysis about the future costs of unproven alternatives like carbon capture and sequestration, reports on Chinese actions, achievements and firming plans for future nuclear plant construction.

This year will see the beginning of the greatest number of nuclear power projects in a single year in China since the 2011 crisis, with six to eight units being approved and eight units going online, said Zhang Huazhu, Chairman of the China Nuclear Energy Association (CNEA), at the annual conference of the association on April 22.

Chinese leaders understand that the proven path to cost reductions for any technology includes dedicated action and consistently implemented learning based on growing experience. They recognize that ever changing regulations lead to interruptions in the development path and inevitably add cost and schedule uncertainty.

China took a lengthy pause in new nuclear plant project approvals following the Fukushima events. It invested that time in efforts to understand exactly what caused the problems and in implementing mitigation efforts that would minimize the risk of similar events in their own country. They did not respond precipitously and decide that an event at a forty year old facility located in a geographically unique area proved anything about the existing or potential safety of nuclear technology.

The Chinese nuclear development pause has ended.

As some of its competitors continue their retreat from the nuclear market, Chinese companies see increasing opportunities to export their expertise and experience. It’s worth noting that much of what China knows about nuclear technology originated in France, the United States, or Germany but knowledge, once transferred, becomes the property of the recipient with little means for the teacher to maintain control.

China has been working diligently to learn as much as possible from as many sources as available about nuclear plant design and construction. It has experimented with an almost dizzying array of designs, each with its own advantages and disadvantages.

As the Chinese nuclear industry moves into a greater application of mass production techniques, it seems apparent that one of the winners in the learning process will be the Hualong One design, a 1150 MWe, three loop, dual containment pressurized water reactor that has been strongly influenced by imported French and German design choices.

Another winner will be the pebble bed high temperature gas reactor that will employ multiple reactor heat sources to feed various sizes of steam turbines. That technical path may eventually provide direct coal boiler replacements in thermal power plants that have relatively modern turbines, turning dirty coal power into clean nuclear power without having to rebuild an entirely new facility.

Because of the proven ability of moderately sized pebble bed reactors to withstand a complete loss of coolant flow or a complete loss of coolant pressure without any operator action or automated active system response, those coal boiler replacement projects will be acceptable even if the current power station is in a heavily populated area.

Logically enough, engineers and businessmen who envision the successful replacement of coal boilers in steam power plants also realize that a natural expansion market for their product is to replace coal boilers in steam plants used for industrial process heat for refineries, synthetic hydrocarbon fuel production facilities, and desalination plants.

According to CNECC chief economist Shu, their group is promoting industrial application of high-temperature gas-cooled reactors in Saudi Arabia, Dubai and South Africa. In April, the company signed a memorandum of understanding (MOU) with South Africa on nuclear power cooperation. It will soon sign an MOU with Saudi Arabia on nuclear power and renewable energy cooperation.

China also has several small, simple reactor designs that may soon be serving in a number of places where 1000 MWe class nuclear plants cannot fit.

Bottom line. Once again Jaczko is wrong. He has arrogantly — and incorrectly — assumed that his efforts in the United States will be influential in other countries. He has ignored evidence and denied reality. He is not an expert and not a representative of the best that the US has to offer the rest of the world.

Motivating natural gas pipeline construction into New England

RBN Energy is one of my favorite sources of education about US energy markets. They publish a daily, song title-themed blog that focuses on a particular energy-related topic and provides useful analysis with a light, often humorous touch. That’s not easy to do when writing about a topic that is as controversial and impactful as energy.

RBN’s May 18 post was titled Please Come To Boston—New England’s Ongoing Gas-Supply Dilemma.

It introduces/promotes a new report produced by the consultants at RBN with the same title as the blog post. That report discusses a topic that has been covered here in some detail – the spiky behavior of natural gas prices in New England.

RBN Energy’s primary recommended solution is building more pipeline capacity into New England. That will enable abundant and affordable natural gas from the Marcellus shale formation to flow more easily into the region.

As much as I appreciate the energy education I’m getting from RBN, I’ve noticed that their preferred method of dealing with the nuclear energy aspect of the market is to ignore it. The ‘N’ word is conspicuously missing from the blog post about New England’s energy supply and it only appears three times in the detailed report.

Here is an example quote where one would have thought that nuclear energy would receive at least a mention.

