While some potential legal challenges remain, the approval of the Exelon-Pepco merger by the Washington, D.C. Public Service Commission means that Exelon is now not only the largest nuclear powered utility in the U.S., it is the largest electric utility period. And with that steady stream of regulated, and non-nuclear, Pepco money filling its coffers, you’d think that Exelon’s continuing “threats” to close up to three of its Illinois reactor sites unless it obtains more bailouts from beleaguered Illinois taxpayers and ratepayers would fall on deaf ears. Or maybe Exelon is now trying to achieve “too big to fail” status? Continue reading
It must be rough to be a nuclear power advocate these days: clean renewable energy is cleaning nuclear’s clock in the marketplace; energy efficiency programs are working and causing electricity demand to remain stable and even fall in some regions; despite decades of industry effort radioactive waste remains an intractable problem; and Fukushima’s fallout–both literal and metaphoric–continues to cast a pall over the industry’s future.
Where new reactors are being built, they are–predictably–behind schedule and over-budget; while even many existing reactors, although their capital costs were paid off years ago, can’t compete and face potential shutdown because of the very aspect of nuclear power that was supposed to be its economic advantage: low operating and maintenance costs that are proving instead to be too high to manage.
Not surprisingly, the nuclear industry is fighting back. After all, what other choice does it have? But two major new reports released this week by established nuclear advocates indicate that the only ammunition left in their arsenal is wishful thinking.
The first is a new study jointly produced by the International Energy Agency (IEA) and its sister organization in the OECD, the Nuclear Energy Agency (NEA): Projected Costs of Generating Electricity. It’s an update of a study last produced in 2010 and despite the headlines being pushed by the industry, which claim nuclear power is economically competitive with other generating technologies, it doesn’t actually say that at all. But perhaps that’s to be expected by an organization now headed by former NRC Commissioner William Magwood and devoted to the promotion of nuclear power.
As Jan Haverkamp of Greenpeace International explains,
You can see the NEA’s bias very clearly in slide 11 (part of the public presentation on the report’s release), where the title is: “Nuclear: an attractive low-carbon technology in the absence of cost overruns and with low financing costs”… which shows clearly where the problem is. To call this “attractive” but then sidelining two of the inherent financial issues with the resource is tendentious to say the least. Apart from not including costs like those for clean-up after severe accidents, an insecure cost idea of waste management, and a preferential liability capping scheme with government back-up.
Exactly. If you assume there are no economic problems with nuclear power, then it looks just great. The problem is that in real life, nuclear power’s financing costs are not low–they are extremely high because nuclear reactors are considered, for good reason, by investors to be very risky undertakings. One reason they are risky, and thus incur high financing costs, is that they are notorious for their cost overruns.
As if to slap its Paris-based companion the NEA in its face with cold reality, yesterday Electricite de France underscored new nuclear power’s fundamental economic problems, announcing that the EPR reactor it is building in Flamanville, France, is another year behind schedule and its cost is now projected at triple its original 2007 estimate.
The study calculates the levelized lifetime cost of electricity for reactors based on a 60-year lifespan at an 85% capacity factor, even though the study itself admits the global capacity factor in 2013 was only 82.4% and has dropped a bit since the 2010’s study reference point of 2008. So the study thus assumes a lifetime that no reactor has yet reached, and that many reactors globally will not even attempt to reach (see below), at a capacity factor higher than has been attained and when the trend is in the opposite direction. Even manipulating the numbers like that, however, only gets the IEA/NEA back to its starting point of needing both the unattainable low financing costs and absence of cost overruns to make new nuclear appear economic.
As for that 60-year lifespan, while most U.S. reactors already have received license extensions allowing their 60-year operation, that is not the case globally (nor is it at all clear that a piece of paper allowing operation will be sufficient on either an economic or safety basis to enable operation). And a new report from a company called Globaldata projects that, partly because of continuing concern over Fukushima, the number of reactors expected to seek license extensions globally will drop substantially over the next several years. In fact, “The total capacity of plants starting plant life extension (Plex) programs globally will decrease more than sixfold over the next decade, it [Globaldata] reported,” dropping from an “estimated 18.1 Gigawatts in 2015 to 2.9GW by 2025.”
Of course, the shorter a reactor’s lifetime, the higher its lifetime cost of electricity will be.
Nor should the industry look for help from the trendy new kids on the block: small modular reactors (SMRs) and Generation IV technologies. The report predicts that electricity costs from SMRs will typically be 50-100% higher than for current large reactors, although it holds out some hope that large volume production of SMRs could help reduce costs–if that large volume production is comprised of “a sufficiently large number of identical SMR designs…built and replicated in factory assembly workshops.” Not very likely unless the industry accepts a socialist approach to reactor manufacturing, which is even less likely than that the approach would lead to any significant cost savings.
As for Generation IV reactors, the report at its most optimistic can only say, “In terms of generation costs, generation IV technologies aim to be at least as competitive as generation III technologies….though the additional complexity of these designs, the need to develop a specific supply chain for these reactors and the development of the associated fuel cycles will make this a challenging task.”
So, at best the Generation IV reactors are aiming to be as competitive as the current–and economically failing–Generation III reactors. And even realizing that inadequate goal will be “challenging.” The report might as well have recommended to Generation IV developers not to bother.
