Enormous differences between Southern Co & Solyndra
Matt Wald at the New York Times published an article titled Nuclear Opponents Invoke Solyndra that alerted me to a new tactic by the forces arrayed against the beneficial use of nuclear energy in the battle against hydrocarbon addiction and climate change. The new meme is a smear on nuclear energy by falsely attempting to classify the two new reactors at Plant Vogtle as similar to the ill fated Solyndra project.
The opponents have no flipping idea just how different the two situation are.
The first difference that needs to be stated as clearly as possible is that the US government has not put a single dime at risk to enable construction at Plant Vogtle. Despite the fanfare with which the loan guarantee program was announced and the fanfare surrounding the selection of Southern Company for an $8.3 billion portion of the $18.5 billion that was authorized for the program by the Energy Policy Act of 2005 the Department of Energy and Southern Co have never agreed to terms and conditions.
All of the resources for the project have come from the plant owners and vendors; some of that money has been borrowed in the commercial lending market at the favorable rates that well-capitalized companies with good business models and sales can obtain.
Unlike Solyndra, Southern Company is a large, long-established public company with a business model that is accepted by traditional investors. It builds and operates reliable, electricity generating equipment, transmission and distribution systems. It sells that exceedingly valuable product to an established base of customers who have regulators that protect their interests, which means both keeping rates reasonable and ensuring that the supplier is adequately compensated so that it can focus on providing the best possible service.
In other words, Southern Company is not a financially stressed, high political profile start-up developing a risky new technology for an uncertain market that is seeking funding wherever it can find it. It is a solid company full of practically minded business people and technologists that is building an improved, licensed version of a well-proven technology. The large nuclear power plants Southern and SCANA are building will be able to predictably produce large quantities of high quality electricity – their product is clean, dependable and vital to essentially all other parts of our industrial economy. Southern does not need the DOE’s money and does not need to subjugate its decision processes to the electoral whims of the federal government.
At a negotiating table for a financing transaction, parties that do not need the money or the other benefits associated with “getting the deal done” often walk away with the most advantageous deal. Southern’s negotiators apparently recognize the strength of their hand and have played it well so far.
On a personal note, I have been enjoying watching my investment in SCANA, a company that has always made it clear that it intended to move forward with its nuclear plant construction project without federal financial assistance (or intervention in the business portion of their decision process).
NEI also offers a useful comparison of the two situations, which are like apples and ackee (a popular but sometimes toxic fruit grown in Jamaica). That the antis would try to conflate the two in the media shows either their ignorance or their depravity.
I also enjoy the hypocritical argument of the antis that new nuclear designs are untried experiments, but solar designs on the drawing board are new super-discoveries that will revolutionize the field….
Sadly we see this hypocrisy and inconsistency in most self appointed Greens (a better term would be Blacks, reflecting their integrity, but that may be misinterpreted as racist).
Nuclear plants that produce reliable electricity displacing coal, receiving a 2 cent per kWh tax break is extreme government subsidy. But solar panels that get 40 cents per kWh without a single coal plant being closed is supposed to be smart government.
The EPR, a standard PWR – the most common type of nuclear plant with many GWe built and operated for decades – is unproven according to Greenpeace. But quantum dot solar panels are “innovative”. New heat pumps using supercritical CO2 are “innovative”. Electric cars using advanced lithium batteries are “innovative”.
Nuclear plants use “huge” amounts of steel and concrete, according to Greenpeace. Even though a simple LCA will show that wind turbines that use 10-15x more steel and concrete per lifecycle kWh delivered.
Being internally inconsistent, and comparing peas with fruit baskets, is a hallmark of these organisations.
“Sadly we see this hypocrisy and inconsistency in most self appointed Greens (a better term would be Blacks, reflecting their integrity, but that may be misinterpreted as racist).”
We could call them Orcs….
Good stuff. It should be no surprise that the antinukes know about as much of finance as they do about nuclear engineering.
You know the old saying: if looks a credit default swap, and walks like a CDS, and quacks like a CDS, it’s a CDS. Or in this case it might look more like a CDX, or credit default swaption, assuming a creditor has the right, but not the obligation, to buy the CDS. Selling a CDS or CDX is only a subsidy if it is sold at a discount, which hardly seems to be the case here.
As you imply, the fair value of CDS depends on the notional, the probability of default, and the recovery fraction. Electrical utilities have low historical levels of default, and Southern Company would be no exception. The recovery fraction would be very high in this instance, as well, because Southern Company has plenty of assets to go after in the unlikely event they don’t pay up. I think you’d agree with me that the plants they are building will be highly valued assets for decades to come.
In other words,
CDS = 8 billion * PD * (1 – R)
For electrical utilities over, say, a 20 year period, an upper bound would be 5% and a lower bound for recovery fraction would about 80%. So the CDS would be worth 80 million – a far cry from the Solyndra loan gaurantee, even if Southern Company never paid in a penny.
I think there’s another important point of differentiation to make between Southern and Solyndra. Southern sells electricity, Solyndra sold manufactured products (solar cells).
The risk for a nuclear plant is mainly in getting it built. Once it’s built, the price of electricity would have to go extremely low before the plant would essentially be losing money. For a nuclear plant, low market prices would mainly mean lower profits over the life of the plant, but it would likely be able to at least break even.
Solyndra, on the other hand, was losing gobs of money on EVERY solar panel they produced, and had to sell at lower-than-cost prices.
I wonder if Southern got an unprecedented subordination deal like this:
Solyndra $535 Million Loan Mostly Lost to Taxpayers, Chu Tells Lawmakers
“Chu said his department’s general counsel determined that the law banned subordinating taxpayer debt only for an initial loan guarantee, not for a refinancing.”
There is also a law on the books, the Nuclear Waste Policy Act of 1982, which requires DOE to take possession of and store all commercial spent fuel at Yucca Mountain. Until a solution to this “problem” is agreed upon, many states have legally prohibited themselves from even considering new nuclear construction.
This administration (unfortunately not the first) chooses to enforce and administer only the laws they like, and are willing to twist others as necessary to support their agenda. It seems obvious to me that however many fine words are spoken, their support for nuclear new build is lukewarm at best.
An excellent point.
1% of companies funded went into bankruptcy. Do you really think this is all that terrible from a risk management perspective? Subordination was not a feature of original loan, but a refinancing deal in 2011 (which brought $75 million of private investment to the table in an effort to save the company, and at no additional cost to the taxpayer). This was obviously an extreme measure (high risk and high reward), and it failed, but does that mean it wasn’t worth trying in the first place (given the available bad choices and alternatives)?
And have we forgotten this relevant tidbit from the past, CBO calculating the risk of default on nuclear loan guarantees at 50% (meriting a Credit Subsidy Fee of 30%). Here’s the actual quote, which NEI seems to have never bothered to look up.
S&P estimates fee should be in range of 4 – 6%, puts recovery at 70%, and gives a bond rating of “BB or BB-” to the government loan. In 2011, CBO provides an update, puts recovery at 55% (and learning from past mistakes, itemizes in excruciating detail the various factors of default risk, but does not quantify with a number). Sounds to me like the clean tech and renewables side of the investment program exceeded portfolio expectations (if measured against nuclear loan prospects and ratings)?
I thought you posted on this before, and we had a discussion clearing up this issue. 1703 program loan guarantees are taxpayer funded loans. They are congressional appropriations, and the loan originates from the Federal Financing Bank. In other words, they are “guaranteed” to be a loan by the taxpayer to the recipient (typically at a lower interest rate then can be obtained in private credit markets).
They typically have what’s called a “credit subsidy fee,” which was waived in the case of Solyndra. I’m not sure if this was waived for the Votgle plants, or not. But this fee is designed to minimize risk because every recipient is supposed to pay it (as the loan program was initially designed), and any defaults on the loans within the program are supposed to be covered by the trust that holds these funds (if the credit subsidy fee was assessed at a high enough amount to cover the risk).
It’s pretty clear the terminology of the program was intended to mislead. It doesn’t work like FDIC insurance, or Fannie and Freddie “loan guarantees” (entirely a different concept). These are direct loans (to a share of the total financing for a project), they show up as liabilities in the federal budget (meaning they contribute to the size of the Federal deficit), and they originate from the Federal Financing Bank (and not with private lending and credit markets).
It is like Solyndra, except the recipient in this instance may be covering some of the risk (and not the taxpayer) through “credit subsidy fees.” This is how I understand the program to work. Do you understand it differently?
Have you ignored the part of the post where I wrote about how the loan has never closed? There was a highly promoted promise, but the recipient has not agreed to the offered terms and conditions.
@Rod. If they close on loan, it will be exactly like Solyndra (minus the Credit Subsidy Fee issue). Are you recommending they not take the loan and cancel their negotiations with DOE on this matter?
Good luck with that. I thought we had an interest in delivering plants on time and on budget (this loan is already cooked into the cake).
