The History of Light Water Reactor Market Dominance – Part 2

(Like all parts in this series, the reference book is Light Water: How the Nuclear Dream Dissolved written by Irvin C. Bupp and Jean-Claude Derian and published in January 1978 by Basic Books, Inc. of New York.)

One of the primary themes running through Light Water is the fact that the economic predictions associated with the technology often did not come to pass in the predicted time frame. The authors evidently believed that this factor was caused by over optimism, but with the perspective offered by three additional decades of reactor operating experience my impression is that much of the optimism was technically justified. Unfortunately, economics is not driven just by technology, it is strongly influenced by outside market forces not under the control of the engineers and technicians associated with the technology.

Here is an early passage that introduces the theme of economic predictions gone wrong. In the very first chapter of the book Legend and Experience, Bupp and Derian stake the claim that nuclear enthusiasts promised cheap energy from fission:

Cheap electricity has always seemed to be one of the most important promises of nuclear fission. In 1945, soon after World War II ended, J. Robert Oppenheimer told a national radio audience that “in the near future” it should be possible to generate profitable electrical power from “controlled nuclear chain reaction units” (reactors). He saw no real limitation in the availability of nuclear fuel; therefore, “we may look confidently to the widespread application of such source of power to the future economy and technology of the world.” That same year, the National Association of Manufacturers brought together a panel of experts to discuss the prospects for “peaceful uses of atomic energy.” Dr. James B. Conant, President of Harvard University, acting as moderator, asked how long it would take to develop an atomic power plant which could compete with coal in the production of electricity. A professor of nuclear physics said that the job could be done in three to ten years, an estimate with which the President of DuPont agreed. Other predictions ranged from 15 to 25 years.

Some 30 years later (1975), these prognostications appear to have been confirmed. Indeed, for many the promise of cheap electricity from nuclear fission became reality in 1963. In December of that year, an electric power company in New Jersey announced that it had come to terms with General Electric for the construction of a nuclear power plant which would generate cheaper electricity than a coal-burning plant. In the decade that followed that announcement, an impressive body of evidence accumulated in support of the hopes of those in business and government who had worked to make “peaceful” atomic energy a success. The prophecies of hope about the benefits of atomic energy to society appeared to have been fully vindicated.
(Bupp and Derian, p. 4)

From my point of view, the attributed statements do not fully back up the claim that technologists promised “cheap” electricity. That is not even the question that they seemed to be addressing. Instead, what they claimed was that they saw a path forward to a point where atomic energy could COMPETE with coal, not a time when it would REPLACE coal. Being competitive with coal does not equal being cheap; many adults in the 1940s and 1950s would have had clear memories of times when coal was hard to obtain and represented a large portion of their household budgets.

Perhaps my view about the meaning of “competitive” is colored by my years as a swimmer. I competed with a lot of people during those years. Sometimes I won, more often I got beat by some people and finished ahead of others. On some days, I won a race or two and finished in the middle of the pack in the other events. It all depended on which stroke I was swimming, how long the event was, and who showed up in the lanes beside me. I had several rivals in the area that constantly pushed me to do my best; I could beat them in one particular event one week and lose to them the next week while always beating them in certain events and always losing in others.

Like racing sports, the energy business is not a game of winners and losers, it is a race with many competitors and many different fields of competition. Some technologies win in certain situations and lose in others. When GE won a sale in New Jersey, that did not mean it would have won with the same technology in West Virginia. Each plant location had its own situation and field of play that was influenced by the distance to the nearest source of coal, the air quality regulations in effect, the local labor market, the distance that the supplier would have to move major pieces of equipment, the availability of cooling water, the cost of land, and probably a dozen or more additional factors. The really difficult part of any selection process was, and continues to be, what will happen in the future?

Accountants are often frustrated by skilled technical analysts because the accountants want a single number when they ask “how much” and an experienced technical analyst will only provide a range of values with error bands, qualifications, and a list of assumptions.

