Monday, April 20, 2015

Post # 104: The Sunset of U.S. Nuclear Power?


This is a post I thought I would never write.  It is one I do not enjoy writing. 

I’ve been thinking a lot lately about the future of nuclear power in the U.S.  I’ve concluded those of us in the “pro-nuclear” camp need to face the likelihood that the brightest days for commercial nuclear power in the U.S. are behind us – at least for the balance of this century… that no one reading these words today will live to see the long-awaited “Nuclear Renaissance” in the U.S.  

Put simply, I’ve come to believe the most likely scenario for nuclear power in this country is that it will fail to maintain its current (~ 20%) fraction of the U.S. electricity generation mix for the remainder of the 21st century – and may never return to its current level of market penetration.  I believe this is almost a certainly through mid-century, and highly likely through the remainder of this century.  I hope I'm wrong.

There are a number of potential events (discussed below) that could change my prognosis.  Some of these events might trigger a nuclear renaissance, while others would probably terminate the nuclear power option in the U.S. 

Allow me to layout the facts as I see them, and engage in a bit of not-too-far-fetched speculation.  I actually don’t think it requires much clairvoyance. Reality is staring us in the face.


THE STATUS QUO
  • The miracle of fracking has made natural gas “too cheap to meter” – the “Gas Glut”.
  • We have very limited means (i.e. few Liquified Natural Gas [LNG] terminals) to export our abundant natural gas.  So the price of natural gas here is relatively isolated from world market pressures.
  • About half the commercial nuclear power plants in the U.S. operate as “merchant generators” in deregulated markets.
  • Deregulated electricity “markets” place little value on:
    • Supply reliability
    • Supply availability
    • Supply diversity
  • Nuclear power plants in deregulated markets are shutting down because they cannot compete with the price of electricity produced from fracked natural gas.
  • Nuclear power plants only come in “one size fits all” mega-plants.
  • The capital cost of available nuclear power plant designs is obscenely high – untenable absent some revolutionary (to the nuclear power industry) financing strategy.
  • The U.S. nuclear regulatory structure is, in many ways a great success and the standard for the world, BUT it obstructs innovation, ensconces technology lock, and promotes a “good-enough is the enemy of better” mentality throughout the industry.
  • The American public is largely ambivalent about nuclear power.  Spent fuel disposal is a real concern for a vocal minority – but it seems to be the problem that will never go away.


THE BASE CASE SCENARIO TO 2040
  • Three dozen nuclear plants (1/3 of fleet) shut down within the next 10-15 years (possibly much sooner) because they cannot produce electricity cheaply enough to compete with fracked gas.
  • Perhaps a half-dozen new nuclear power plants are built in the U.S. during the next 20 years.
  • Nuclear’s portion of U.S. generation mix decays monotonically over next 25 years to ~ 13-15% of the U.S. electricity generation mix by 2040.
  • The only “Renaissance” that occurs is a  “Decommissioning Renaissance” (a term coined by my friend Eric Abelquist at ORAU).


THEN WHAT? – LIFE AFTER 2040

The answer to the question of whether or not nuclear power in the U.S. has seen its best days depends critically on what happens between now and 2040 as the U.S. takes a “Nuclear Nap”.

Factors That Might Revive Nuclear Power In The U.S.

I see a few events that might occur in the next couple of decades that would portend a brighter future for nuclear power:

