Category Archives: Blog

Nuclear Power: Climate Solution or Hype

OWOE Staff:The energy world has been rocked by a number of crucial events during the past two months. In the transition to renewable energy and more particularly in the removal of fossil fuels form the energy mix, there are possibly three history-making game changers:

  1. The International Energy Agency (IEA) came out with its report on the state of the climate, and it was brutal toward fossil fuels. It laid out the reality of the current climate crisis and pointed to one clear action required to prevent catastrophic global warming: “The world has a choice – stop developing new oil, gas and coal fields today or face a dangerous rise in global temperatures.” It is important to point out that the report didn’t call for the immediate elimination of fossil fuels as energy sources. The IEA understands the need for some transition period to a fossil-free future. But the transition needs to be speedy, and the IEA feels that the best way to do this is to stop all new developments, live off the current reserves, and use that time to develop the technologies, change behavior and make the transition.
  2. President Joe Biden issued his sweeping climate goal to cut US emissions in half by 2030 ahead of convening an historic summit with 40 world leaders to demonstrate American leadership in the quest to elimination of fossil fuels by 2050.
  3. ExxonMobil, Royal Dutch Shell, and Chevron were rebuked by shareholders and the courts for not aligning their strategies with the threat of climate change. 

While some critical actions needed to transition to a fossil-free world are pretty clear, i.e., eliminate coal-generated electricity and replace internal combustion engine (ICE) vehicles with alternative transportation, including electric vehicles (EVs), others are not. For example, how does nuclear power fit into these plans?

Fig. 1 – 2018 World energy generation by source (EIA)

Nuclear power is an energy source that certainly has the potential to play a key role in the transition. It is a known technology that has performed well, or reasonably well, for over 50 years, and it is currently a significant contributor to the worldwide energy mix (see Fig. 1) at about 10% in total, it is “dense” in that a relatively small quantity of fuel and a relatively small facility footprint produce a large quantity of electricity, and it is “green” in that it doesn’t emit greenhouse gases during operations. Some proponents of nuclear energy such as Michael Schellenberger, tout it relentlessly as the only solution for the world. Unfortunately, Schellenberger and other nuclear proponents downplay four very significant issues with nuclear power:

Fig. 2 – Lazard Levelized Cost of Energy Comparison
  1. Cost: The cost to build the only new nuclear plant to start construction in the US in the past 30 years, Plant Vogtle in Georgia, is currently estimated to cost approximately $26 billion for two new reactors of 1,117 MW rated capacity each. This is an increase from $14 billion when the project was sanctioned in 2009. That works out to a capital cost of $12,250/kW when adjusted for an assumed 95% capacity factor. Similarly, although a bit less expensive, the first new nuclear power station to be built in the UK in over 20 years, Hinkley Point C in Somerset, is now projected to cost approximately $31.6 billion (23 billion euros) for 3,250 MW capacity, or an adjusted $10,200/kW. We can compare these against other forms of renewable energy using Lazard’s 2020 Levelized Cost of Energy report2). Development cost for a new onshore wind farm is $3,500/kW (adjusted for a 40% capacity factor) or a new solar farm at $3,900/kW (adjusted for a 25% capacity factor). That’s capital cost only. Looking at Levelized Cost of Electricity (LCOE), which takes into account fuel cost (small for nuclear, zero for wind/solar), longer life for a nuclear plant, and higher operating costs for nuclear, but excluding expensive nuclear decommissioning costs, a new nuclear plant costs between $129-198/MWh.  This compares to $29-42/MWh for new solar and $26-54/MWh for new onshore wind. No matter how you look at the cost, nuclear is 3-4 times as expensive as wind or solar. See Figure 2.
  2. Time to commercial operation: Plant Vogtle was originally projected to be operational in 7 years from its sanction date. The first reactor is currently at 98% complete, and commercial operation is expected in early 2022, for a real construction duration of 13 years. Compare that to approximately 3 years for wind or solar farms. By the time the world would go through the process of designing, approving and building sufficient facilities, we would have missed our opportunity to control warming.
  3. Nuclear waste disposal: In the 50 years of commercial nuclear power, the US industry has been unable to find a robust solution for disposal of the spent nuclear fuel. The closest it came was the planned Yucca Mountain underground storage facility in Nevada that was under construction until killed in 2011 by the Obama administration for political rather than technical reasons. The not-in-my-backyard (NIMBY) forces prevailed and prevented a national solution to a real problem, and there’s no reason to believe they won’t continue to do so in the future. The result is local storage at each individual facility. The preferred method is so-called dry cask storage. But how safe is this? Fig. 3 is a view of the San Onofre Nuclear Generating Stations (SONGS) in Southern California that is in the early stages of decommissioning, with 73 casks of spent nuclear fuel on site. Note the Pacific Ocean in the near background, recognize that this is an earthquake and tsunami zone, and think Fukushima.
  4. Meltdown / explosion risk: This is the risk that killed the initial wave of nuclear plant construction in the US, triggered by the Three Mile Island near meltdown in 1979. It is also the risk that killed the so-called Nuclear Renaissance in 2011, triggered by the Fukushima-Daiichi disaster. Between those two events we had the Chernobyl disaster in the Ukraine in 1986. Nuclear proponents like to point out that there have been no deaths in the US due to such nuclear accidents, and worldwide the deaths per MWh of power generation are much fewer when compared to coal power related deaths. While that is all true, consider that the Japanese government estimates the cost to clean-up the Fukushima plants at between $73-$470 billion and will take between 30-40 years. Although a relatively small risk over the full population of nuclear reactors, I wouldn’t want to be the utility hit with that bill (or utility customers or taxpayers footing a bailout).
Fig. 3 – Dry Cask Storage at SONGS

