Don’t blame “the market.” Individual people with money and power do not like nuclear
Robert Bradley at Master Resource has responded to my criticism of his continued dismissal of nuclear energy in favor of burning more hydrocarbons. He kindly visited the Atomic Insights comment thread to let me know that he had responded. Here is his response from a comment that he posted on his blog titled Remembering ‘Green’ Enron (Part I: The Kyoto Moment).
Rod Adams at his blog Atomic Insights has this critical post on my work (and that of Cato’ Jerry Taylor): Challenging Master Resource’s implication that Enron was the only rent seeking manipulator (November 25, 2011).
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. Note that nuclear has a very high up-front capital cost versus fossil-fuel-fired plants, and that debtors want 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 market place. 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.
(Minor spelling corrections made from the original.)
Here is the response that I posted on his blog. It is awaiting moderation – as of 2:45 on December 3, 2011.
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 wins 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.)
Publisher, Atomic Insights
I think it would be a great idea if someone would prepare an online list of anti-nuclear politicians, listing how much fossil fuel money each had taken to finance their campaigns.
I do have a bias, but it looks like it would be tough to argue any against any of the factual points in Rod’s response. Good work, it better get through moderation.
An admirable response.
An additional point to consider should you engage further: those new nuclear plants that are going forward are not merchant operators but regulated utilities.
A merchant plant, other than operating responsibly, has only one goal: make money for the owners. It has no responsibility for the aggregate power delivered to the consumer for either cost or reliability.
A regulated utility has a responsibility to both its owners and, through the regulators, to the consumers. It is responsible for 24/7 power.
The decision matrix for generating technology is very different for a merchant generator. He is not concerned with fuel diversity or delivered price stability except as it affects his competition.
Robert Bradley and Rod Adams debating. Both are clueless. When ERON was the darling of Wall Street and the ‘greens’, I worked for the next biggest energy company in the same category. We referred to then as the croked E. The power industry is basically a set of public service utilities with close ties to customers. We take energy and concert it to power. While the NG gathering and pipelines industry while also regulated had a different energy relationship with customers.
ERON got into the power industry by buying small utility in Oregon, Portland General Electric. As best as I could tell, ERON’s only interest was the vanity of upper management which required them to be very rich. When it comes to Wall Street, those profits were smoke and mirrors. Our CEO would stand before employees periodically for Q&A. There was always a question about why were were not keeping up with ERON and Wall Street often was critical in the regard too. Our CEO would answer that we were not in the short term profit business but in the long term benefit of customers and shareholders. He also inferred that many of ERON big projects would lose big money. As they did.
When it comes to environmental issue they were smoke and mirrors too. I was once so frustrated that I call our environmental manager and asked why we were not issuing more press releases. His reply was that when you are the best, you do not have to brag. Our customers knew and the company felt no need to pander to DC lobbyists who in fact have no interest in protecting the environment. We worked with local environmentalists. Many a Saturday has been spent working environmental groups on volunteer projects. We learn what there concerns are and they learn how we are addressing them.
There is tangible poof too. ERON went bankrupt. On the environmental side we have to go back to when Clinton was POTUS. There was annual reports for volunteer reporting of ghg reductions. The largest reductions were at nuke and coal plants. Typically the rotor of a steam turbine is replace many years of service. Improvement in turbine design result in about 5% more electricity. At a nuke plant the NRC approves the power uprate. Clinton’s EPA would would sue the utility. The company I worked would also have its share of minor reductions from thing like planting trees.
Looking at Robert Bradley and Rod Adams just have no experience in the commercial power industry or protecting the environment. Since Robert Bradley has many years in the gas industry he is just lying about ‘$4/MMBTU natural gas’. The reason is that is not the delivered price of NG in the summer and winter when it is needed.
Rod is just wrong about new nuclear being expensive. When you look at the cost of new coal, NG, and nukes; they are about the same. The trend for the cost of fossil fuel in up. The uncertainty of supply is a significant issue that affects cost and reliability.
@Kit – New nuclear IS expensive under current regulations and interpretations. Why do you think that there are only 4 units that are even close to being under construction compared to the 25 initial submissions to the NRC after the Energy Policy Act of 2005? Why do you think that NRG and Constellation abandoned their plans after spending more than half a billion on engineering and NRC license application fees?
Rod first thank for correcting my spelling.
Since Rod was a government employing working in DC and supposedly closely following the nuclear industry, I am surprised that he does know about recent events in the US none of which have to do with the cost of regulation.
For those of you who were born yesterday, there has been an economic downturn in the US. Demand for electricity had been growing at 2% per year and the average generating costs was $85/MWh. The supply train for both NG and coal were being strained.
Furthermore, Constellation was over leveraged like but not as bad as ENRON. When the market went south, Constellation needed to be bailed out for its merchant contracts. First Warren Buffet stepped in and then EDF made a better offer.
Furthermore, furthermore, The CC3 COL is still proceeding along with other COLs..
It’s the economy stupid.