  • A “Fracking Fukushima” occurs – an event (such as the contamination of a major ground water aquifer) that results in much tighter regulation or perhaps even prohibition of natural gas fracking in the North America.  In such a scenario, the price of natural gas would escalate dramatically, making the price of nuclear-generated electricity an attractive alternative again.
  • Orwellian carbon tax is enacted that penalizes natural gas, petroleum and coal – obviously making nuclear power and renewables energy sources more price competitive.
  • A major focus on Domestic LNG Terminal Construction enables the U.S. to export our natural gass, and raises domestic natural gas prices to world market values (a slow effect, no doubt, but one that makes nuclear power more price-competitive).
  • For those of you who are banking on Small Modular Reactors of all sorts – a Revolutionary Reduction in the Capital Acquisition Cost & Operating Cost of nuclear power plants dramatically lowers the barrier to plant acquisition and economic operation.  I’m skeptical about the likelihood of this particular dynamic. Small reactors would reduce the absolute acquisition cost of a nuclear power plant, but barring some other event, I don’t see a revolution coming in the operating cost of nuclear power plants (large or small).  After all, if a fully-amortized large plant operating in today’s deregulated market cannot produce electricity cheaply enough to compete with natural gas, I’m skeptical a new plant – of any size – will be able to reduce the price of electricity production sufficiently to slay the natural gas dragon.
  • Finally, the Emergence of Enlightened Regulated Electricity Markets – markets that place a tangible value on reliability, availability, and diversity of electricity generation sources.  Such markets would seek a strategically-mixed portfolio of electricity generation assets to reduce the overall dependence of electricity production on a single “fuel source”.


Factors That Might Turn Out The Lights On U. S. Nuclear Power

On the other hand, there are a number of potential developments that could drive the last nail in U.S. nuclear power’s coffin:
  • A Breakthrough in Carbon Capture and Storage (CCS) Technology – puts coal back on the table. The U.S. transitions from a “Gas Glut” to a “Coal Glut”.  No one needs nuclear anymore for baseload capacity.  Twenty-five years is a long time for researches to tackle a challenge.  Is there a solution out there for CCS, or will it remain a technology similar to nuclear fusion – always just over the horizon?
  • A Breakthrough in Battery Technology – eliminates the renewable energy (solar and wind) penetration barrier, obliterating the grid instability problem posed by “excessive” penetration of these time- and frequency- varying electricity generators.
  • An American Fukushima-like accident at one of our commercial nuclear power plants – results in the permanent shutdown of the majority of the U.S. nuclear fleet.  (I have previously shared my view that the Japanese people have actually responded to the events at Fukushima in a more sanguine manner than I believe the U.S. population would if such a major accident occurred in the U.S.)

Wild Card Events

There are, of course,  some “Wild Card” events that could happen during the next 25 years.  I'm speaking of events that would throw all the silverware in the air.  Here's my #1 chaos generating event:
  • The mega-event would be a huge Geomagnetic Storm that decimates the North American Grid – forcing a rebuild of both the Generation and the T&D network.  The impact of such an event (which is overdue if history is any guide) is hard to predict.  Solving the nuclear power riddle might be the least of our problems if it were to occur. (Actually, I’d be more concerned about avoiding an American Fukushima if a catastrophic geomagnetic storm occurred.)


AND SO…

One of the (few) benefits of aging is that I’ve become more willing to “stare the dragon in the mouth”.  My analysis leads me to conclude the nuclear industry can put itself out of business by poor safety performance, but it needs a “little help” (probably a “lot of help”) from somewhere else to remain a viable energy alternative in the U.S. through the remainder of this century and beyond. 

We are all notoriously bad at predicting the future.  (After all, who predicted the fracking revolution?)  Whether U.S. nuclear power is sliding into a beauty rest or a coma remains to be seen.  But the next twenty-five years are a crucial time period.  Are we seeing the Sunset on U.S. Nuclear Power, or just a “Nuclear Nap” to be followed by Sunrise on the long-awaited nuclear renaissance?  No one can know.

Just Thinking,

Sherrell

9 comments:

  1. This is an EXCELLENT piece... and while some might take it right off the top as having an anti-nuclear stance, SOMEONE has to say these things or they will not get faced.

    If I had to just give a label on the whole piece as to whether or not I agree with it, the answer is "agree." I do think I see the start of some momentum in the way of manipulating merchant markets to give nuclear a benefit for productivity, leveraged against the coming EPA regulations -- the lead example of this is what's going on over there in Illinois with their move toward a Low Carbon Energy Portfolio Standard instead of a Renewable Energy Standard. Looks like that will probably get through both houses of the Illinois state government; the bills have broad bipartisan support.