How about Small Modular Reactors (SMRs) that are being touted as the nuclear technology that might resuscitate the industry? The first U.S. small-scale project, NuScale Power LLC, is planning to develop twelve 60 MW modules at the Department of Energy’s Idaho National Laboratory. The project’s initial cost estimate was $3.6 billion in 2017; it’s now projected at $6.1 billion. This works out to be $8,950/kW, not much below today’s conventional nuclear development cost. More recently in the news, power companies run by Bill Gates and Warren Buffett have chosen Wyoming to build the first Natrium SMR on the site of a retiring coal plant in Wyoming. Its cost is projected to be $1 billion for a 345 MW facility. If that holds, we could see SMRs as low as about $3,000/kW, or in the range of new wind and solar. But both these technologies are in very early stages, and history tells us that these costs are only going to grow, and likely significantly.

Given costs and unsolved challenges, OWOE doesn’t believe nuclear power is the solution to the world’s pending energy crisis. Nuclear power will and should continue to be a major player in the mix of green energy because the advantages of nuclear power, namely high capacity baseload power packed into a small geographic space, make it somewhat irreplaceable in the foreseeable future. Every effort possible must be made to extend the life of current nuclear facilities and ill-conceived, partisan-based decisions like the one to prematurely shut down the California Diablo Canyon nuclear power plant must be prevented. But nuclear power alone cannot solve the world’s energy and climate problems. Solving the problems will require all forms of renewable and/or green energy, and, instead of fighting over partisan solutions, a concerted and collaborative effort from all to find the best combination is critical.

What’s up with the Texas power grid?

OWOE Staff: So what’s going on with the power grid in Texas? Last week the state was hit by a polar vortex winter storm (Uri) that brought snow and ice and record low temperatures. Such storms aren’t especially rare – it snows and ices in Houston about every ten years. But this time it created one of the biggest power outages in US history (Fig 1), and the Texas power grid came within minutes of failure. Then the real fun began. The Governor blamed the power failures on the wind turbines in West Texas freezing up, but had to retract the comment almost immediately when the grid operator, ERCOT (Electric Reliability Council of Texas), announced that the majority of the power outages were due to gas supply shortages and freezing of the conventional thermal power plants. A former Texas Governor claimed that Texans would rather endure power failures than have more regulation of the industry. Senator Ted Cruz, from Texas, who had a history of denouncing renewable energy as the cause for California’s power outages fled the cold to take his family to Cancun and immediately had to fly back due to public outrage. A photo of a helicopter deicing wind turbines in Texas went viral as an example of renewable power being dependent on fossil fuel and chemicals, until the photo was identified as actually being an extreme case of deicing an old-style turbine in Sweden from 2014. Texans who signed up for electricity plans that charge based on wholesale electricity prices are now facing bills in the thousands of dollars. Etc, etc.

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Time for a New Energy Policy

OWOE Staff: It’s a new year, we have a new president and administration, and we have new hope that the plan to vaccinate Americans is going to finally end the pandemic. What we don’t have is new thinking on what this country should be doing for a long term, rational and strategic energy policy. OWOE believes it is the right time to propose a comprehensive energy policy that balances America’s needs with the planet’s needs and is based on sound economics, realistic technology and good common sense. The OWOE energy policy combines several key elements, including: firm commitment to dramatically reduce dependence on fossil fuels in a planned and rational manner, sustainable investment in renewable technologies, and establishment of a North American Energy Alliance (NAEA) between the US and Canada to aggressively develop and globally sell our existing energy resources.

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A Look-back at 2020

By OWOE Staff: Happy 2021 dear readers and supporters of OWOE. As everyone is aware, 2020 was a most unfortunate series of events, beginning with the release of a virulent pathogen from China which resulted in a wide range of foreseeable acute and long range economic, social and energy consequences. Thus, OWOE staff are working hard to analyze these consequences to provide meaningful insight about energy matters going forward. We plan a variety of interesting updates to our core energy information, tools and blogs this year and perhaps even a contest involving energy self-sufficiency at the local level. Many of the changes happening in the world of energy are the cumulative results of individual changes in consumption resulting from economic turmoil compounded by inept government policies and continuing industry business practices.

