Nuclear Energy Summit sponsored by Third Way and Idaho National Laboratory – Positive step in long slog to revive nuclear energy
On December 7, 2010, I attended the New Millennium Nuclear Energy Summit, sponsored by Third Way and the Idaho National Laboratory. The event was held at the Freedom Forum, a part of the Newseum that is located just a few blocks from the Capitol Building in Washington, DC.
When I received the press release announcing the meeting, I responded internally in a way that might have been fairly common among other members of the DC press – “Wow, somebody is having a meeting in Washington. What news!” (Of course, you must read that reaction with the appropriate level of cynicism and realize that there are probably a few hundred press releases about meetings in Washington each week.)
The more I read about the way the meeting was organized and learned about the participant list, the more interested I became in attending the event. The conference co-chairmen were Senators Carper and Voinovich, the two senators from Idaho were there, along with several US Representatives. Dr. Steven Chu, the Secretary of Energy and Carol Browner, the director of the White House Office of Energy and Climate Change Policy had both determined that the meeting was important enough to attend, even though they could both probably justify being in warm and sunny Cancun instead of being in DC on one of the first really cold days of the year. There was also an impressive list of business and labor leaders that had agreed to participate in the discussion.
I determined that covering the Summit for Atomic Insights (and perhaps a revived Atomic Show podcast) was something that was worth the investment of my vacation time, diesel fuel for my trusty Jetta, and the four hour drive (each way) through the central Virginia countryside. (I was not so sure about the prospects of dealing with DC traffic again, but I determined that even that would not deter my decision.)
It is going to take me a few days to sift through all of my recordings and to digest the transcript that was promised by the conference organizers, but I wanted to offer a few first impressions.
It was encouraging to hear a group of serious and committed people talking candidly about the potential for atomic energy to contribute substantially to a cleaner and more secure energy production system that does not sacrifice the reliability that Americans assume almost as a birthright. A number of the speakers were quite clear in their judgement that wind and solar energy were not adequate replacements for fossil fuel. One speaker (and I promise to find the name) used an interesting word about those sources; he called them “cute”. (Something tells me that the people from stopillwind.org would not agree that industrial wind turbines are cute, unless viewed from a significant distance.)
Many of the discussion participants stated their support for a “clean energy standard” that included objective measures of effectiveness. I detected opposition to maintaining an insistence on a standard that uses a politically defined word like “renewable” that purposely excludes nuclear energy from qualifying. The summit participants were too civilized and polite to state it this way, but any definition of “renewable energy” that includes sources like municipal solid waste, manure, wood chips, industrial wind turbines and black liquor but excludes nuclear fission with recycled fuel is an obvious attempt to keep the strongest kid on the block out of a carefully constructed sandbox.
I also heard about the need for some kind of predictability for nuclear plant builders in the form of one or more of the following: long-term power purchase agreements, regulated rates of return with guaranteed cost recovery, or a predictable price on carbon dioxide. I also heard the phrase “cheap natural gas” at least a dozen times as an obstacle to nuclear plant investments.
Fortunately, there were several participants who reminded everyone about the historic volatility of the price of that commodity and reminded them how incorrect long term predictions have been in the past. Unfortunately, one of the people who seemed most confident that our current low gas prices would last a couple of decades was Dr. Chu. It is apparent to me that he knows a great deal about technology, but he has not spent as much time reading the business press or studying price charts.
I learned from John Dyson, a former chairman of the New York Power Authority, that the cost of electricity from Niagara Falls, which had too high of an initial cost to have ever been built by private industry, is measured in a unit that has almost disappeared from the electric power lexicon – it costs about 4 mills per kilowatt hour.
Mr. Dyson noted that when the Niagara Falls hydroelectric plant became operational, it produced so much power that it resulted in shutting down nearly every generator in the entire northern New York region. Said another way, though it was a tremendous boon for power customers, it negatively affected the business of a number of fuel marketers and power plant operators. That is the kind of investment that our grandparents (or perhaps great grandparents) made for us; I hope that we can figure out a way to finance and construct similar long term capital projects that supply our grandchildren with reliable, clean, affordable power.
Chairman Jaczko of the NRC once again demonstrated why it is probably not a good idea to put a 39-year-old (as of May 2009), especially one who has spent his scientific career on Washington DC political staffs, in charge of a key federal agency. That is an important consideration when that agency is the gate keeper for a potentially large nuclear plant construction industry.
I agree that it is important for the industry to have a credible regulator, that does not mean that it is right for the country to have a regulator of a large and complex industry that can only focus on a few things at a time. High quality, service-oriented enterprises need to recognize that a long queue indicates that you need to rapidly open more lanes and demand additional resources, not that customers need to meekly and quietly get into line. This is not the DMV and it is not the Soviet Union.
I also remain convinced that at least some people at the top of the NRC do not understand what is involved in actually building something that you have never built before, even if it is very similar to something that you built a long time ago. Please do not get me wrong – I have no idea exactly what obstacles lie ahead and what kinds of adaptable, creative responses will be required.