Another problem with the report is that the IEA–perhaps at the urging of the NEA–simply assumes that the electrical grid of the future will be the same as it is today, despite the rapid pace of change across the world but especially in the IEA’s European home base. (Side note: why is there even a separate Nuclear Energy Agency at all? Shouldn’t there be a separate Renewable Energy Agency then too? As IEA has noted, renewables are now the world’s second largest electricity generator, after coal) The report lumps nuclear, coal and gas together as “baseload” technologies, and the various renewables together as sort of Cinderella’s ugly stepsisters. But as we’ve noted here in recent weeks, renewables are increasingly providing “baseload” power by anyone’s definition (24/7 power with high capacity factors), and are certainly providing baseload-equivalent reliable electricity in many regions.
In fact, if there is a real takeaway from the report, it is from the headline on the IEA’s website rather than any nuclear publication: Joint IEA-NEA report details plunge in costs of producing electricity from renewables.
Yes, while the nuclear industry has been attempting to frame the report as good news for nuclear power, the real findings of the report are in the no-longer-surprising yet still stunning drop in renewables costs. Onshore wind, according to the report, is the cheapest power source of any examined. Solar power, except residential rooftop, is increasingly competitive and will drop further, unencumbered by the high financing charges and cost overruns experienced by nuclear. And that residential rooftop? Well, really, it turns out that for it, and for all renewable technologies, it depends on the specific circumstances where you live. With millions of Americans paying less for their electricity with rooftop solar than they were with grid-supplied electricity, high electricity cost doesn’t seem to be the technology’s biggest problem in most areas, at least in the U.S.
It’s good to see IEA say something favorable about renewables. As we reported last year, the organization has been notoriously wrong on the deployment of renewables over the years, greatly underprojecting their growth and compiling a simply embarrassing record, especially compared to that of Greenpeace–which also underprojected their growth.
The U.S. is where the second report from nuclear advocates this week is focused. This one, from the increasingly right-wing group that likes to pose itself as moderate, Third Way, argues that shutting nuclear reactors will scuttle the carbon emissions reduction goals of the Clean Power Plan.
But, like the IEA/NEA report, there are a few problems with their assumptions. Indeed, the assumptions appear to have been made not based on a sense of reality, but on what might attract some scary-sounding newspaper headlines.
According to Third Way, under their “worst-case” scenario, if nuclear power is forced to essentially phase out by 2025 with only those reactors now under construction allowed to operate beyond that date, its power would be replaced primarily with natural gas and U.S. carbon emissions would revert back to 2005 levels. Many people would consider this instead to be a “best-case” scenario, especially since most of the power lost–where replacement power is needed at all–actually would come from renewables and energy efficiency. And the nation would be mostly rid of the threat of atomic meltdown; of routine and accidental releases of plutonium, strontium, cesium and the rest; the continued generation of lethal radioactive waste; the environmental destruction from uranium mining and all the other ills of the nuclear age. Unfortunately, it’s not a very likely scenario.
Third Way’s middle scenario is one where reactors are not allowed to operate beyond their original 40-year lifetimes. Apparently no one bothered to tell Third Way that most U.S. reactors already have received their license extensions and there is no legal process (at least, certainly no easy one) to revoke those licenses. Thus, the reactors that will close–and we predict there will be quite a few–will do so because the utilities themselves have decided that they are no longer economic and/or public opposition to particular reactors has grown so overwhelming that the utility would be crazy to ignore it–or both.
The choice of this unrealistic scenario seems geared primarily to focus headlines on two sites where license extensions have not been granted and where there is substantial public opposition: Indian Point in New York and California’s Diablo Canyon. But denying license extensions to four reactors and forcing them to close is a far different scenario than shutting down nearly 100 reactors; on a national basis the carbon implications of that four-reactor shutdown would be negligible and, if renewables were the replacement of choice as they almost certainly would be in both states, carbon reductions would actually improve.
In fact, under the Clean Power Plan (CPP), as we’ve reported, the EPA assumes that most retiring nuclear capacity would indeed be replaced by renewables; thus the final version of the Plan offered no special help to keep existing reactors open. That view was supported by the Energy Information Administration’s analysis of the plan, which found that about the only thing nuclear power does under the plan is stifle the development of solar power.
Third Way’s preferred scenario is where all U.S. reactors operate at least 60 years (apparently whether they are able to safely or economically or not doesn’t matter to Third Way). Even then, Third Way says we won’t meet CPP goals because of rising electricity demand (unless more new nuclear is built, presumably). But, as we noted above, electricity demand has been falling, not rising, and there is little reason to think that trend will change. And, like IEA, Third Way also underestimates renewables deployment, believing that it will be the minimum required under existing state mandates, rather than the larger amount actually being deployed.
Both of these reports are based on wishful thinking by nuclear advocates–in the sense that they clearly wish things were different for their preferred industry. Third Way’s report is essentially dishonest–conjuring up unrealistic scenarios in order to try to scare up some pro-nuclear headlines–but because of that is unlikely to prove very effective or meaningful.
As Greenpeace’s Jan Haverkamp points out, however, the IEA/NEA appears to have a different endgame in mind: “This study clearly targets at the Paris COP and tries to instill the idea that nuclear needs to get subsidies in the form of credit guarantees and price guarantees and then that will be the silver bullet.”
And that brings us back to that more familiar refrain from the nuclear industry: give us more ratepayer bailouts and more taxpayer subsidies and everything will be just fine. The problem for the industry is that fewer and fewer people are singing that song. And it’s more wishful thinking on their part that that stale chorus will ever be popular again.
September 3, 2015
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