White House Chronicle

News Analysis With a Sense of Humor

The Efficient, Stupid Market for Nuclear Electricity

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By Llewellyn King

The market is a wondrous place. It ensures you can drink Scotch whisky in Cape Town and Moscow, or Washington and Tokyo, if you prefer. It distributes goods and services superbly, and it cannot be improved upon in seeking efficiency.

But it can’t think and it can’t plan; and it’s a cruel exterminator of the weak, the unready or, for that matter, the future.

Yet there are those who believe that the market has wisdom as well as efficiency. Not so.

If it were wise, or forward-looking, or sensitive, Mozart wouldn’t have died a pauper, and one of the greatest — if not the greatest architecturally — railway station ever built, Penn Station, wouldn’t have been demolished in 1963 to make way for the profit that could be squeezed out of the architectural deformity that replaced it: the Madison Square Garden/Penn Station horror in New York City.

End of the line

End of the line

Around Washington, Los Angeles and other cities are the traces of the tracks of the railroads and streetcar lines of yore. These were torn up when the market anointed the automobile as the uber-urban transport of the future. As Washington and Los Angeles drown in traffic, many wish the tracks — now mostly bike paths — were still there to carry the commuter trains and streetcars that are so badly needed in the most traffic-clogged cities.

Now the market, with its concentration on the present tense, is about to do another great mischief to the future. An abundance of natural gas is sending the market signals which threaten carbon-free nuclear plants before their life is run out, and before a time when nuclear electricity will again be cheaper than gas-generated electricity. World commodity prices are depressed at present, and no one believes that gas will always be the bargain it is today.

Two nuclear plants, Vermont Yankee in Vernon, Vt. and Kewaunee in Carlton, Wisc., have already been shuttered, and three plants on the Exelon Corp. system in the Midwest are in jeopardy. They’ve won a temporary reprieve because the Federal Energy Regulatory Commission (FERC) says the fact that they have round-the-clock reliability has to be taken into account against wind and solar, which don’t. In a twist, solar and wind have saved some nuclear for the while.

Natural gas, the market distorting fuel of the moment, is a greenhouse gas producer, although less so than coal. However gas, in the final analysis, could be as bad, or worse, than coal when you take into account the habitual losses of the stuff during extraction. Natural gas is almost pure methane. When this gets into the atmosphere, it’s a serious climate pollutant, maybe more so than carbon dioxide, which results when it is burned.

Taken together — methane leaks with the carbon dioxide emissions — and natural gas looks less and less friendly to the environment.

Whatever is said about nuclear, it’s the “Big Green” when it comes to the air. Unlike solar and wind, it’s available 24 hours a day, which is why three Midwest plants got their temporary reprieve by the FERC in August.

When President Obama goes to Paris to plead with the world for action on climate change in December, the market will be undercutting him at home, as more and more electricity is being generated by natural gas for no better reason than it’s cheap.

As with buying clothes or building with lumber, the cost of cheap is very high. The market says, “gas, gas, gas” because it’s cheap – now. The market isn’t responsible for the price tomorrow, or for the non-economic costs like climate change. 

But if you want a lot of electricity that disturbs very little of the world’s surface, and doesn’t put any carbon or methane into the air, the answer is nuclear: big, green nuclear. — For InsideSources.com

Nuclear Power under Threat

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On the face of it, the nuclear power industry should be enjoying a boom, reveling in its extraordinary safety record and the fact that it is a carbon-free way to make electricity.

But all is not well in atom land. In fact, things are dismal. Only five nuclear plants are under construction, and they are having birth pains as schedules slip and costs rise.

One plant, Vermont Yankee, has been taken out of service and others are on a watch list. This is happening not because of safety or end-of-life, but because cheap natural gas is undermining the economics of nuclear.

The market has spoken and it has determined that gas is cheaper in the short term, and wind and solar, though limited, enjoy social acceptability and declining costs.

The mighty Exelon Corporation is trying to save three, and maybe more, of its nuclear plants with a political fix; arguing that nuclear is a value proposition – its value to the community will continue long after the gas boom has fizzled. It is an argument that might have been made to save commuter railroads in the heyday of the automobile.

But that is not all that challenges nuclear. Despite its environmental advantages in a time of climate change, the public has been steadily turning against nuclear, persuaded by a relentless campaign that has been waged by opponents like the Union of Concerned Scientists and Natural Resources Defense Council and by Japan’s Fukushima accident following an earthquake and a tsunami. Wrongly, it is believed this resulted in lives lost: Many lives were lost to flooding, but not to radioactivity release.

But the public has absorbed a fear of nuclear, unless it is associated with the Navy. That was reflected this month, when a Gallup poll revealed that only 51 percent now support nuclear, as opposed to a traditional divide of 60 percent for and 40 percent against. It is hopeless to expect a big swing to nuclear with this kind of public reaction. The current slim majority favoring nuclear falls far short of a call for action.

More, the nuclear industry has fair share of bad news of its own which does not help the public love the atom.

The San Onofre plant in California was closed down because new steam generators were defective, and the owners decided it was not worth the hundreds of millions it would cost to fix things. Cost overruns and delays, once blamed on environmental opposition, now are almost always a result of problems in the construction.