Platts Nucleonics Week (behind a paywall on Nov 29, 2012) reports Oglethorpe is only a few weeks away from “making the important baseman concrete pour for the first new unit.” Betsy Higgens, executive VP and CFO, is hoping the deal goes through (but is a slow process). Final approval is subject to “negotiation of definitive agreements, due diligence, and satisfaction of other conditions.” Sale of taxable bonds is an option, but not at the same low cost as the Federal loan guarantee. Equipment is already staged and ready to be put into place. “Finalization of the loan guarantee, which will enable Oglethorpe to reduce its project borrowing costs, is expected to occur in the first quarter of 2013, Higgins said. Oglethorpe signed a conditional term sheet with DOE for the loan guarantee two and a half years ago, in May 2010.”
Are you really saying they should back out of a public financing deal some three years in the making? No wonder why developers can’t deliver a plant on budget (they don’t negotiate with taxpayers and investors in good faith and appear to make it up as they go along).
Can you honestly believe that a loan to a publicly traded corporation with a market capitalization of $38.5 billion and annual revenues of $16 billion is exactly the same as a loan to a start-up that is not yet a public company?
If Southern turns its back on federal financing because it can find a better deal in the market, why would this affect the project schedule and why would it indicate a lack of good faith bargaining? Potential borrowers should always ensure that they develop viable options before beginning to ask for a loan; otherwise they are taken to the cleaners during negotiations.
I do not have any inside information on this particular loan and I have not been closely reading any trade publications with quotes from participants. I am commenting strictly as an outsider who has been involved in a deal or two. Though I still hold out hope for the President in finding his pro nuclear voice again, I recognize that there are many members of his Administration that have no desire at all for nuclear energy to succeed.
They continue to play the part of Lucy to the ever hopeful Charlie Browns in the nuclear industry that will not recognize that our federal government employs too many politicians who have received or expect to receive way too much income from the coal, oil, gas, wind and solar competitors who lose when nuclear succeeds. Nuclear industry leaders need to take their case to the groups of people who benefit most from clean, low cost energy and ask them to assist with the financing and with the political effort required to remove some of the costly barriers that competitors have erected in front of nuclear energy success.
We also need to get our own house in order and help people understand which of their daily actions add cost without adding any improved performance or safety. Quality programs are supposed to lower overall costs, not turn into barriers to goal achievement.
There are two programs: 1703, where the company pays the fee, and 1705, where the recipient does not pay the fee. Nuclear power, alone among the intended users of the scheme, is not eligible for 1705, and therefore has to pay a fee. (Solyndra did not pay fees.)
Despite the confusing terminology, the credit subsidy fee is not a subsidy if it is paid by the user. In the case of 1705 programs, the fee is explicit set against government expenditure.
Bear in mind that this was supposed to be a stimulus program, so perhaps it would be reasonable for the government to take on some of the risk – especially as the government is historically the origin of a great deal of the risk, in the case of nuclear plant construction.
I think Rod’s point about the Southern (who I used to work for in California before we were spun off as “Mirant”) is taken. You cannot compare the two: one is a decades old, UNIONIZED utility with a proven record and one was something of a fly-by-night company of questionable financing making a product that had to compete with the state supported enterprises in China. There is no comparison.
Secondly, if the loan goes through…the payback with be enormous as the ‘loan’ and the ‘subsidy’ with be transformed into an ‘investment’.
Thirdly, the biggest investment savings here is that instead of dangerous natural gas being burned we will have cleanly generated electricity with zero health problems. Unlike with natural gas.
Yes. This speaks to the Holding Company (“Southern”), and less to the individual vendors (some of whom will be recipients of the loan). I agree. This is one of his points. I am speaking to another:
This is clearly incorrect. If I was an investor in Vogtle (and I am … since I am a taxpayer) I would be very upset with this characterization. Obama spent considerable political capital to broker this loan. The conditional paperwork has been signed, and it is well on it’s way to being finalized in 2013. There are many other projects to which this $8.3 billion could have been productively spent, and we’re borrowing the money to do so (which places considerable burden on the government, available services and programs … to say nothing about stalemates and showdowns in Congress over the deficit). If we’re not going to be getting any credit for this, I say shut down the deal and call back the loan (and use this money for something else, or better yet, not borrow the money in the first place). Investors of $8.3 billion should never be ignored in this way (or treated with such callous dismissiveness and disregard). And yes. I am upset, no bond holder in the private sector would EVER be told their investment doesn’t matter (perhaps even “doesn’t exist), or shouldn’t be rewarded with fair value interest rates for putting considerable funds at risk and investing in something as complicated and yes “risky” as a nuclear plant.
So you don’t think Calvert Cliffs, Levy County, AmerenUE, or the cancellation or suspension of 26 reactors (from a total of 30), is reason enough to be moderately concerned about the investment risk of these very expensive taxpayer financed expenditures? To say nothing of another Fukushima type accident that puts many existing construction projects on hold, or operating power plants into shutdown awaiting further action (on any number of possible timelines). If you can assure me that none of these things are going to happen, then why go to the taxpayer in the first place? Why not go to private credit markets, and secure the lowest possible interest rates on capital you can find?
And yes. I am upset, no bond holder in the private sector would EVER be told their investment doesn’t matter (perhaps even “doesn’t exist), or shouldn’t be rewarded with fair value interest rates for putting considerable funds at risk and investing in something as complicated and yes “risky” as a nuclear plant.
Perhaps we have a different interpretation of when someone becomes a bond holder. It is not when conditional promises are offered, it is when the borrower actually has access to the promised money.
I too, am angry. Why has this program, which was touted as a way to enable an important, emission free energy source to begin building new reactors after a 35 year hiatus, not provided any resources that can be spent for that purpose in the 7.5 years since it was passed by Congress?
All of the obstacles that you have listed are, in fact true and do cause a considerable investment risk. How many of those obstacles, however, could be moved out of the way with just a few well chosen words from leaders who assert that our ability to build nuclear power plants is important enough for the NRC to elevate its priority level? Why did our leaders allow the AP1000 license application to sit for 5 months between the time that the staff work had been completed and the commission decided it was time to take a vote?
Southern didn’t make a “handshake” agreement for $8.3 billion dollars of public financing. They signed a conditional contract with definite terms and conditions. I am sure they can get out of the deal if certain conditions are met, but this money has been allocated. A bunch of developers didn’t get it when Southern moved to the top of the list of applicants in 2008, and their contract states they are committed to “working constructively” with DOE to finalize the loan. Typically, one wants to do business with folks who honor their contracts (and don’t break them for no apparent reason)? I believe Southern understands this, and top company officials (and vendors in line to receive these funds) have stated as much. Moreover, it also appears to make a good business case (since no lower cost option is available to them in private credit markets).
Now I’m confused. You stated in original article that “Southern does not need the DOE’s money and does not need to subjugate its decision processes to the electoral whims of the federal government.” And now you’re saying you are upset this public financing was not offered earlier, or on a more consistent basis? Does Southern need the public financing (or not)? Because if they don’t, then the loan should come back (or should be issued at a fair market interest rate comparable to what is available in the private market). And I think we should all (nuclear proponents and critics alike) be writing to our fiscally conservative House Representatives, Senators, and even executives at Southern saying as much.
Another reason why fixed income nuclear loans frequently have junk ratings (or BB at best)?
Duke Energy botches a repair, and spends $1.65 billion on a plant that is never going to produce any power, and has to refund customers $835 million for the higher cost of replacement power on top of it. 60 years to decommission the plant. They won’t start recovering the cost of these expenditures until 2017, and over a 20 year period.
I see a lawsuit in Duke’s future. This money has to come from somewhere, and I don’t see it coming from the Executives of Duke Energy.
The Crystal River story is quite distressing to me on a personal level. It is one of the nuclear plants that I have visited and toured and for a long time it was the closest nuclear plant to my chosen residence. I have several colleagues who have worked on the project.
There is no doubt that some errors were made along the way; it is impossible to spend that much money trying and failing to fix something without making some mistakes. As is the case for every enterprise, there are people involved and there are components made of materials that are sometimes uncooperative and difficult to restore to a “like new” condition.
There are some questions that should be asked that is not being asked, however. Is the damage that was done to the concrete containment dome really and truly important to public safety? Could the dome have been economically restored to a condition that was good enough to protect the public from any hazard but was not good enough to meet the strict regulations and standards that are imposed? Do all of those regulations really protect the public or are they sometimes just weapons to use to make nuclear fission energy, which is fundamentally cheaper and cleaner than hydrocarbon combustion energy, as expensive and as difficult to deal with as possible?
I did a seat of the pants analysis of the option to run the CR plant in its current condition, versus the other options of repairing the plant or shutting it down and replacing it with gas. The (order of magnitude) results were astonishing. Choosing to repair the plant corresponds to spending ~$10 billion per life saved (assuming LNT!!). In terms of pure economics, the costs to fix the plant were ten times the benefits.