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Coping with two crises

Note from your OWOE editor: Houston has always been a city whose fortunes have risen and fallen with the price of oil. Now it is being hit with two crises at the same time – the coronavirus pandemic which is significantly cutting oil demand, and the Saudia Arabia-Russia battle for market share which is flooding the world with oil and forcing down its price (see Fig. 1). The result has been immediate and drastic. The almost instantaneous drop in price from the $50-60 per barrel range to the $20-30 per barrel range is worse than the drop in 2014 that almost destroyed the US oil business, with some analysts predicting the possibility of $5/bbl oil. Oil companies are looking at every way possible to cut spending quickly, including cancelling projects, idling rigs, instituting hiring freezes, and laying off staff. Add on top of that the fear of transmission of the coronavirus and need for social distancing are having what could be a long-term impact on oil demand as well as making it even harder to work, assuming one is fortunate to keep a job in this climate.

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OWOE January 2020 Prediction – A US Legacy Carmaker will Disappear this Decade

It’s a new year and a new decade and time to make a bold prediction regarding developments in the energy industry and associated transportation industry. The last few years have been a wild ride for electrical vehicles (EVs) with Tesla continuously in the headlines. Will Tesla go bankrupt? Will Tesla change the way the world views automobiles? Is Tesla stock a good buy at $250/share (2019) or $550 (2020)? But other automakers have made their own headlines: Jaguar began sales of its iPace EV, Volkswagen began sales of its eTron, and Ford introduced its Mustang Mach-E. A prediction concerning EVs is warranted, but OWOE is going to go beyond EVs and make a prediction concerning the broader automobile industry: Within this next decade one of the three US legacy car makers will cease to exist.

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The fundamental (and somewhat existential) source of climate change – and how we might overcome it

With the news that this past July was the hottest month on earth since record keeping 140 years ago, satellite images of the Amazon and State of California burning, the most powerful hurricane ever measured in the Atlantic Ocean east of Florida, carbon dioxide emissions to the atmosphere rising again to near record levels after a brief leveling, and Swedish teenager Greta Thunberg’s stirring call to action while staring down both Donald Trump and Vladimir Putin, climate change has been a hot topic in 2019. While the scientific community remains nearly 100% aligned that global warming is driven by the burning of fossil fuels, a relatively small, yet powerful, group of naysayers fights the science. Who are these very powerful people, and why do they fight? One common characteristic – they are mostly baby boomers = the generation of Americans with an insatiable appetite for consumption and a strong resistance to change.

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Don’t get too worked up over the President’s actions against the environment

Every week seems to bring another attack by the Trump Administration against laws and regulations that have been instituted by prior administrations to protect the environment and fight climate change. The most recent is the campaign to deny California the right to set stricter automobile emissions standards than federal limits. It has caused yet another uproar among environmentalists and liberals and glee among climate change deniers and conservatives and will undoubtedly lead to many years of legal battles. But what is reality? In fact, this move, and all the others, are just meaningless actions that do little more than pander to the Administration’s fossil fuel campaign contributors and excite the hardcore Republican base ahead of the upcoming elections. The reality is that technology and market forces are driving the world inexorably and at an increasing pace toward a renewable energy future, despite the last-ditch efforts of the President and his supporters. Let’s look at some of the higher profile actions.

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How good is the OWOE blogging staff?

SA Shelley, WH Luyties: OWOE is a small site, with just a few dedicated and experienced staff who follow energy technologies, economics and policies. Occasionally, OWOE bloggers dare to forecast energy developments that tend to be contrarian, and, much to everyone’s surprise, they have been very good at forecasting trends correctly and ahead of much larger analytical organizations. Are we that good at more quickly analyzing publicly available information along with some insight and soft analysis? Or do we have access to the dark arts such as whiskey and voodoo?

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Do Renewable Portfolio Standards Increase Electricity Rates?

I live in California. That gives me a front seat to virtually every new initiative and trend related to saving the planet, whether it is about turtles and plastic straws, banning single-use plastic bags, electric vehicles, or green energy. Although not the first state to adopt a Renewable Portfolio Standard (RPS), California has been one of the most aggressive in its timetable for replacing fossil fuel based electricity with carbon-free. In 2018, California updated its RPS to the requirement to achieve 60% of electricity sales from renewable sources by 2030 and 100% by 2045. Of course, California’s aggressive push toward renewables has triggered a wide range of reactions. For example, Michael Shellenberger of Environmental Progress has been pushing the idea that California’s electricity rates are significantly higher than the rest of the US (see Figure 1) and rising significantly faster because of its dependence on renewables. His culprit is renewable energy and his solution is to keep nuclear plants open. In contrast, Roger Sowell, who blogs about renewable energy issues, argues that California’s unique climate, geography, and large population make such differences to be expected.

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