Mitigation Efforts. Fear that wintertime gas supply shortfalls could leave the region woefully short of generating capacity prompted ISO New England, the electric grid operator, to implement a Winter Reliability Program (WRP) that in its latest iteration (for the winter of 2014-15) provided incentives to gas-fired power plants to stockpile LNG and dual-fuel power plants (ones that can burn either gas or oil) to stockpile oil that could be used to run their plants if gas was not available. ISO New England also is putting in place “pay-for-performance” requirements that will incent generators to line up firm gas supply to meet their winter needs. Are these solutions or just stopgaps?

Competitors to Gas. No energy source operates in a market vacuum. While natural gas has emerged as the go-to power plant fuel in New England, regional powers-that-be are exploring alternatives to going all-in on gas, such as building more wind and solar capacity and ramping up imports of Canadian hydropower. If the most ambitious of these plans were to pan out, future demand for gas would sag, and so would the need for incremental pipeline capacity.

The detailed report takes it as a given that nuclear power is as unpopular as coal in New England and the rest of the northeast. It assumes that the remaining plants will eventually shut down without any potential for replacement. That result would probably please most of RBN’s subscriber base, which the publisher describes as 18,000 + energy execs every day who are making connections “across energy markets – oil, NGLs, Gas.”

One of my self-assigned duties is to remind energy market participants that nuclear energy exists as both an option and as a potential competitor. I’m confident enough in its inherent capabilities that some of the good, well-resourced, and competitive people who populate the industry will break out from the pack and begin seriously thinking about making investments in developing those capabilities.

I’ve sort of given up hope that nuclear industry lifers will be the source of the kind of dynamic thinking and business model development that is required to build a true Renaissance based on the technological advantages provided by an energy dense fuel that produces reliable heat with exceedingly compact waste products that can be safely stored as long as needed.

Here is a comment that I left on RBN’s blog post.

While discussing natural gas price variations in New England, you overlooked the effect that the region’s antinuclear activism has had on the market.

In the 1960s and early 1970s, New England had a hugely volatile energy market dependent on imported oil, coal, and some natural gas. A logical response was to build a substantial nuclear energy capacity in the region.

Starting in the early 1970s, New England – and New York – became a major battleground over nuclear energy development. The Clamshell Alliance and other groups worked hard to halt nuclear energy expansion and then to shut down the capacity that had actually been completed and was operating.

Seabrook was delayed by half a dozen years and Unit 2 was never completed. Shoreham (820 MWe) was completed but never allowed to enter commercial operation. Indian Point 1 (275 MWe), Millstone 1 (660 MWe), Yankee Rowe (185 MWe), Maine Yankee (900 MWe) and now Vermont Yankee (620 MWe) have all been shutdown well before their mechanical end of lives. There is enormous pressure from the activists all the way up to the Governor of New York to shut down Indian Point 2 and 3. Pilgrim is under severe pressure as well.

Ginna (610 MWe) and Fitzpatrick (838 MWe) are both on the list of plants that are threatened by economics – mostly due to the availability of “cheap gas.”

A rough thumb rule is that each 1,000 MWe of nuclear plant capacity that is shut down or not built adds 0.2 BCF/day of natural gas demand.

Is it possible that natural gas interests are quietly – or actively – cheering the actions of the antinuclear activists in order to soak up some of their excess production from fracking the Marcellus formation?

Is it possible that some of them want to firm up their pricing power?

Rod Adams
Publisher, Atomic Insights

As of the time I’m publishing this post, may comment had not been moderated and made available to other readers, but when/if it is, I will provide an update.

Note: In addition to its perceptive analysis, I like RBN Energy because they have an unusual business model compared to many other consulting groups focused on the energy market.

They seek scale by providing value to a large number of customers at an affordable price. All of their in-depth reports are available to people that purchase a “Backstage Pass”, which is available for just $75.00 per month. That might sound like an expensive subscription to some people, but industry insiders that are used to paying several thousand dollars for detailed reports should find it cheap to purchase a pass for a month or so of detailed study.

I finally broke down and purchased my pass this morning. While respecting all copyrights, I’ll still be able to share some of what I learn from these oil and gas industry experts.

In keeping with RBN’s music themed approach, here is an inspirational tune explaining my interest in their information services.

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