Assumptions were as follows. Probability of significant release (assumed to be a Fukushima-scale event) increases from 10-5 per reactor year to 10-4 per reactor year. Economic cost of event is on the order of $100 billion. Human lives lost conservatively assumed to be on the order of 100 (over decades, assuming LNT). Cost to repair the plant is ~$2 billion. Assume it buys 20 more years of plant operation. Thus, a 0.2% chance of the event in the 20 years of operation. Multiplying this times consequence yields 0.2 deaths and ~$200 million in economic costs (or “econonic benefit” of repairing the plant). $2 billion to save 0.2 lives is $10 billion per life. $2 billion is ten times $200 million. And most of the above assumptions are conservative…..
Meanwhile, according to the article linked below, the fossil (coal) industry is resisting an EPA particulates rule that the EPA says will cost them $53 to $350 million, but will save 40,000 lives and $9 billion in health care costs. Do the math, that’s only between $1,000 and $10,000 per life saved!!! Even the economic (health care cost) benefit is over 10 times the industry cost. And yet, this proposed rule may not be implemented do to political resistance whereas the suggestion to run CR w/o repair is not even taken seriously.
What really gets me is that there are four coal plants at the CR site that will continue to operate. I wrote a provocative internet comment in response to the Tampa Bay paper’s article, pointing out the hypocrisy of this situation, and pointing out that the overall public health risk and environmental impact from operation of the coal plants on the site is far higher than what the risk would be from the nuke if it were operated in its current, unrepaired condition. Predictably, many people were not ready to hear that message.
Oops, here’s the link to the article about soot regulation.
Your assessment of costs/benefits seems rather narrow to me. Nobody really sees “mortality” from acute or chronic exposures as a significant measure of liability claims or costs. This appears to be why your ratios are skewed and your results “astonishing.” A larger component of costs are protective measures intended to keep these mortality statistics very low in the first place (and in this instance, the costs are very high, and the protective measures very effective).
Care do to this calculation again with cancer incidence, relocation costs, lost livelihoods, property damages, environmental clean-up, business damages, and emotional distress thrown into the picture. Because there will be plenty of claims filed on this basis in civil courts, or under Price-Anderson.
Beyond personal injury, we also have other types of liability impacts. They can be quite broad, and far reaching after a nuclear accident, and many of them beyond the scope of Price-Anderson to quantify or “pay out.” Which doesn’t mean that nobody has to pay them (they are just absorbed by the taxpayer, private companies, banks and investors, and the industry as a whole). Looking at some of the history of these claims in the US (for nuclear and other types of power related accidents and incidents), here’s a quick summary: property damage, emergency services, environmental-clean up, food monitoring and inspections, worker compensation and tort claims, emotional distress (and other civil cases), impact to local business and employees (and lost tax revenue), cost to industry (from costly upgrades and additional regulations), cost of replacement power, lower property values, impact to public confidence and political shifts, bankruptcies, cost for public commissions and studies, tourism impacts, loss of stock valuation … on and on.
In fact, Japan appears to be a pretty good case (and unfortunately so). While the loss of human life has been small, the costs of the accident has been widespread and “astonishingly” large. For a country that already had some of the highest debt to GDP levels in the world, the loss of four reactors on one site on one day is something that will take decades if not generations to overcome. $137 billion in claims alone (rivaling that of the bank bailout in the 1990s). And how are we to assess the other impacts and costs: to business investment, economy, public confidence, trust in government, 30 to 50 year energy shifts, and public investments as a whole (in health care, social services, infrastructure development, international relationships, and more). I don’t see where “mortality” measures come anywhere close to properly assessing these broader impacts (even if we limit ourselves narrowly to immediate financial impacts and liability claims)?
A natural gas plant blows up (or there is an oil refinery fire), it is unlikely that “liability caps” will ever be triggered. Unfortunately, the same can’t be said for deepwater drilling accidents in the Gulf, or a (“man made“) nuclear accident as serious as that at Fukushima (or Crystal River if industry standards weren’t followed in important construction upgrades).
Before we tackle Price-Anderson, perhaps we should outlaw New Jersey. One hurricane resulted in $30+ billion in damages. Where do you think most of that money is coming from?
Hurricanes are far more frequent than nuclear reactor accidents.
Did New Jersey do anything to upset the gods … or put a power plant unprotected in the path of a hurricane?
Yes … perhaps this money could have been better spent on carbon mitigation alternatives, and shoring up hurricane defenses before the fact. I believe much of will be (and is exactly my argument). But so far as preventing all hurricanes forever, what are you recommending … the power of prayer?
New Jersey, like all other coastal states, has done the financial equivalent of putting “a power plant unprotected in the path of a hurricane.” As a society, we accept the fact that hurricanes and other natural disasters happen. We build our homes, factories, power plants, office buildings, and downtowns anyway. We do not let our fears of what might happen stop us from working to progress and make our lives better.
When the storms happen, we pick up the pieces as best we can. We insure each other and take some cost effective mitigation measures.
However, the standard that some people – present company included – want to apply to nuclear energy is FAR higher than that applied to all other investments. I remain convinced that the real reason behind nuclear exceptionalism is a multi-decade propaganda campaign by the competitors of nuclear energy to attempt to keep it tied down like a gigantic energy “Gulliver”.
Like Salem, Hope Creek, or Oyster Creek?
How much in damages is being paid by the federal government for these?
Not asking for prayer, just asking for ill-informed Internet comment-trolls to get a clue.
What am I ill informed about. Do you have any specifics?
Hate filled people like yourself need to put up, or shut up.
IMHO, the people who should be paying the “emotional distress” tort costs are those who think it is somehow beneficial to spread irrational fear of something that is about as dangerous as spending a few minutes waiting for an airport shuttle inside a less than perfectly ventilated parking garage.
As with anything that involves risk, failure to account for it compels people to be irrational and not improve building design and practices in hurricane-prone areas, provide adequate insurance coverage, or engineer sub-standard (unprotected) power plant designs. And this is being offered as a defense of progress?
Why can’t we build sufficient designs, learn from past mistakes, adequately cover risk, and make our lives better at the same time? I don’t see where any of this is mutually exclusive. Does this sound to you like a false choice?
We have learned. What we have learned is that sometimes stuff happens. It is useful to take reasonable precautions, but also to know when the reasonable treads into the unreasonable. In some cases, the prudent choice is to take your chances and be ready to mitigate the consequences if an unlikely event happens.
We could, for example, require our cars to use safety equipment that has been proven by NASCAR to make it possible for drivers to be involved in dramatic crashes and still be able to walk away. We could force drivers to wear the same kinds of protective clothing and strap into the same kinds of carefully designed and fitted seats. We could put all drivers through the same kinds of training programs that are required before being able to drive in a sanctioned race.
Would that make life better or worse?
I actually thought that death/illness were often a big part of liability claims. In fact, my understanding of what Price Anderson was mostly about was to make sure that people are compensated, quickly and w/o question, in the event of an accident (i.e., that it was mainly for the “victims” benefit, not the industry’s). It was to prevent years of litigation and delay, not only regarding who was at fault, but if a persons health problems were because of the release.
The overwhelming body of case law (i.e., legal precedent) concerning the payment of damage claims for things like cancer, etc.. is that it has to at least 50% likely that the cancer in question was caused by the event (or agent in question). As everyone here knows, no member of the public’s exposure could ever get even close to meeting that criterion in any meltdown scenario. (Heck, even the two workers who found themselves waist deep in highly radioactive water would not be able to make that claim.) The upshot is that the industry would fight any health claims in court and would almost certainly win. Nobody would get paid anything. Under PA, they get some compensation.
You are correct, however, that there would be economic claims (as was the case with the BP oil spill as well). But $137 billion in compensation?? About one million per evacuee?? I doubt that most of such claims will be paid. I continue to think that ~$100 billion is a good number. (Far less than that has been paid so far.)
Minor point: Also note that a good fraction of Fukushima’s total cost is cleaning up the (wrecked) reactor. In the case of CR, we’re talking about the benefit of repairing the containment dome. The dome contains the effects of serious accidents. It does nothing to avoid them or reduce their probability. Thus, reducing the chance of having to clean up and decommission a wrecked reactor is not among the benefits of repairing the dome.
As for all the “other” (intangible?) effects you talk about, I don’t really get it. Impacts can be devided into two parts, health/mortality, and economic. All the economic costs are covered by the ~$100 billion estimate that I’ve been using, which includes estimates of total compensation. Compensation covers all the things you mention, having to move, loss of business/income, emotional duress…. That’s how such things have always been handled in modern society. An adequate amount of compensation is agreed upon (by policy or litigation).
Getting back to the Fukushima compensation estimates, which have been equating to several hundred thousand per evacuee (about a million per family). I don’t know about you, but I’d gladly have to move, and/or have to find another job, in exchange for a million bucks.