    I have been working lately with a compiled list of cancelled US nuclear plants (note - the NRC lists 94 cancelled units but my list has 143; the difference is that NRC only lists units that received dockets) and have been starting to look specifically at the time frame problem, as compared with energy and carbon requirements / projections. To be brief, we can't expect a new nuclear plant to get into commercial service any sooner after utility commitment today than we could have thirty years ago -- so, eight to ten years. However we continue to see breathless reports of imminent panic on carbon, GHG's, and so forth, and so there seems to be a wide belief that we need to shut down coal immediately and thus we'll need to replace it immediately.... and that points to natural gas plants.

    What gets skipped are things like this: A couple of Kansas utility companies in the late 60's used, and had historically always used, only natural gas to power their generating stations. At some point, the utilities were told that not only would the supply for generating no longer increase but that the price would start to go up as more and more residential space was built -- space prioritized for the natural gas. The response? The construction of coal plants to fill in short term... and Wolf Creek Nuclear Station to assist with the load projected to be there in the future (several to a dozen years down the road.)

    So are we not able to make longer term predictions now? Longer term commitments? Longer term investments? Are we to throw ourselves entirely on the mercy of intermittently generating renewable sources and price-spiking natural gas in a penchant to drive the coal plants out? Where, that is in what alternate universe, does moving backwards like that in terms of fuel mix, and likely grid stability and reliability make any sense whatsoever?

    And yet (as you're clearly aware) we can't talk about building new nuclear unless we put ourselves in a place to either have to defend things like GW-class nuclear plant cost and schedule overruns or else to have to try to push SMR technology which, while already proven in terms of the iPWR SMR, is still viewed as something new and suspicious in the public mind.

    Thanks for encapsulating the major problems we need to soberly face; thanks for presenting them factually, without hyperbole; thanks for offering this article as a starting point for consideration and communication.

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    1. Thanks Will for your thoughtful comments.

      I agree the embryonic movement in some quarters from a "Renewable Energy Standard" to a "Low Carbon Standard" is encouraging. But the drip will have to turn into a torrent to have real impact.

      I would like to see your analysis of the 143 plant "cancellations". Does the list include operating plant closures as well? Every semi-realistic analysis of potential unit closures during the coming decade is pretty sobering.

      Thanks for your efforts to keep us all informed over at the ANS Nuclear Cafe, Will. I enjoy reading your well-researched and balanced reports.

      Cheers,
      Sherrell

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    2. Will,

      Respectfully, I live here in Illinois, and was down in Springfield on Wednesday this past week. Exelon's bill has some bi-partisan support, but its not broad. The Illinois Clean Jobs bill, has bi partisan support, and more people supporting it. Due to the state of the economy, its highly unlikely, any of the 3 energy bills will individually gain support, and could easily die off this year in the legislature. The last thing on Rauner's (gov) or House speaker Madigan's mind is energy legislation.

      That said, there is a case to be made for 2 or more of these bills to be merged into one, to gain enough broad support to get the votes to pass ANY energy legislation. There is actually more common ground between the Exelon bill and the Illinois Clean Jobs bill (renewables) than meets the eye. The two just have different perspectives on how to accomplish what amounts to the same goal. The Com-Ed bill for all intents is a 'distraction bill' and a red herring thrown out there by it's owner, Exelon, to attempt to distract politicians and citizens who wish to take the 'ignorance is bliss' approach. (my opinion of course, but the Com-Ed bill is just plain stupid - it has no definable goal whatsoever- or what we used to call in the mid 80's at engineering school, of no social redeeming value whatsoever.)

      If Exelon mothballs a couple of their older and costly nukes, it wouldn't be the worse thing in the world. It would become a financially healthier company by doing so, and help eliminate the grid (T&D) locked baseload energy glut the northern part of the state (PJM/Com-Ed zone) has. For example, if Exelon could ship more than 6 gw of power outside of the Com-Ed zone, the nukes would have no problem whatsoever making money. The ability to export and import power from this grid, is T&D constrained. Its why we have some of the cheapest power prices in all of PJM, and the midwest (Indiana on average is 15% higher than northern Illinois power prices). Capacity prices ironically, just shot up in MISO for the southern part of the state from around $6000/mw-year to $40,000/mw-yr. Wow, they finally caught up to where the cap prices have been on average for the past 7 years in western PJM.