I do know that there are inevitable opportunities for learning and revision in every construction process, especially one as complex and with as many components as a new nuclear power plant. The demand for absolute certainty and the lack of a defined process for rapid reviews of changes needed during construction will (I predict) lead to significant delays. I also predict with great certainty that the government regulators will blame the industry for making those changes and for causing the delay. Part of the issue is that skilled commercial project managers understand the need for a contingency fund and pool of resources, many government leaders think it is better to size their organization for a steady st
ate and let the length of the queue vary with peaks and valleys in demand.
I hope they prove me wrong.
The event was well-organized and there were at least some of the right people in the room to initiate an effort that makes real progress in restoring the US nuclear construction and manufacturing industry. I have no doubt that the people there were serious about discussing ways to move forward. I expect that the event sponsors will encourage follow through on the part of the principals. I expect that the principals will encourage and support the deputies who broke into working group meetings for the afternoon sessions. It would be great if this event led to concrete steps, but that will only happen with continuing pressure.
One thing I have learned during my 20 years of enthusiastic support for the idea that it is time to begin building new nuclear power plants in the United States is that the effort is a long, difficult slog. I remain convinced that the effort is worthwhile and that the more people that get involved in pulling, the better chances we have of succeeding in throwing off the deep mud that the opposition has put in our path.
Final note – the event was not a unanimous celebration of nuclear energy. I recognized at least two of the major opponents to any organized effort within the US to regain nuclear technology leadership. Peter Bradford had a seat at the discussion table and spoke several times about his skepticism that encouraging nuclear energy was the right thing for the US government to do and I saw Ed Lyman from the Union of Concerned Scientists sitting in the back row of the observer section. I hope he was not plotting his next move, but that might be a bit over optimistic.
Additional Views of the Summit
Businesswire – Press release from GE-Hitachi Expanded Use of Nuclear Energy Will Advance U.S. Energy Security, Technology Leadership and Exports: GE Hitachi Nuclear Energy Chairman
(December 7, 2010, 11:02 am)
Politico.com – White House open to nukes as ‘clean energy’
Read more: http://www.politico.com/news/stories/1210/46080.html#ixzz17WQJOQy3
(December 7, 2010 12:26 pm)
Kansas City Star – Nuclear summit urges wider use of atomic power
(December 7, 2010 6:27 pm)
Platts – US nuclear expansion needs clean energy policy: Chu
(December 7, 2010 6:31 pm)
NEI – Nuclear Put Forward as Part of Clean Energy Standard
(December 7, 2010)
You can also find some short thoughts about the discussion by searching Twitter for #nesummit. There were at least four people who were tweeting running commentary during the Summit.
Great summary of the summit. I heard Mr. Bradford’s “caviar” comment. For some odd reason, Korea, China, India, and the UAE look at nuclear as an “early bird special”. 😉
“Chairman Jaczko of the NRC once again demonstrated why it is probably not a good idea to put a 38-year-old, especially one who has spent his scientific career on Washington DC political staffs, in charge of a key federal agency.”
In other words, this is why you don’t send a political flunky to do a man’s job.
By the way, “scientific career” should be in quotes. Jaczko never had a scientific career.
You can find additional media coverage and tweets at http://www.inl.gov/nuclearenergysummit
Rod, your straightforward candor is always appreciated.
Thanks for the summary, Rod! Your tweets were also helpful to those of us interested in the event, but located outside of the Beltway. I wish they had made a webcast available.
“Niagara”, not “Niagra”. The omission of the second “a” makes references to the potency of the power source almost irresistable.
A question about DoE Loan Guarantees. . .
I know you guys have to constantly argue with anti-nukes calling the Loan Guarantees “expensive subsidies”. I was reading Rod’s comment on the Kansas City Star article, and the discussion in his comments made it sound like the government is making the loan itself.
I thought a loan guarantees is like ‘insurance’ for the lender? I.e. the nuclear developers go to private lenders for the loans, and the lenders agree to loan the money, but only if the loans are ‘guaranteed’ by the U.S. DoE?
If that’s the case, if there aren’t any defaults on the loans, the guarantees should cost taxpayers almost nothing, right (and since the developers are having to pay a credit subsidy for the guarantees, could potentially *make money* for the government if no one defaults, yes)?
It seems to me that the logical thing is for the government to use its unique powers to ensure that none of the loans completely defaults. If a developer cannot afford to keep making payments on the loan, they should lose their equity in the nuclear plants, and the government can find *someone else* to finish the plant, and get it into revenue service. Make sure none of the projects fail, and it won’t be expensive for taxpayers.
Additionally, the federal government should use its powers to ensure that we don’t have any more fiasco’s like Shoreham – once a nuclear plant is licensed to start construction, and all the money has been committed, you can’t let capricious politics stop a perfectly fine plant with no safety problems from going into service.