I wonder how the victims of Katrina would feel about this. Katrina also resulted in people having to evacuate a large area for a long time period (settle elsewhere, get new jobs, etc…), the difference being that the number of affected people was far larger with Katrina. Many have never returned, to this day. New Orleans, a major US city, is still a fraction of its original size. Under any objective definition, Fukushima doesn’t compare. And yet, I wonder how much Katrina’s victims were compensated. Does the term Katrina trailer ring a bell? They may have gotten a few thousand, if they got anything at all.
Finally, I find it a little odd when you say that it’s not about health/mortality impacts, but about other (economic, sociological) impacts, when it is absolutely clear that all of those other impacts are due to (caused by) an undue level of public fear of …….. health and mortality impacts.
I haven’t looked into it closely, but perhaps you can tell me if you understand it any differently. But current compensation claims for Fukushima victims (labelled a humanitarian crisis in current reports) are the result of relocation and displacement, and not health impacts. Cancer has latency of 5 – 60 years, so why would they be dealing with health related compensation claims at this moment in time? Many of these claims have already been settled, and I believe the application deadline for new claims is March 2013.
The statistics are pretty staggering (and disheartening). I understand a number is just a number, but these are villages and communities that don’t exist anymore. Many of them are very old with important and long standing traditions, and rebuilding community and livelihoods (as your Katrina example points out) takes a great deal more than a government check. Such efforts will be ongoing for many years (even if they don’t have a price tag attached to them in compensation claims). The region is also an important agricultural region to country. The losses have been devestating.
While I haven’t followed it closely, a quick search pulls up some of the numbers. Compensation estimates to March of 2013 are somewhere around 4.5 trillion yen (or $48 billion USD). As of late last year, 257,000 claims were received from individuals, and 116,000 from corporations and sole proprietors: “206,000 and 92,000 respectively have been settled voluntarily.” If all settled claims were getting same amount (which I am sure they are not), this would be some $161,000 per person. Reasonable, yes, but sufficient, I’ll leave that for you to decide. If you can tell us the actual settlement rate is for individuals, I am sure it is far less than the bulk amount, this would be helpful.
As far as the broader impacts to the economy, they have been bad (but not horrible). The Japanese economy was already in pretty bad shape. 228% gross-debt-to-GDP at the time of the accident, and a 18% percent decline in GDP in the first quarter of 2009 (in response to global financial crisis). The impacts have already been felt at a political level, we’ve seen many immediate impacts (imports and exports, food products, agriculture and livestock, cost of emergency measures, impact to automakers, business development as a result of energy situation, cost of replacement energy). Many longer term economic impacts will no doubt be a result of how the Japanese respond to these broader issues and concerns. And Japan has a great deal of ground to make up (they have been trying to make it up ever sense the 90s, and recent events and issues surrounding restart of reactors and broader energy shifts aren’t helping much). But it’s a big economy, and big economies (if the world is wishing you to succeed) can be pretty flexible and resilient. Likely to be successful in the future, most definitely, but I doubt we’ll be seeing any major headlines of US companies being takeover targets as a result of the juggernaut of the Japanese economy. This crisis continues to set them back on the global stage (and the world is increasingly interdependent and interconnected these days).
As near as I can determine the $1.65 figure is what it would cost to do the repair and so far $338 million has actually been spent.
“The ill-fated Crystal River upgrade project and operations and maintenance costs since 2009 add up to $1.3 billion …”
In July 2012, Standard and Poor downgraded Duke’s bond ratings from A- to BBB+ (with a negative outlook), and cited Crystal River as the company’s “biggest challenge” in 2012. The recent decision to cancel repairs and shutdown the plant was viewed favorably by credit rating agencies. Duke Energy has $1.6 billion invested in the plant (presumably as a result of merger with Progress Energy), and it will recoup these costs beginning in 2017 over a 20 year period.
$388 million appears to be the “charge against earnings in earlier quarters to account for the anticipated shareholder costs related to the fuel and purchased-power refunds Progress Energy Florida will be required to make to customers.”
I’m fully on board with the fact that Crystal River has been a financial debacle and will be an expense for Florida rate payers for many years into the future. It is not good news for the nuclear industry.
My question, though, is whether it should be counted as a large strike against the use of nuclear technology. The component at issue is a concrete containment dome. The functional basis for that component is to provide strength and support to a 3/8 inch thick steel containment vessel, which is the third of three barriers to the release of fission products to the environment in the case of a reactor accident.
(The first barrier is the fuel cladding; the second barrier is the primary coolant pressure boundary.)
As the SOARCA study indicated, even in the case of a containment failure, there would be few if any instances of public harm, in the already unlikely case of a severe reactor accident.
From “boots on the ground” reports, the issue was not that the concrete dome could not be repaired, it was that repairing it in a way that could be proven to be acceptable to the NRC was going to be extremely expensive. Patching it up to provide adequate protection to the steel liner would have been pretty easy and cheap, but anyone who has ever tried patching concrete will understand that repair on 3 foot thick walls would be difficult to achieve without some amount of cracking.
In my opinion, the real issue that Crystal River illustrates is the cost impact of applying standards of near perfection to a component that is not actually providing any additional protection of public safety. Those standards are rarely, if ever, applied to the “cheap” competitors of nuclear energy.
For example, how likely is it that there will be an accident or two associated with building a new natural gas fired power plant and additional natural gas pipeline capacity to provide fuel for that plant if it is built in what is already a supply constrained peninsula? If the gas plant is built closer to a place in the gas infrastructure where there is more capacity – say up in the panhandle region, what is the potential accident scenario for building out additional transmission capacity to move the power down to the areas that are current supplied by Crystal River?
As you say. The concrete dome is a containment barrier, but also provides structural support to containment vessel. It seems improbable to me that anybody would allow a nuclear power plant to operate without sufficient structural support (in Japan, China, Czech Republic, or elsewhere). “Tremors rattle local residents,” airplane strikes, hurricane loads and projectiles, etc. 20,000 people live within 10 miles of the plant (Plume Exposure Pathway), 1 million within 50 miles (Ingestion Exposure Pathway). Let’s say you are correct, what other alternatives are available. A higher insurance rate to cover the additional risk to the plant, removing liability caps and placing a greater share of the burden on the utility and investors, extending buffer zones, and what are some of the other impacts to local home values, property tax base, etc. It seems pretty reasonable to me that fixing the plant might have been the most cost effective alternative (rather than covering the risk in some other way by ignoring structural defects, extending buffer zones around the plant, purchasing more liability insurance, and further externalizing risk to local homeowners, taxpayers, ratepayer base, State and Federal Governments).
One solution: repeal Price-Anderson, and let utilities cover the full cost of insurance and liability risk for their power plants (that sounds like a perfectly reasonable solution to me … and perhaps the best way to assure that plants are built to the highest standards and with the most robust of structural and containment systems).
Progress Energy attempted to save $15 million by doing the repairs themselves. Something tells me that putting the all of the responsibility for oversight, design licensing, and regulation in the hands of the developer (who’s main responsibility is the protection of shareholder value) may not be the best approach to take. It certainly wasn’t in this instance (for a company so poorly mismanaged, ignoring technical advice to the contrary, and eager to cut corners to do repairs on the cheap).
You seem to be contradicting yourself. Don’t you think that the rest of the decision makers in the nuclear industry, who are also tasked with a fiduciary responsibility for shareholder value, are taking a very hard look at the short sighted decision at Crystal River? Whoever made it most emphatically did not protect shareholder value.
In fact, I think that the man with the ultimate responsibility for that decision was rather summarily dismissed by people who recognize that doing things right is ultimately the way to build both trust and profits.
It’s clear that repairing the plant is nowhere near cosst effective. See my analysis above.
If we want to get realistic for a moment, a cosmetic repair (enough to provide some confinement of escaping cesium) would be sufficient. As experts have pointed out (Rockwell, I think), even a failed containment significantly reduces release, due to plate out and settling. On the flip side, it doesn’t appear that the containments at Fukushima accomplished much. Also, CR is just one plant, vs. three at Fukushima, and PWRs are, if anything, better than old BWRs in these regards, with a higher containment volume, etc… What I’m saying is that even with the containment in its current state, the worse possible release at CR would probably be far LESS than that which occurred at Fukushima.
Furthermore, we have to keep in mind that the consequences of Fukushima were FAR SMALLER than what people had thought, or had been basing policies/requirements on (e.g., evacuation and emergency planning requirements). Why would they have to increase the buffer/evacuation zones? Even for this “broken” contaiment? A higher insurance premium, perhaps, but it would be nowhere near $2 billion.
The decision not to run the plant in its current state was not a utility decision, and was not based on any kind of cost/benefit analysis. It was not even considered, as NRC demands verbatim compliance with all requirements. If you’re suggesting that it’s a politically impossible decision, well yes, you may be right.
EL (RE: Price Anderson)
If we repealed Price Anderson and the utilities made rational, objective decisions based on real risk, they would spend far LESS on safety programs and systems, not more. At a minimum, there are a whole lot of requirements out there that are hugely expensive and don’t provide much in the way of risk reduction (e.g., NQA-1, IMO). Such policies would be re-evaluated, objectively (finally).