Bupp and Derian continue later in the chapter:

A worldwide conference on nuclear power was held in Paris in April 1975. Its theme was “The Maturity of Nuclear Power.” A. E. Hawkins, Chairman of the United Kingdom Central Electricity Generating Board, believed this choice of theme “both commendable and appropriate.” He noted that in the early days there were doubts about solving the technical problems associated with nuclear power. There had been even greater uncertainties about its economic viability, but now “all of these questions had been resolved.” Nuclear power had indeed “matured.”

Among all countries the one most deeply committed to nuclear power was the United States. By December 1976, only 19 years after the Shippingport reactor began operation, a total of 60 reactors with an aggregate capacity of 43 GW were completed. An additional 146 were under construction or on order. At that time the total capacity of the nation’s generating network was approximately 300 GW. The enormous benefits of nuclear power were reflected in an early 1975 Public Utilities Fortnightly survey of all American utilities that operated nuclear power plants as part of their electrical generating systems. The 24 companies concluded that “the peaceful atom” had saved their customers more than $750 million in their 1974 bills that they would have owed had their electricity come from fossil fuels. They also reported that in the same year “power from the atom” had saved “the equivalent of more than 247 million barrels of oil”.

These developments were all the more striking because they were the fruit of only one reactor design – the “light water” system originally developed in the United States. By the end of 1975, this American technology completely dominated the world market for nuclear power plants. Only the Canadian heavy water system – nicknamed “CANDU” – survived as potential competition. Light water’s success was achieved in spite of considerable efforts to develop and market other technologies in Europe and the United States. The most significant of these efforts was the 15-year attempt by Britain and France to make the gas-graphite design the basis for the world’s nuclear electricity programs. But the last gas-graphite plant was sold by the French Atomic Energy Commission to Spain in 1967, and 10 years later no manufacturer offered such reactors for sale.
(Bupp and Derian, pp. 7-8)

All of this positive information about nuclear power and its economic benefits is then contrasted with a rising tide of opposition that includes organized protests and dedicated pressure groups who worked hard to stop the continued rise of the technology. I guess a good place to leave this installment is with the concluding paragraph of
the first chapter of the book:

This book is an interpretation of how the nuclear dream which emerged at the end of World War II and seemed to be on the verge of realization in the aftermath of the 1973 OPEC embargo dissolved during the ensuing four years. The central argument is that the origins of this disappointment can be found in circumstances which span the preceding 25-odd year period. Much of the first third of the book reviews events and developments of the 1950s and 1960s to answer the question of how American light water reactor technology overwhelmed the Western world market for nuclear power plants. We believe that our answer to this question contains the key to understanding the real condition of nuclear power today. To compress our argument into its concise form: the way that the innovation process for light water reactors was managed by business and government in the U. S. and Western Europe contributed to the identification of nuclear power technology with something that many citizens in these countries dislike and distrust about their societies. Moreover, it is this dislike and distrust which is the driving force behind the nuclear safety controversy and the principal cause for the dissolution of the nuclear dream.

Though I am fascinated by the history lessons and the analysis provided by Bupp and Derian, my argument is a bit different. From my point of view, though there is much truth in what they say, they have missed a real underlying issue – when a new technology competes with an existing technology, its promoters MUST assume that the purveyors of the existing technology will take action to protect their markets. The growth in nuclear power most certainly had a major effect on local, national and international energy markets. That money that the utilities talked about saving their customers came at the expense of reduced sales by fossil fuel companies.

Here is a lesson I learned from years of competitive swimming that has been reinforced by years in a competitive work environment flavored by a few years in a competitive business environment. No competitor worth the title lays down and quits when threatened. The strong ones fight back, sometimes in deceptive and backdoor ways.

One thing I should mention that might be useful to know as you read more of this series – Irvin C. Bupp went on after publishing this book to spend many years as an analyst, consultant and eventually Managing Director of Cambridge Energy Research Associates (CERA) an organization with multiple ties to the world’s oil and gas industry.