Cut the red tape, make sure the plants get built and operate, and there’s not much financial risk to the taxpayer, it seems to me.
As it turns out, Jeff, when the federal government guarantees large loans to commercial enterprises (farming, shipping, etc) they often cut out the middle man and lend the money directly from the Federal Financing Bank. (I just learned this recently.)
“The Federal Financing Bank is a government corporation, created by Congress in 1973 under the general supervision of the Secretary of the Treasury. The FFB was established to centralize and reduce the cost of federal borrowing, as well as federally assisted borrowing from the public.”
Perhaps this is one of the reasons that there is not a lot of political support for loan guarantees – the bankers do not get to take their cut of the action of some very large, low risk transactions.
Well, if the government itself is making the loans, in a way, that’s even *better* for taxpayers, right? I mean, the government gets to take a credit subsidy *and* gets to earn interest back on the loan (although they are fairly low interest rates, I’ve heard, but when you are talking about a 10 or 12 Billion dollar loan, even if the interest rates are 1.5 or 2.0 percent, we’re talking about pretty big bucks, aren’t we?), *and* when the plant goes into service, gets tax revenue off the income from selling the power?
You know what’s funny? I tried using a few of the web-based loan calculators out there (the kind designed to let people estimate their home/auto loans), just to get a ball-park figure for what the interest on a nuclear plant loan is, but none of them will allow me to enter values in the billions of dollars for the loan amount, hehe. Just at a guess, a long term (30 or 40 year loan), even with a low interest rate, I would think that we’re talking about 2 or 3 billion in interest charges?
I know one person I saw posting on the Internet said that any loan by the government, if it isn’t at the same interest rates that a wall street bank would charge, is a subsidy. I suppose that’s technically correct, but I see a big difference between a small interest rate ‘subsidy’ that *generates revenue* for taxpayers, versus the outright subsidies that solar and wind projects are getting – cash payouts by the government to buy technology that can’t financially compete in the generation market – even if it had ‘subsidized loans’ in the style of nuclear.
New Millennium Nuclear Energy Conference – Nuclear
A streamlined global regulatory environment set up on a rational basis to facilitate worldwide nuclear power deployment sounds like a very good idea. Please note, however, that it is probably unlikely that in negotiating such an arrangement the US would have everything go its way. Indeed, I could see the other major players looking at a US initiative in that direction with a good deal of suspicion.
Craig – I would hope that the US regulatory standard would not be a close model for the streamlined international regulatory standard. US regulation is, I believe, the single largest factor in shutting down US new reactor starts over the last 30 years. The world needs to build more nuclear over the next 40 years to accommodate the needs of the additional billions of additional inhabitants that will join us oldsters in sharing this planet. Diffuse energy solutions will not be adequate to provide what is needed for preserving decency and quality of life when the population of the world rises to 8 to 9 billion in 2050. A properly framed international regulatory standard needs to be designed to permit practical safe construction of new nuclear power plants. If, as a nuclear manufacture, you have one regulatory standard to design to you can save costs of producing a vast array of regional design variations. With a design made to an international regulatory standard, you can sell that internationally certified design into hundreds of worldwide markets and with genuine international competition, cost to energy end users will inevitably go down while value to the customers will go up.
One of the more difficult things in the world is to reduce the accumulated body of regulation. I think that Rod is correct in that, given the current NRC; significant change would require the passage of decades. Movement on this slow a scale will ensure that the US will lose its own nuclear industry to emerging Asian superpowers. Joining a process to bring into being a uniform international regulatory standard provides a graceful way to transition out from under a basically hostile US regulatory structure that has effectively shuttered the American nuclear industry and to transition to a flat international regulatory standard that all can respect. Under a properly framed international regulatory standard the American industry gets a real chance to recover and supply a world market.
For an international nuclear regulatory standard to be effective and well framed it should bear no more than small resemblance to current US regulation. A properly framed international regulatory standard should feature safety achieved through prudent assessment of probabalistic risk, not safety achieved by shutting the regulated industry down for three decades by setting the regulatory obstacles too high (if no body builds anything then there can be no accidents and nothing can go wrong).
@Bob – I did not hear anyone at the conference looking for largess. Mainly what I heard was a request for predictable regulations and some assurance that the selling price of the product that can come from a very large investment in a long term generating asset is not artificially depressed just when the plant comes on line and needs to start paying back the loans.
I also heard a company executive explain that his company has already invested $440 million into a project that will not even begin to start paying any returns until 2018 at the very earliest.
Not only was Steven Chu at the meeting, but so was Greg Jaczko, the Chairman of the NRC. Though I agree that there is a need for streamlining of regulations, that is a process that will – realistically – take a long time. What would not take a long time is adding additional reviewing resources to the NRC so that they could handle more than one or two things at a time. As a gate keeper, the NRC leaders have a philosophy more like the folks that run the DMV. Not enough employees – that’s okay, the customers will just have to line up and wait their turn. They cannot go and get the service that we offer anywhere else.