I actially like the notion. Given that, as we learned in Fukushima, the consequences of even a worst-case nuclear accident are purely economic (no deaths or health consequences), such decisions should be purely between the utilities and their insurers. Whereas NRC has no incentive to be reasonable (financially), insurance companies may compete for the industry’s business. An insurer would, of course, have every incentive to require the plant owner to put in place cost-effective risk reduction measures, but if they become unreasonable, requiring measures that are extremely expensive but provide little risk reduction, other insurers will see the “opportunity” and step in.
Simply put, sure, I can accept the repeal of Price Anderson, but in return we should get, pretty much, the elimination of NRC.
One more thing, why should the industry give up Price Anderson when fossil generators get to pollute the environment for free? This “free pollution” subsidy is ~100 times any subsidy nuclear gets from Price Anderson.
So, Fukushima, the first significant release in non-Soviet nuclear’s entire 40+ year history will cause 0-100 eventual deaths and ~$100 billion in economic damage. That’s ~0.1 cents for each kW-hr Western nuclear had generated before that (first) release. Meanwhile, in the US alone, fossil generation causes ~20,000 deaths ANNUALLY, as well as $100 billion in economic costs ANNUALLY (according to EPA). And then there’s global warming…… And yet, they don’t pay one dime, to anyone, ever, in compensation for these massive external (public health and environmental) costs.
The harm from fossil generation is orders of magnitude larger than that from nuclear accidents, yet whereas fossil generators pay zero fraction of those costs, the whole Price Anderson issue is that nuclear may not be covering ALL of the costs of (rare) accidents. There’s no comparison. So, yes, I’d be willing to give up Price Anderson if fossil (mainly coal) plants had to pay $100 billion per year to cover the costs of their pollution. (That would add ~5 cents/kW-hr to coal’s costs.) But not a moment before……
See my response above.
Are economic impacts any less of a liability or public concern than personal injury (especially when they are on the scale of what we have seen in Japan)?
I think you mistake my comment with a “stereotypical anti-nuclear” position having something to do with radiation health risks (and I never made such an argument). I don’t believe private utilities, investors, or bond rating agencies are making those kinds of arguments either. Investing in nuclear power plants is very risky (and apparently more so than renewables by most available measures). CBO provides a pretty good overview of many of these risks.
Price Anderson covers direct claims (not indirect claims as a result of accidents). With fossil fuels, it sounds to me you are talking about indirect claims.
In general. I accept your premise. Nuclear is not as bad as fossil fuels.
In general. I accept your premise. Nuclear is not as bad as fossil fuels.
Good. Now we can discussion rational policies and stop treating nuclear as something worthy of exceptional measures.
I personally have no problem advocating a repeal of Price-Anderson. It is way past its useful life. The industry, however, will need some kind of anti-trust exemption in order to participate in some kind of reasonable pooling of risks and liability. One of the good things about Price-Anderson is that it helps to propagate a very useful philosophy within the nuclear industry that since “an accident anywhere is an accident everywhere” we need to work together, learn from each other’s mistakes and share as much information as we can about how to prevent future mistakes.
— trying this post again (having trouble with it)
See my response above.
Are economic impacts any less of a liability or public concern than personal injury (especially when they are on the scale of what we have seen in Japan)?
I think you mistake my comment with a “stereotypical anti-nuclear” position having something to do with radiation health risks (and I never made such an argument). I don’t believe private utilities, investors, or bond rating agencies are making those kinds of arguments either. Investing in nuclear power plants is very risky (and apparently more so than renewables by most available measures). CBO provides a pretty good overview of many of these risks.
Price Anderson covers direct claims (not indirect claims as a result of accidents). With fossil fuels, it sounds to me you are talking about indirect claims.
In general. I accept your premise. Nuclear is not as bad as fossil fuels.
Agreed. But it would appear we are unlikely to agree on what is reasonable or appropriate (as opposed to exceptional). You seem to think “some amount of cracking” is fine in a structural component that provides “strength and support to a 3/8 inch thick steel containment vessel.” So the question remains, who gets to decide: independent regulator, private developer (recommending least expensive alternative), contractor (recommending most expensive alternative), insurance actuary (responsible for contingent outcomes, probabilities, and uncertainty), ratepayer and taxpayer (not wishing to be on the hook for runaway costs), or investors (looking for a stable business environment in which they can obtain a reasonable rate of return on their investment).
I understand your interest is with the developer. But there are other parties sitting at the table too, whose interests are just as legitimate and have to be properly accounted for as well? What would be exceptional to me would be to take only one group of interests and concerns, and to dismiss all the others as unreasonable or ill-advised. No developer gets a free pass on this basis, and certainly nuclear should be no exception.
I understand your interest is with the developer.
Then you have not understood.
We have been conversing for quite some time. I was hoping that you were beginning to realize that I am not motivated just by money, that I am not interested in doing things that hurt people, that I have a reasonably wide lens when it comes to assessing consequences, and that I fully understand that there are many interests at the table.
In this case, it is hard to see that anyone’s interests are being served other than those of the hydrocarbon fuel suppliers who have been benefitting ever since the shutdown of Crystal River began.
The air is dirtier, the people are poorer, property values are lower, electric power rates are higher, and the widows and orphans that used to benefit from investing in reliable electric power utility companies have fewer options. (That statement is not meant to be a comprehensive listing of all of the affected stakeholder, by the way.)
I have no doubt that if better decision making had prevailed at Crystal River, that the warnings and advice of experienced contractors and technical specialists had been heeded, and more money had been spent doing the repair correctly in the first place, we would still have a power plant that is fit for service after only 38 years of operation and contributing electricity to the grid (to the benefit of consumers, taxpayers, shareholders, outside investors, industry representatives promoting safe and reliable operations, and more). Your argument that the best technical approach to repairs in this instance was also the least expensive appears to not be born out in this case. “You get what you pay for” (as the old maxim goes). In this case, Progress Energy (and now Duke) got much higher refurbishment costs, much greater investment risk, and a $1.6 billion liability that they have to now pay off over the course of the next 20 years (beginning in 2017). How you can defend these actions is really beyond me, especially as someone who is working on multiple fronts to enhance public confidence in nuclear, and recommend it as a viable alternative to other energy alternatives (from a risk management, public investment, shareholder value, cost-benefit, environmental, or any other type of analysis). There is nobody here to blame except Progress Energy (not regulators, not credit rating agencies, not anti-nuclear zealots, not natural gas interests and lobbyists). Replacing a steam generator and uprates happen all the time, and successfully so. Progress Energy botched this one, and lowering reactor safety and operational standards to accommodate their poor decisions seems like the wrong approach to take to me (and one that doesn’t bring a clearer picture or greater certainty to the industry).
Your argument that the best technical approach to repairs in this instance was also the least expensive appears to not be born out in this case
When did I say that? The best technical approach to repairs is generally the least expensive in the long term
. It is not always the easiest or the best in the short term and it is sometimes difficult for people trained in American business schools to understand the long term costs of making what look like inexpensive choices by cutting corners.
My current advocacy of accepting a concrete containment dome repair that is not quite perfect starts with the knowledge that the very poor decision was made. Nothing can be done about that; it’s done and history. In this discussion thread, I am talking about making the best decision for everyone from here going forward. It is my considered technical opinion that there is no credible scenario in which operating an otherwise acceptable light water reactor with a flawed concrete containment dome will protect anyone from any harm.
As a complete aside, I think that similar short-term, price-focused decision making played a role in the selection of the steam generator vendor for SONGS. Someone thought they obtained a really good price through their competitive bidding process. Again, now that the generators have been purchased and installed, I would recommend a different path than the current one that is being followed by the regulator and the utility.
I’m glad you agree about fossil fuels, but this is something that we’ve always heard from anti nukes (not even necessarily saying that you are one, per se). But what they’re really saying is that they don’t want to be bothered with nuclear vs. fossil arguments, as a challenge to their efforts to oppose nuclear. They argue that opposing nuclear is justified (despite their not having an answer to the nuclear vs. fossil arguments) because we can get rid of both (and use renewables only).
Even if that absurd claim were true, if one of the “bad” energy sources were 100-1000 times worse than the other, it’s still hard to justify putting any effort into opposing the slightly bad one, at least until the really bad one(s) are virtually gone. But they go right on doing that, opposing nuclear with far more fervor than anything they throw at fossil fuels, even coal. The result of their influence is things we’re seeing like nuclear having to spend thousands of times more dollars per life saved than fossil fuels, and fossil fuels being used instead of nuclear as a result.
Of course, all of us here know that the real impact of reducing nuclear has always been increased use of fossil fuels, not increased use of renewables. Case in point is Crystal River. It will be replaced by gas generation. Also, there is the obscene fact that while CR is forced to close, the four coal plants on the site will get to contunue operating. The simple fact is that if they shut the coal plants instead of CR, and (yes) operated CR with the “broken” containment, the health and environmental risks would be less.