Much hope has rested on two new reactors being built by the Southern Company in Georgia. Known as Plant Vogtle Units 3 and 4, there are delays and cost overruns and the utility is in court with the prime contractor, the eponymous Westinghouse Electric Company. Although the Southern Company is determined to complete the reactors and under its feisty chairman, Tom Fanning, possibly to build more, the costs are rising.

Just a few months ago, there was hope that new reactors — smaller, mass-produced power plants — were in the pipeline. But now the industry is convinced the next reactor design will have to be developed outside of the United States; probably in Asia, where both China and India are working on radical new reactors, far from today’s light water plants — 100 of them — operating in the United States.

The U.S. challenge is not science or engineering – we have designs aplenty and great nuclear science – but regulation. The Nuclear Regulatory Commission (NRC) – which protects public health and safety — is not equipped to license a new reactor, and it is believed that a new reactor type would have to spawn a whole new regulatory bureaucracy. One aspirant with a new nuclear design says ruefully, “It’s as though the FAA had recertified every aspect of flying when the jet engine came along.”

The NRC, even its staff admits, is slow and ponderous. What they don’t admit is that the commission is not only protecting the public, by making sure that today’s reactors are safe, but it’s also preventing the public from having better nuclear power in the future.

For the industry the problem is not only the time it would take to bring a new reactor through licensing, but also the cost. The applicant, not the government, pays for the NRC to license a reactor. Some say that cost could run towards a billion dollars.

Considering this situation, U.S. leadership in reactor technology is doomed. — For the Hearst-New York Times Syndicate

Nuclear Teetering on the Economic Precipice

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This will be a bleak Christmas for the small Vermont community of Vernon. It is losing its economic mainstay. The owner of its proud, midsize nuclear plant, which has sustained the community for 42 years, Entergy, is closing the plant. Next year the only people working at the plant will be those shuttering it, taking out its fuel, securing it and beginning the process of turning it into a kind of tomb, a burial place for the hopes of a small town.

What may be a tragedy for Vernon may also be a harbinger of a larger, multilayered tragedy for the United States.

Nuclear – Big Green – is one of the most potent tools we have in our battle to clean the air and arrest or ameliorate climate change over time. I've named it Big Green because that is what it is: Nuclear power plants produce huge quantities of absolutely carbon-free electricity.

But many nuclear plants are in danger of being closed. Next year, for the first time in decades, there will be fewer than 100 making electricity. The principal culprit: cheap natural gas.

In today’s market, nuclear is not always the lowest-cost producer. Electricity was deregulated in much of the country in the 1990s, and today electricity is sold at the lowest cost, unless it is designated as “renewable” — effectively wind and solar, whose use is often mandated by a “renewable portfolio standard,” which varies from state to state.

Nuclear falls into the crevasse, which bedevils so much planning in markets, that favors the short term over the long term.

Today’s nuclear power plants operate with extraordinary efficiency, day in day out for decades, for 60 or more years with license extensions and with outages only for refueling. They were built for a market where long-lived, fixed-cost supplies were rolled in with those of variable cost. Social utility was a factor.

For 20 years nuclear might be the cheapest electricity. Then for another 20 years, coal or some other fuel might win the price war. But that old paradigm is shattered and nuclear, in some markets, is no longer the cheapest fuel — and it may be quite few years before it is again.

Markets are great equalizers, but they're also cruel exterminators. Nuclear power plants need to run full-out all the time. They can’t be revved up for peak load in the afternoon and idled in the night. Nuclear plants make power 24/7.

Nowadays, solar makes power at given times of day and wind, by its very nature, varies in its ability to make power. Natural gas is cheap and for now abundant, and its turbines can follow electric demand. It will probably have a price edge for 20 years until supply tightens. The American Petroleum Institute won't give a calculation of future supply, saying that the supply depends on future technology and government regulation.

Natural gas burns cleaner than coal, and is favored over coal for that reason. But it still pumps greenhouse gases into the atmosphere, though just about half of the assault on the atmosphere of coal.

The fate of nuclear depends on whether the supporters of Big Green can convince politicians that it has enough social value to mitigate its temporary price disadvantage against gas.

China and India are very mindful of the environmental superiority of nuclear. China has 22 power plants operating, 26 under construction, and more about to start construction. If there is validity to the recent agreement between Chinese President Xi Jinping and President Barack Obama, it is because China is worried about its own choking pollution and a fear of climate change on its long coastline, as well as its ever-increasing need for electricity.

Five nuclear power plants, if you count Vermont Yankee, will have closed this year, and five more are under construction in Tennessee, South Carolina and Georgia. After that the new plant pipeline is empty, but the number of plants in danger is growing. Even the mighty Exelon, the largest nuclear operator, is talking about closing three plants, and pessimists say as many as 15 plants could go in the next few years.

I'd note that the decisions now being made on nuclear closures are being made on economic grounds, not any of the controversies that have attended nuclear over the years. 

Current and temporary market conditions are dictating environmental and energy policy. Money is more important than climate, for now. — For the Hearst-New York Times Syndicate