Nuclear industry wins short-term victories, but losing long-term battle

Three major decisions, in three different venues, made last week a good week for polluting utilities and thus a bad one for actual people. But the longer-term trends stayed on track,  with the nuclear/fossil fuel industry still in growing trouble and facing decline as the transition to a nuclear-free, carbon-free energy future continues on.

The bad news first:

*Under utility pressure, the EPA caved and “watered down” its proposed rule to prevent massive fish kills and other damage to marine life from power plants using once-through cooling systems. Environmentalists had wanted the proposed rule strengthened to require such power plants to close or at least build cooling towers but nuclear and coal plant owners successfully lobbied the agency and won weaker regulations.  

*A U.S. Appeals Court threw out a Federal Energy Regulatory Commission (FERC) rule that encouraged energy efficiency. “Under the rule, electricity users who cut consumption when prices and demand rise were paid the same amount as generators that produce electricity. The practice has been embraced because it can reduce the need to build additional expensive power plants and cut air pollution.” Utilities argued that the rule “would discourage power-plant investment,” which, of course, was the point. Energy efficiency is both cheaper and cleaner than new power plants of any kind.

*The PJM power grid, which covers 61 million customers from the mid-Atlantic to Illinois, held its 2017-18 power auction and procured 167,004 megawatts of capacity resources at a base price of $120, a whopping increase from the $59.37 base it bought at last year’s auction. That’s good news for Exelon and its troubled nuclear reactors and bad news for ratepayers in the region.

Despite those industry victories, that news was offset by the continued and probably unstoppable advance of clean energy:

*Most significantly, the giant international investment house Barclays downgraded the entire U.S. utility industry. Their reasoning: “Over the next few years…we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo….We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade.” In other words, distributed solar power is growing rapidly and threatens the entire utility model of large, polluting “baseload” power plants.

*Barclay’s may be influenced by the reality in Europe, where the value of the continent’s electric utilities already has dropped by half in the past few years, led by the troubles of Germany’s utilities, which bet heavily on nuclear power now being phased out there, as well as “the sharp decrease in the cost of solar and the rise of renewable generation capacity. This somewhat wonky article argues that European utilities need to reinvent themselves to use “their advanced engineering capability, specialism in energy systems and close historical ties to transmission and distribution system operators and consumers” to “become smart infrastructure solution providers.”

*The Rocky Mountain Institute, which coined the term “grid defection” a few months ago in a paper discussing exactly the issue raised by Barclays, added to the discussion in “Why Owning Your Own Power Plant Might Not Be Crazy” by arguing that for homeowners, the idea of their own power plants (e.g. solar plus storage) could well become simply the next major applicance decision millions will make. This article points out that not that long ago–the 1950s–air conditioning at the residential level was rare and expensive, but when mass production began, prices fell and by the end of the 1960, A/C was standard equipment in most U.S. homes. Similarly, computers not that long ago took up warehouse-sized space and cost large fortunes. Today our smartphones are more capable than those devices–and astronomically cheaper. There is little reason to think the technological and economic advances in solar power, already stratospheric over the past few years, won’t continue as mass production expands and technology improves further.

*The Sun Day Campaign issued a statement noting that for the first time ever, non-hydro renewable energy provided more electricity in the U.S. during the first quarter of the year than conventional hydropower–a major milestone for clean renewables. Non-hydro renewables provided 53.16% of the net U.S. electrical generation from renewable energy sources for the period January 1 – March 31, 2014 while hydropower provided the balance of 46.84%. Ken Bossong of the Sun Day Campaign noted that these numbers actually understate the amount of power supplied by solar because significant levels of solar capacity come from smaller, non-utility-scale applications like rooftop solar PV, and the Energy Information Administration numbers on which the statement is based only include utility-scale solar. Disclosure: the Sun Day Campaign is based in NIRS’ office, but is a separate organization.

*The Spanish solar firm Abengoa said that concentrated solar power plants with storage will be competitive not just with coal, but even natural gas by 2020, and can fulfill the same “baseload” power function as fossil fuel and nuclear plants. “Abengoa last week broke ground on a 110-megawatt molten salt storage plant, which combines solar tower technology with 18 hours of thermal energy storage based on molten salt.” Also last week, Abengoa opened a 206 MW solar plant in California, and has several other large solar projects underway. The combination of growing use of rooftop solar backed by large-scale solar and wind projects (last week, Maryland Governor Martin O’Malley vetoed a bill that would have prevented an offshore wind project in the state–that act virtually ensures offshore wind will soon be coming to the mid-Atlantic, which has tremendous wind resources) is the future.

*Denmark added to the growing literature that finds that a 100% renewable future by mid-century is feasible. The difference here is that this report came from the Danish Energy Agency rather than a non-profit organization. Denmark is already one of the most renewable-intense countries in the world and a 100% renewable energy system by mid-century is not just a concept for debate there, it is the government’s goal.

*Finally, this article predicts that the massive changes now underway in New York for the state’s utility system may well herald the future of U.S. utilities across the country. New York, learning from the experiences of Hurricane Sandy and the state’s troubled and mostly unwanted nuclear reactors, has launched major new programs to encourage distributed generation and other steps to make the state more “grid independent.” Consumers, Audrey Zibelman, chair of the New York Department of Public Service, said at a major event on the future of the utility industry, are the “disruptive force that’s going to change things.”

*As for the nuclear power industry, it’s in trouble even in China, where officials fear a fledgling anti-nuclear movement, which already blocked a $6 Billion uranium processing plant, could stymie the countries plans to add more than 50 GW of new nuclear by 2020 (a goal unlikely to be met in any case, since only 28 reactors–about 35 GW worth–currently are under construction). And even that is considerably less than China’s goal for new solar capacity during the same period. According to the U.K.’s Financial Times, “Regulators fear images of riot police crushing protests at a reactor site–like this month’s violent clashes over a planned garbage incinerator–could quickly harden attitudes against nuclear power.”

Michael Mariotte

May 27, 2014


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