It’s not really enough to say “I agree that fossil fuels are worse”. What does that mean? What actions does that translate into? You/we can’t just say that and then sit by while nuclear gets regulated out of existence and fossil fuels are used instead. For me, it’s clear. Until coal is virtually gone, all alternatives to it should be actively supported. Not only should regulations on coal be greatly increased, but as long as coal plants still operate, not only should there be no increases in requirements (that significantly increase costs) for the alternatives, but we should consider relaxing some requirements until the alternatives (most notably nuclear) become competive, with coal at least.
Increasing requirements so that nuclear is priced out of the market, and fossil fuels are used instead, actually increases public health risks and environmental impacts, in addition to causing economic damage.
Increasing requirements so that nuclear is priced out of the market, and fossil fuels are used instead
That is the desired outcome by many of the people in The Establishment who continue to supply the antinuclear movement with its funding.
By the way, there is a substantial economic motive associated with the current demonization of coal, which is actually just another hydrocarbon fuel source. There is a good reason why Chesapeake Energy, a major US-based gas extraction company, paid the Sierra Club, a major antinuclear, anticoal non-profit “environmental” group, $26 million over a three year period for expenses related to its “Beyond Coal” campaign.
The ecological damage caused by using coal varies quite a bit from place to place, but so does the ecological damage caused by using gas or oil. There is a lot of overlap in the total cost/benefit ratios between the three primary forms of hydrocarbons so I refuse to make blanket statements about which one of them is best without knowing more specifics on the fuel resource, transportation, and consumption process for the portion of the energy production system under discussion.
I will say that from an economic point of view, burning coal tends to provide better employment for more Americans than burning oil or natural gas. Burning oil tends to concentrate incredibly large sums of money into the hands of some rather nasty individuals. That concentration of wealth and power is NOT GOOD for humanity or for freedom – which is one of my primary measures of effectiveness. Gas, since it is produced largely by exactly the same entities from similar reservoirs is not much better. Again – these statements are very broad and need to be evaluated for the specifics.
I like North Dakota shale oil much better than Nigerian, Venezuelan, Saudi Arabian, or Russian oil. I like Pennsylvania gas much better than gas that is imported from Qatar or Trinidad (though I like providing good employment to people in the Caribbean Island chain). I would really like Virginia uranium if it was legal to mine the material here.
Yes, I am a rather parochial and selfish individual. Aren’t we all?
I like all reliable sources of energy because of the power to do work that they provide to human beings.
Indeed, adequate resource planning is on the scale of decades (and not months or years, as is the case with CR). The short term hit will be an increase in fossil fuels. What makes you think this will also be the long term trend, and that resources won’t be better spent on the development of cost effective alternatives (that do make a substantial impact on rising emissions)? You obviously have faith that nuclear is the only option for meeting our significant global energy and climate challenges. Nuclear, however, is projected to be a smaller share of global energy mix in the future than it is today. If your claim is true, it doesn’t seem to be keeping up a pace or doing a very good job at displacing fossil fuels, it appears to actually be losing ground to fossil fuels and other alternatives (and for a number of different reasons, some of which we have discussed in this thread).
We can discuss evolving energy markets, and the best way of meeting our growing energy and climate challenges, but nuclear has a number of fairly significant hurdles ahead of it. Minimizing risks, regulatory burden, and construction standards is not the way to get there (to my mind). Nobody is saying nuclear needs to go away. What I am saying is we need to get practical and busy. And turing to stuff that works is one way to go about doing this. I’m not one for false choices. I’m also not one for straw men. There are many fine people working on these issues, and it’s perfectly reasonable to differ in our approach. We live in a complicated world. In arguing these differences (and exploring options in the marketplace, new capital opportunities, new regulatory regimes, research and development, scaling new opportunities in OCED and developing countries alike), I think we can arrive at better solutions, and practical alternatives that get us to a much happier, far more sustainable, and “less worse” future world. Do we get there by being stymied by false choices (or understanding that natural gas is a flexible fuel, an excellent capacity resource, and a very good way to get off coal with a competitive market window of some 30 to 50 years in my view). I don’t think so. As Rod said, we get there by taking risks. And I see our world as being full of possibilities, and a great many very good alternatives and future opportunities.
Indeed, adequate resource planning is on the scale of decades (and not months or years, as is the case with CR). The short term hit will be an increase in fossil fuels. What makes you think this will also be the long term trend, and that resources won’t be better spent on the development of cost effective alternatives (that do make a substantial impact on rising emissions)? You obviously have faith that nuclear is the only option for meeting our significant global energy and climate challenges. (Emphasis added.)
You call it faith; I call it technical knowledge. Heavy metal fission energy IS the only proven replacement for hydrocarbon combustion in the market for reliable, affordable power that can be controlled by human beings and human designed control systems. There is no other choice.
I know it sounds incredibly arrogant, but I am a reasonably intelligent guy who has read very widely on this topic for more than 20 years. I have taken several advanced energy conversion engineering courses from one of the true thought leaders in the alternative energy community – he wrote the book on Ocean Thermal Energy Conversion and published widely on many other topics in alternative energy.
My quest came up empty. There is nothing at even a laboratory scale, much less a reasonable facsimile of a commercial demonstration scale that can work.
On the other hand, you seem to have faith in the miraculous. Perhaps you just have faith that given one incredible energy source and rejecting it for a variety of reasons, human beings will eventually succeed in inventing a new one without as many potential drawbacks.
The only other explanation I can come up with for your attitude is that you are one more of those fossil fuel advocates wrapped up in “Green” clothing that I continue to blame for our current energy situation. Yes, nuclear is not doing so well in the market right now, but that is just reason for better communication and real marketing that includes attacking and tearing down the obstacles that have been purposely erected by its competitors.
You have provided a pretty good cover story through many of your comments and through your own web site. I have always considered you quite sincere but this statement may be more revealing of your true goals:
Do we get there by being stymied by false choices (or understanding that natural gas is a flexible fuel, an excellent capacity resource, and a very good way to get off coal with a competitive market window of some 30 to 50 years in my view).
That statement sounds like it might have come straight from a Chesapeake Energy marketer to me.
As an aside, one of the many weaknesses with the “many good alternatives” paper to which you linked is its characterization of nuclear as just baseload that requires a large export market for excess power if you go to a high nuclear input scenario.
We have been building responsive nuclear power systems since the very beginning – the STR was fully capable of rapid response to every load demand within its design profile. Hundreds more have been built and operated for as long as a 50 year lifetime – like the USS Enterprise reactors.
Once again, people who are fundamentally opposed to the use of nuclear fission have ignored its real capabilities in the hope and prayer mode that an imaginary technology like CCS will prove to be more flexible than fission has already proven it is in the real world.
I’m not saying that I believe nuclear is the only way to meet our energy needs while limiting emissions. I do disagree with those who think that (intermittent) renewables will be able to meet all or even most of our electricity needs. My guess is that they can provide about ~25% of our generation, tops. Beyond that would be impractical, or at least extremely costly. In other words, I believe that (very low CO2) mixes that include a significant amount of nuclear will be far less expensive and more practical than mixes (approaches) that have little to no nuclear. I also don’t believe that gas will remain cheap for nearly as long as everyone is saying they will.
That said, my real belief is that my prognostications (as well as yours) about what will happen several decades in the future are of limited value, and stand a good chance of being wrong. Who knows what technologies will be developed, or what happens in policy space, between now and then? The future price of oil and gas has also been proven to be highly unpredictable. My real position is that the real point is to establish correct *policies*, as opposed to striving to make some pre-determined outcome happen. We all can feel free to cheer for our various favorite sources, but we need to agree upon fair, objective and effective energy policies, which hopefully result in the best mix being chosen, on the basis of merit.
In general, I’m a fan of applying external costs (i.e., taxing pollution), and letting the market respond as it sees fit, as opposed to policies that try to push any given energy source(s). One simple example of good policy, with respect to global warming, would be to tax or limit CO2 emissions, and let the market decide how to respond. But such policies are going nowhere, and to the extent we have policies at all, they are “winner picking” policies that aim for a specific outcome.
I’m afraid it’s the “other side” that has been primarily guilty of this. Instead of fair, objective policies that set performace goals (e.g., reduced air pollution, reduced CO2, or reduced energy imports) and let the market choose the response, we’re treated to horrible policies like Renewable Portfolio Standards or (renewables only) feed-in tarrifs (at their urging/insistance). These policies obviously don’t have performance goals in mind. They have specific outcomes (i.e., specific “winners”) in mind, i.e., renewables. Some competition! Renewables are declared the winner, by govt. fiat, regardlesss of cost or practicality. Meanwhile, all nuclear advocates have ever wanted is the ability to compete fairly on a level, objective playing field.