      So you too, Cheer Up. Its often darkest before the dawn, as they say. Nuclear will rise from the ashes sooner than you both may think. Freer markets have a way of eventually sorting things out, despite politicians, and special interests, best efforts to really gunk them up. And you have to admit, Illinois (politicians) with a $6 billion deficit hole, largest vs GDP of any state in the US, has been great at gunking things up. The politicians need a 'miracle' here, and they just might get it from the gift that keeps on giving: nuclear powered energy. Though it might not be so obvious right now as to how that is going to be so. I suggest, keep the faith, and life just might have some rather pleasant surprises for you in the near term 5 to 10 years to come.

      Mike R
      Sustainability Advocate.

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  2. When I feel sad about nuclear I often wonder if it will be in the same museum as the longbow (touted to end knighthood, but required skilled operators vs. gunpowder) and the dirigible (elegant way to fly, but no match for airplanes). I will at least feel a little consoled if nuclear is replaced by a breakthrough technology such as super-batteries or gas with CCS. My nightmare is that we merely abandon nuclear out of fear and suffer along with more dangerous and ecologically damaging energy sources.

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    1. Well, I observe that the process by which our society "makes decisions" and comes to conclusions about complex and controversial issues is both non-linear, ugly, and (often) irrational. The less urgent the issue, the more difficult it is to reach a consensus. I'm not happy about my conclusions regarding nuclear energy's future in the U.S., but I'm satisfied they are reasonable conclusions given the facts we're presently confronting. Thanks for reading my blog!

      Sherrell

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  3. An excellent and approachable 21-page summary of potential geomagnetic harms to the North American power grid with 48 references was produced in 2013 by Lloyds of London analysts. Here is the URL:
    http://www.aer.com//sites/default/files/Solar_Storm_Risk_to_the_North_American_Electric_Grid_0.pdf One of the key changes was that the large transformers that connect large nuclear plants such as Diablo Canyon Power Plant to the power grid are of a more reliable, post-1972 design. There will also be advance warning of any potentially-harmful "Carrington-Type" events. Even solar plasma blasting from the surface of the Sun at 1,000,000 mph takes about 93 hours to arrive at Earth's orbit. You may wish to bookmark the informative NOAA-NWS Space Weather Prediction Center web page at http://www.swpc.noaa.gov/ and subscribe to their no-cost email alerts.

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    1. Gene,

      I'm familiar with Lloyd's report. There are also a number of more recent reports that address the issue from similar perspectives. I remain very concerned about our vulnerability to a geomagnetic storm. Everything about our grid (hardware, softtware, procedures, regulatory infrastructure, etc.) was designed to maintain service no matter what the challenge. One has to wonder what might occur if the only successful survival strategy was to intentionally blackout millions of people in advance of a geomagnetic storm in order to preserve the grid. Would we do it? Many fascinating issue to ponder!

      Thanks again for reading my blog and for the interesting comment!

      Sherrell

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  4. Dear Sherrell,
    So I would beg to differ on a lot of what you have articulated. Here's my shot at that:
    1) Solar PV, Wind. the renewable market penetration will continue to be around the circumference of the energy generation space, because utility market barriers, along with the industry challenges on BOP and install costs continues to slow it down and from gaining acceptance. Solar PV nor wind is likely to go away anytime soon, but I'm fairly certain it won't be the death knell you make it out to be.
    2. Fracking is no miracle. There are numerous issues that will hold fracking back for years to come:
    a) Availability of water (citizen and community perceptions of contaminated water tables)
    b) significant decline rates of wells that are tapped
    c) environmental concerns
    d) 'investors' who took all the QE induced "free money" and got way ahead of themselves funding this industry since 2008. Capital for continued fracking in the US is going to dry up markedly, if oil prices remain below $60/bbl for the next 2 years. And there are many indications, that market dynamics already in place and underway, will continue to cap prices below $60/bbl well into 2017. So what's going to happen, is typical of all the boom/bust cycles that have happened with oil here in the US over the decades since the early 20th century. Besides that, Asia, and Europe are paying 3 to 4 times what we pay in the US for NG on a btu basis, so if anything were to happen from a price perspective, we here in the US have nowhere to go, but up, on the delivered price of natural gas to US industry and consumers. Cure for low prices, is low prices. LNG plants being built (for export finally) will act in part as a 'valve' to regulate the situation, and keep prices from staying this low.