@Kit P – I understand you are trying to use allusion, but I would appreciate it if you did not call me “stupid.” I am not trying to brag, but by applying that label to me you condemn several respectable institutions that issued me diplomas “with distinction” plus a highly respected nuclear design, maintenance and operations program that assigned me the task of being in charge of a 23-27 year old nuclear propulsion plant, plus an entrepreneurial nuclear power plant design firm that hired me on in a position of responsibility. Either I am not “stupid” or there is something wrong with the hiring, screening and evaluation processes at all of those places.
Secondly – have you read deeply into the causes of the economic downturn to recognize that the first areas of weakness came in newly constructed suburbs located a significant commuting distance from employers and requiring a significant monthly energy consumption for heating, air conditioning, and even swimming pools? The reason that I mention that is because the extremely high energy prices and the flow of dollars out of the pockets of people who had stretched a bit to buy into the American Dream had something to do with the initiation of the recession – though there were a lot of other contributing factors.
Finally, your hero, John Rowe, whose company is the third one (after Buffett and EDF) to step in to pick up Shattuck’s mess has a slightly different take on the prospects for CC3.
New Calvert Cliffs nuke ‘almost inconceivable’: Exelon CEO.
Remember, I moved out to Lynchburg, the home of Areva last year. I see the numerous for sale signs in my 3 year old neighborhood of very pleasant homes and know that a good portion of them are still owned by people who used to be working for Areva on the US EPR project. I also work at a company full of refugees from that project.
It is not just the economy that has put a pall into the “nuclear renaissance”, since there is still a lot of energy related activity going on throughout the US.
One more thing – the now defunct company that you are referring to used to spell its name as ENRON, not ERON.
Actually Rod you are too tied to the grossly inefficient financing scam that poorly run US private utilities must subscribe to get Wall Street money.
If you take the $4B/Gw that the VC Summer project is coming in at without any loan guarantees and have ultra efficient public power utilities build it, that $4B/Gw is less than 2 cents a kwh financed at 5%. Now add the 2 cents a kwh it costs to run ancient nukes with antiquated technology and enrich uranium with 50’s technology and subtract a half cent or so.
3.5 cents a kwh for first of a kind nukes that Westinghouse claims will drop to half the current cost when factory module production gets going.
That’s cheaper than natural gas even at current fire sale prices.
To get an idea of how much cheaper reactors get after a score or so are built look at Candu’s built around the world to 2007 for $2B/GW.
With $80B in decommissioning, waste storage, and insurance funds none that will ever be used, the US government has a lot of cheek calling it a subsidy to guarantee a loan of the nuke industry’s own money.
Unique amongst green energy sources, rather than needing subsidy the nuke industry is $80B in the black.
@Seth – I am not tied to any particular financing scheme and I fully recognize the value of learning curves and series production. My personal portfolio includes a number of companies that will profit handsomely from new nuclear plant construction and it does not include a single Wall Street financial institution. I have presented potential investments to typical Wall Street audiences – including actually traveling to Wall Street itself. I was not impressed by their acumen or ability to recognize value. I was struck by how impressed they were with themselves and their exceeding large paychecks.
It is interesting to note that Matthew Boulton and James Watt used their standing in the nascent steam industry, their patents, and political influence to hold back the development of high pressure steam engines by invoking fears that incompetence ether in construction or operation of these would lead to fatal accidents. They managed to keep this up for over twenty-five years.
The conservative elements from the nuclear industry that we see commenting here remind me of this.
Is that the conservative element that has been pushing the envelope for 40 years to create a fleet of 104 US nukes with a availability of 99% and a capacity factor of 90%.
With all due respect to bloggers, paper reactors are more interesting but the business is making electricity without hurting people.
Indeed the business is about making electricity without hurting people. There can be no more moral cause than providing benefit to all with minimal harm.
What you fail to see is that by not challenging your assumptions you are causing an additional loss of life.
“Self-complacency is pleasure accompanied by the idea of oneself as cause.”
What you miss is that which was not done, based off of artificially imposed constraints that which when introduced may have had validity based off of our lack of experience, but that with the addition of almost 70 years of controlling fission reactions that we should continue to ignore the knowledge that we have gained.
You and others continue to rationalize from an idealogical framework that things are the way they are and should not be challenged, and understanding not expanded. You ignore for the sake of complacency and the security of being set in your ways.
What is it that you have to loose by the potential loosening of the regulatory grip on nuclear power? If it is face or validation of the 40+ years you have in smashing atoms that you did it right. If so get over yourself. The work that you and your generation did was impressive and stands as a testament to your effort and integrity. Nothing can take away from that.
By however, not challenging your assumptions seeking to incorporate the quantity of experience that is amassed you act to restrict the furthering of understanding for all with slipshod reasoning.
“Pushed the envelope?” No US nuclear reactor concern has pushed the envelope at all in the last forty years. Boulton and Watt made pumps for mines using L.P. steam and that’s about all they were good for. After they lost control of the industry, H.P. steam brought the railways and steamships which pushed the Industrial Revolution into high gear.