Countries like Germany and Denmark are the worst examples of this. Their policies have one goal in mind, to maximize renewables. For all the other energy sources, their policies largely don’t care which one is used, and their relative environmental impacts are not factored in at all (given the low CO2 credit price, juxtaposed against – and largely due to – massive renewables subsidies and outright mandates). Coal, even ultra dirty brown coal is treated almost the same as nuclear or gas, or even hydro. The result has been decreasing nuclear and gas, and increasing coal and renewables. That in turn results in higher overall air pollution and CO2 emissions, along with much higher cost. No fair, objective or effective policy would produce such a result.
If emissions reductions were left to the market, there would be a whole lot of coal to gas switching going on, along with some conservation efforts, and a whole lot less investment in renewables. At least for now. Longer term, assuming gas prices eventually go up, there would probably be a bit more focus on nuclear and less on renewables. The EIA and CBO pubslished an analysis (link below) of what would happen if dramatic (US) CO2 reductions were required and it was left to the market as to how to respond (i.e., if the lowest cost approach were taken). The results showed that nuclear would take the biggest share of the non-emitting market (generating 62% of all power by 2050), with wind coming in second.
Of course, fair, objectve policy may be alot to ask for. The recent projections you cite, where nuclear stays roughly constant (at 12-13%) while renewables significantly increase are the product of grossly unlevel, unfair playing fields (such as massive renewables subsidies), along with outright fiat decisions by govt. that renewables will be used (through use of portfolio standards and feed in tarrifs). Meanwhile, there are policies put in place to hold nuclear back, either indirectly through uniquely excessive regulation, or outright fiat decisions to close it down or not even allow it. Those projections, BTW, are also essentially based on the assumption that we do little to reign in global warming, and accept rising emissions. If emissions were required to fall, the results would be quite different.
I believe that the “hurdles” to nuclear that you mention are not real, or fundamental, but are artificially imposed (i.e., are in most ways phony). The nuclear waste “problem” is perhaps the best example of a phony issue, given that most other sources’ waste streams actually pose a larger very long term risk.
In summary, I’m not wed to a given outcome. I want to see policies that require large reduction in air pollution and steady reductions in CO2 emissions. I want it to then be left to the market to decide how to achieve that. If nuclear loses on a fair, objective playing field, I can accept that. What I can’t accept is a grossly unlevel, unfair playing field, and policies that have specific outcomes in mind. I want a level playing field between nuclear and fossil fuels in terms of how strict regulations are (e.g, money spent per unit of public risk reduction), and I want an end to massive renewables only subisdies and/or outright mandates.
I agree. I’m fine with this. Carbon taxes and regulations assuring best industry practices in every field: especially well design and natural gas development, reactor licensing and oversight, deepwater drilling, arctic drilling, wind energy siting, solar and conservation of water resources and desert ecosystems, mountain top removal, and more. For technologies less than 20 years old, and where markets are still being developed, a little bit of subsidies can be a good thing (and can do a great deal to make markets more competitive, and not less). But nuclear is very far away from competing on a level playing field (and this is one reason why investors are very cautious of it). They don’t do a lot of their own R&D, get below market rate public loans, have shifted operational and construction risks to taxpayers and ratepayers, get production tax credits, ceded waste management to the government (because it has far better institutional leverage to do the impossible), and it seems pretty normal to be short on decommissioning funds (as in the case of Crystal River delaying decommissioning of plant until 2076).
It sounds like we agree on many things (and yes, energy is far from a perfect world). But as someone who tries to look at these things rather objectively, nobody is trying to price nuclear out of the market. Minimizing risk, regulatory burden, and construction standards would be far from ideal (in my mind), a special favor to the industry (as is for natural gas), and this is not how I wish to see our energy infrastructure and systems developed. Nuclear needs to get it’s act together (and natural gas too). I feel pretty confident in saying this. Not because activists say so, but because it has a very clear and consistent finance and investment problem (and it has yet to show itself capable of managing it’s legacy costs without a great deal of time, special consideration, and even taxpayer help). I think government is doing a fine job being dealt a difficult hand. The industry can meet them halfway by covering more of their costs, lobbying less for special consideration (or lower standards), and also achieving better results (delivering power plants on time, on budget, and keeping plants operational and in good working condition as long as possible). I find it astounding Duke doesn’t to bury the CR plant as quickly as possible. As one newspaper put it, it is likely to become “a long term community stigma” and a public relations rallying cry, a 60 year reminder of incredibly poor management decisions. We already have a good many symbols of nuclear development projects gone awry … why do nothing and create another?
There are many fine people working on this, and I understand this is your view. And while fossil fuels are still at a relatively low cost option in today’s markets (pushing many other alternatives off the table), this not a consensus view in the long run. I don’t think it’s “arrogant” to say heavy metal fission is the only viable choice out there, I think it’s incorrect.
We already have many serious studies and research models for a reliable, affordable, and fully controllable energy system with very high renewable energy content. This research isn’t based on faith, it’s based on science and technical knowledge. And if fossil fuels weren’t so cheap, available, dominant, with none of their external costs paid for … I am certain we would be looking at them with more urgency (and there would be a far greater attention to building them than there is today). But we’re not there yet, and we have a long ways to get there (whether it’s fully flexible nuclear plants running at sustainable burn-up rates and capable of covering their own development and legacy costs … or anything else, renewables, geothermal, or otherwise).
We know why we have the current system we have, because we’re treating our atmosphere like a sewer (and the public is paying the cost). In Chicago (where I live), we reversed the river and sent the pollution elsewhere when the Lake started making everyone sick. We haven’t reached that point with the climate yet, and sustainable alternatives (nuclear, renewables, or otherwise) are still rather farfetched, untested, and undeveloped. And yes, nuclear isn’t there yet either (in my view) and certainly not Gen IV: EdF is crushed under a mountain of debt (heavily subsidized by government), has runaway consumption (unable to recoup much of it’s very high development and legacy costs), has Europe as a giant electricity dump, and appears unlikely to continue it’s current policies (as reactors age, retrofits and new power plants become more costly, and many get replaced with lower cost alternatives).
And who is saying we can’t do it with renewables? If you’ve done a search, and have found nothing. How hard have you been looking?
German technical science advisory board: “Climate compatibility, safe, affordable 100% renewable electricity supply by 2050.”
NREL: “Exploration of High-Penetration Renewable Electricity Futures” (MIT article), link to study here.
Recent journal article (one of many I could provide): “Cost-minimized combinations of wind power, solar power and electrochemical storage, powering the grid up to 99.9% of the time” (early release, March 2013).
Lawrence Berkeley National Lab (among others): “The Technology Path to Deep Greenhouse Gas Emissions Cuts by 2050: The Pivotal Role of Electricity” (which I have already provided). Most of the substance of the article is in some 120 pages of appendixes, which are still behind a paywall.
These are all very serious studies. If you’re going to cite science and technical knowledge in one breath (as a defense of nuclear), you can’t take it away in another (as a critique of renewables). Do a more serious search. You may be surprised what you will find out.
Pretend I am from Missouri. Stop pointing to academic studies and models created by “many fine people.” Show me a place anywhere in the world that provides an example of a reasonably large body of people who are living in a style even remotely close to the American middle class suburban lifestyle that I have enjoyed throughout my life while depending on an energy source other than hydrocarbons, nuclear energy or large hydroelectric dams for the lion’s share of the power they use in their daily lives.
Whenever your references include a strong dependence on people like Mark Z. Jacobson you will eventually find out that you are on the wrong technical path. He is an unreliable charlatan when it comes to real world energy production.
You keep telling us here that you care about people who struggle to make ends meet, yet you also claim that your favored energy sources cannot compete because fossil fuels are too cheap. You then claim that nuclear is losing in the market because its cost seems too high.
I refuse to play the energy game by your rules or the rules that have been imposed by the establishment. In my analysis, hydrocarbon fuel sources are far too expensive. They are moving farther and farther out of the reach of the people who need them the most to lift themselves out of dire poverty. It is time for the Kobayashi Maru solution to a game that has been programmed to force nuclear energy off of the list of available options.
The standard that you have implicitly applied to natural gas is a pretty good one to apply to nuclear energy; as long as an energy source is substantially better (cleaner, safer, etc) than our existing coal power plants, then it is worth developing and improving.
Nuclear energy met that standard almost as soon as the self-sustaining chain reaction was discovered. Within 13 years after the historic operation of Fermi’s CP-1 demonstration, Rickover’s USS Nautilus reported that it was underway on nuclear power. That ship dramatically showed the world that the atom had tremendous potential for clean, reliable power, even in the most challenging possible application – a sealed submarine under a deep ocean. Within a couple of years after its launch, the USS Nautilus made a trip from Hawaii to the UK by way of the North Pole. The Shippingport reactor started providing commercial quantities of electricity on the fifteen year anniversary of the successful demonstration at CP-1, despite the disadvantage of 13 years worth of strict secrecy about the technology.