    3) At least, 60 GW of coal fired plants will have been retired by 2016 . Taking away coal, is not only taking away capacity, but taking away cheap baseload power generation!. Capacity is more and more being met by NG fired gas plants, which are water intensive.
    Investors in those plants, need to see in general strike prices in excess of $140/mwhr before they turn on. Again, water is a HUGE issue, for these plants, and much of the US is in a drought, that could be prolonged and secular in nature. Citizens are not happy about their water tables being sucked dry by power plants and AG and food will be made even more of a priority for water.
    4) Every study I've seen on power costs, especially with what's happening from an EPA perspective, leads me to believe power prices overall are going to continue to be setting new records for many years to come, latest average is now over 14 cents/kwhr nationwide. Coal plant operators are not in a good way presently. My view is that they can't raise power prices fast enough.

    Base load energy ? Water supply ? Where's it going to cost effectively and reliably come from ? Only one technology that I can see; The only viable answer is nuclear. Period.
    Cheer up, Dear Friend
    Mike R - Sustainability advocate

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    1. Mike R.

      First, thanks so much for reading my blog and for your thoughtful and passionate reply! A lot of food for thought and discussion in your response...

      Just a few comments as the hour is late and the sand man cometh...

      I hope you are correct in your optimism, but I'm some data that suggests you're overly optimistic (with regard to nuclear that is...)

      1. Solar PV and wind... there's mounting information that a revolution is happening in solar PV. The efficiency of the cells continues to rise, and and the production cost of the cells continues to drop. The market penetration for rooftop solar appears to be increasing at a surprising rate in many regions across the country. More and more utilities are either experimenting with or embracing energy purchase agreements with both residential and commercial customers rooftop solar customers. This trend has no where to go but up. I think it's the biggest thing going on the renewable energy front.

      2. I think fracking *** combined with horizontal drilling *** still has a lot to offer. I've friends who watch the petroleum business closely who tell me we've not yet seen all that the fracking/drilling revolution can delivery. The amount of fracking we're now doing is obviously being modulated by the market price of oil & natural gas. But we shouldn't deceive ourselves – when the market price goes up - so will the fracking. Given our current known and "expected" reserves, unless fracking is killed due to an aquifer contamination accident or due to groundwater usage regulations, I see no reason at all to believe it will not continue to be the major dynamic in the domestic energy business for another couple of decades. And over the next several years, the ongoing revolution in horizontal drilling technology is going to open up the shoreline of the U.S. to drilling by bypassing the issues posed by off-shore drilling platforms. These developments will open up new oil and gas reserves that are presently out of reach due to drilling regulations.

      3. Water Usage. This is an issue for fracking operations as previously mentioned, but ***ALL STEAM CYCLE*** plants, and all plants that reject heat at low temperatures are water hogs. Until we can move to something like CO2 Brayton Cycle power conversion systems, and high temperature direct-to-air heat rejection systems, both fossil-fired and nuclear power plants will remain vulnerable to surface water availability and usage regulations. At present, I see no distinct advantage here for nuclear. In fact, given one can only purchase 1GW nuclear plants at present, this puts nuclear at a distinct disadvantage simply because these large plants require large heat sinks (i.e. lots of water).

      I guess the point is, there's much more experimentation and innovation going on in the solar PV and petroleum drilling business right now than there is in the nuclear business. That places nuclear at a disadvantage.

      Finally, as I've said before, when a fully amortized nuclear plant operating in a merchant (deregulated) electricity market can't compete on price, I fail to see how ANY new nuclear plant will be able to compete on price. I don't see a near-term change in that dynamic other than the possibilities I mentioned in the post.

      It's bed time. Got to run. Let's keep the dialog going!

      Thanks again Mike!

      Sherrell

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