The only good thing is that one day you and your ilk will lose influence and a new generation will take nuclear to the next level without you. As it is your influence is waning and you know it. I suspect that the noise you are making here is just a pathetic attempt to justify your position as you can see that what you believed in will soon be swept away, and you with it.
Why should there be a we vs. them conflict in the energy sector. A co-operation will pay dividends to both the nuclear and chemical fuels sectors. All nuclear power plants have diesel generators as assured power systems, just like other industrial plants. They could, of course, be replaced by RTG batteries powered by Sr-90. It could be done even in other industries or coal mines. Nuclear heat could be used for underground gasification of coal or kerogens used as sources of oil or gas. This will reduce risks and costs. It will make more rocks with higher ash contents economical for fuel extraction. The Chinese are seriously considering recovery of uranium from coal ash.
The Chinese and Indians are going for all the sources of energy to meet the requirements. The developed economies can just take some options without name-calling other energy sources.
@Jagdish – all commodity markets have an “us versus them” struggle. Nothing is inherently valuable; making money requires a sufficient market demand for whatever you want to produce. That is especially true when the basic product is smelly, flammable and explosive. Energy fuels are useful, but you do not want to have too much lying around.
Producing more nuclear energy means selling less of something else. It remains to be seen exactly where the market losses have to occur to allow nuclear to capture market share, but the fossil fuel industry has already suffered through a lengthy period of adjustment to allow the present nuclear plants to enter the market. For the period from 1985-2000, all fossil fuel prices tended to be quite low, with natural gas selling for about $2 per million BTU, oil dropping to as low as $10 per barrel and coal selling for less than $1.50 per million BTU.
All that happened – IMHO – partially as a result of building enough nuclear plant capacity in just a couple of decades to produce the energy equivalent of 12 million barrels of oil per day around the world. That is roughly the output of Saudi Arabia PLUS Kuwait. That amount of new energy supply was hard for the market to digest.
Lest you get the wrong idea here – I think low energy prices are a terrific boon to the world economy. My eyes, however, are wide open. I realize that it is unlikely that my views will ever be very popular in energy producing company that cannot take advantage of the low cost heat. Among energy consumers, however, I suspect that my ideas and goals might be very popular.
The Monbiot article that Rod linked to talks about the IFR, and mentions that the IFR is a melt-down proof design, because the fuel is designed to stop fissioning all of it’s own if it overheats.
I have a question for the nuclear tech people out there who are more familiar with liquid metal reactor technology.
The meltdowns at F-D happened, even though the reactors in that situation *were* shutdown, so far as I know – the fuel rods were inserted, boronated water flooded the chamber, and the fission stopped. The meltdown, as it’s been explained to me, happened because of the decay heat from nuclear decay of the ‘waste products’ of fission.
Wouldn’t an IFR also have decay heat? What stops a meltdown in that case? My best guess is that all the liquid sodium around it conducts the decay heat away from the fuel pins to an outer containment wall which radiates the heat into the local air, like a big, very hot potbelly stove, or something similar?
Good insight on the physics of the IFR, that is precisely GE’s methodology with S-PRISM as the back up to the backup. ARC-100 is a little different
The IFR does have decay heat. There are two ways of removing it directly from the primary system and one that involves the secondary system. All methods do not rely on operator action or electrical power.
GE’s S-PRISM uses RVACS (Reactor Vessel Auxiliary Cooling System) to remove the heat. It is air that flows down the exterior of the reactor containment and up towers. It is always “on”. and works precisely as you described.
ARC-100 has a good paper on how their reactor would respond.
GE and ARC also rely on natural circulation to establish a thermal connection with the intermediate heat exchanger, which has another “always on” cooling system which is the primary means of decay heat removal for a loss of all power.
GE’s and ARC’s design are based on EBR-II that ran a set of qualifying transients in the early 1990’s. One of the tests was to stop intermediate loop pump and not SCRAM the reactor. Due to doppler feedback effects and core expansion (metal fuel expands a good bit when heated) the reactor shut itself down and would have remained safe for over a week with no operator intervention.
I have some references on this but they are not available online to the best of my knowledge. Yoon Chang (worked on the IFR project at INL), Charles Boardman (General Electric) are some good resources to look up. Boardman did a lot of work on the economics of the fuel cycle. INL has done some more recent work on various fuel cycles notably a report in 2009.
D. E. SHROPSHIRE, et al., “Advanced Fuel Cycle Economic Analysis of Symbiotic Light-Water Reactor and Fast Burner Reactor Systems,” Idaho National Laboratory, (2009)
NUREG-1368 contains a lot of technical detail about the safety features and is a very dense read.
Comments are closed.
Recent Comments from our Readers
I spent some time to listen to this podcast, and I still have two questions about module size and its…
Will I agree with your theory. Expensive designs are going to be expensive to build, even with practice. I would…
“And since we are seeing it in the West but not in the East (UAE, S Korea, Russia, China) is…
@Cyril R What was Tesla’s learning rate starting at the first Roadster? How much do you think that first unit…
A new engine or turbine product line doesn’t just cost triple a unit. That’d make it pointless. Yet this is…