In reaction to the proven potential for nuclear energy to take markets away from fossil fuels, fission energy’s hydrocarbon competitors teamed up with vendors and construction contractors who learned about cost control from their experiences in the military industrial complex. They developed a government regulatory agency influenced by scientists who felt that they were guilty of original sin because of their involvement with The Bomb. That coalition of common interests developed designs and processes that elevated the cost of nuclear energy (and the revenue from building the plants) to its currently uncompetitive level. Many scientists and some engineers kept going along with the program because it led to a reasonably steady flow of research dollars for an unachievable goal of perfect safety.
There is no need to tighten nuclear energy regulations; far from it. There is a crying need to relax prescriptive regulations, to encourage real quality assurance programs adapted from industries like commercial aviation and shipbuilding that seek to improve results at ever lower costs due to waste reduction, and to allow nuclear fission’s inherent energy density advantage to drive DOWN the cost of energy.
Making energy cheap will force hydrocarbons to become cheap again. It will protect the very places where you prefer to camp and kayak; oil and gas companies will stop trying to extract resources from the Arctic, the deep ocean, the tar sands and the mountains of North Dakota because those places contain large quantities of high production cost resources that could not compete in a market of abundant fission energy.
Rod … could we stop the anti-science mumbo jumbo. We all work in the world of objective facts. If you dispute the studies that have been cited, please describe how they are wrong (and what you think can be done to improve them). And nobody said anything about the work of Mark Z. Jacobson (unless he is your favorite straw man these days).
Fair but premature. You’re maybe 20 to 40 years too early asking the question. Energiewende is less than 2 years old (and after re-unification Germany has a politics that is heavily invested in coal). Who has been trying, and for how long?
So far, smaller towns (with effective local decision making and smaller infrastructure needs) have been running this experiment (and successfully so). Greensburg (USA), some 130 small towns and municipalities in Germany (Feldheim is one), and many others.
Larger cities and industrial centers have set much lower targets (and are balanced and reasonable for doing so). Hawaii (40% by 2020), Colorado, California, Scotland, Ireland, Australia, Germany, Denmark (50% by 2020), France (27% by 2020), Greece, Italy, New Zealand (90% by 2025), Portugal, Romania, Spain, South Africa, and others. REN21 has one of the best status reports on renewable technologies, annual targets, and policy outlooks. The challenges are immense (as they are for nuclear). If anybody wants to change the rules and develop better markets for energy storage (in the midst of cheap and affordable natural gas over the next 30 – 50 years), they are certainly free to do so. By all available evidence and science, this would get countries with advanced infrastructure needs and modern populations to well above the 40% range. Knowing what you know, however, would this make much sense from a resource or economic perspective (given the availability of cheap and affordable natural gas) and current carbon regulation regime? Competitive global economies typically aren’t in the habit of running very high risk and very high cost energy transformations and engineering experiments on a national scale just to show that it can be done. Germany may be the exception (but perhaps they are just a little bit longer in their view than everyone else). Check back in 20 years, and let’s see how it all turns out. And if you think we can’t say anything substantive based on government, academic, or private sector engineering and market research that has been done to date, all you are doing is taking yourself out of the conversation. And for someone who wishes to be a part of the conversation in the first place, what benefit is there to that?
Humans have known that there was energy that was free for the taking in the wind and in the sun for as long as we have been aware beings. Windmills and sails have been used for power for thousands of years. They were used to produce electrical power almost as soon as electricity was discovered. People have been collecting and using solar energy for tasks like salt making, curing, and drying leaves for thousands of years. The photovoltaic effect was discovered at least 110 years ago.
Don’t give me this anti technology mumbo jumbo that we have only just begun to try to figure out ways to collect useful energy from these well known sources. Don’t try to tell me that human beings have always found that hydrocarbons were just too cheap to beat; massive fortunes have been made by controlling supplies of those products and pricing them at levels that were painful for many customers.
Many “fine people” have been trying for a VERY long time to produce useful power from the wind and sun and have always come away dissatisfied and looking for something that was more reliable and less capital intensive. Do you really believe that Szilard, Noddack, Frisch, Meitner, Einstein, Curie, Fermi and dozens of other equally fine people were motivated to learn about nuclear fission because they wanted to build bombs?
I have pointed out the weaknesses in your cited studies dozens of times. Some of them assume its okay to cover large areas of land they do not own in order to collect unreliable and diffuse flows of “natural energy” from the wind and sun. Some assume we will figure out a way to economically move and safely store billions of tons of CO2, which is a gas at STP, and that it will somehow be easier than storing a few tens of thousands of tons of solid used nuclear fuel. Others think it is okay for a supplier to manage demand by turning off customer access and calling it “negawatts” and “smart grid technology.”
Some of the authors of the studies that you cite think that the solution to inherent unreliability it to connect up a whole bunch of unreliable sources spread out over thousands of square miles and hope that some of them keep producing. They ignore the costs of the wires and the costs of having to built double, triple or quadruple as much capacity as required, expecting that someone else will pay. They ignore the substantial risk of overproduction during times when most of the unreliable sources happen to be producing well at the same time that no one is terribly interested in buying the power.
It’s no surprise why demand does not correlate to production when you are trying to harness the wind and sun for power; when the weather is sunny with pleasant breezes many people decide it is a fine day to be outside instead of watching the big screen or doing laundry. Your sources also ignore the very well proven fact that both the wind and sun are frequently missing in action just when people NEED power the most – on hot, muggy evenings and nights in the summer and during frigid, still nights in the winter. You do not seem to mind if natural gas is the backup and you probably think it is fine since it is pretty clean and the capital cost is relatively low. Have you investigated the capital cost per unit of power when a gas plant is operated with a low CF? The really cheap, flexible gas plants are inefficient simple cycle machines – which still have a high cost per unit of power if they operate a few hundred hours per year.
I don’t actually want to be a “part of the conversation”. If I had my druthers, I would be building nuclear energy systems that were designed to be simple, safe, reliable and extremely competitive in pricing. Those systems would be directly improving the lives of the same kinds of people that you claim to care the most about. I would let my actions and products tell my story and show how much I cared about making the world a better place.
I started writing about atomic energy after I had already started a company to build useful products, which was after I had already given up a well-paying job and invested my entire life’s savings. I even invested some generous investments from family members who trusted my knowledge about power and my judgement about the market opportunity for significantly improved technology.
Unfortunately, the laws of the same land that allow me to write as much as I want with very few restrictions has decided that allowing people like me to develop better energy systems using fission is so risky that we need to spend decades obtaining permission to get started. After a few years, I figured out that the problem was not a concern about safety, it was a concern from wealthy and powerful people that the technology that I and “many fine people” have recognized has incredible potential was a threat to their wealth and power.
You and your activities are part of the problem that prevents clean, affordable atomic energy from taking market share away from hydrocarbon combustion. You are the one who is guilty of anti science mumbo jumbo by continuously claiming there is something better that we just have not yet discovered.
Can someone explain the function of the concrete containment, specifically is the concrete only for shielding or is it required to add additional strength to the steel liner.
Here is the NRC info brief on the topic.
EL – Models are not “objective facts.” Neither are dubious goals and pledges to do something “by 2020.” You should refrain from trying to pass them off as “science” if you want to foster any credibility.
Their predictive capability is hardly better than reading animal entrails.
Is this equally true of nuclear projections as well, or is it just “renewables” that smell crappy. I can’t count the times I have heard Gen IV saves the day, LFTR is ready to go, uranium from sea water, and all the rest.
I assume that this is a question and not a statement. Yes, of course. The optimistic predictions that were made in the early- to mid-seventies of the number of nuclear reactors that the US would have by 2000 were wildly off the mark. This is not a secret.
Keep that in the back of your mind the next time you read about someone’s goal of such-and-such a percent of such-and-such by 2020.
Predictions are hard, especially about the future.
The NRC’s quaterly pulbic meeting with the TVA Browns Ferry Unit 1 Restart Project Management was on Thursday. Here are a few notes I took (I am not an engineer, so sorry for mistakes!):- The nuclear fuel arrived on site on July 17 from GE.- Expecting a December 2006 fuel load.- Power generation is on schedule for May 2007. There was some hinting that this might happen earlier.- The $1.8 billion restart project is on budget.- Browns Ferry staffing was at 898 persons prior to restart. They are at 1015 now. They forecast a need for 1047 staff members to support 3-unit operation.- About 2,300 contractor employees on site.- Stone & Webster is the prime construction contractor.- Bechtel is the prime design contractor.- NRC will have an additional permanent on site inspector (2 -> 3), since it is their custom to have the same number of resident inspectors as operating units.- There is a tremendous amount of testing and inspection, and internal and external approvals required as each of the many subsystems are turned over to the plant operators. (The subsystems of the Unit 1 are “owned” by the restart project, and the restart project sort of has to “prove” that the subsystems are appropriately designed and constructed and inspected/tested before the “operating plant” will accept them for operation.)- The project involved 605,529 feet of cabling, of which 83% is installed.- There are 41,038 cable terminations, of which 89% are complete.- There is 15,137 feet of small bore piping, of which 96% are complete.- I gathered that much of the unit’s active equipment was either replaced or sent to the vendor for refurbishment.
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