Spendy nukes throw a wrench into the renaissance

Let me take a look at my checklist — what haven’t I done in a while? Oh, here it is: “Piss off the mindlessly pro-nuke crowd”.[1]

So, what shall it be this time? How about plain ol’ economics?

New Nuclear Energy Grapples With Costs:

President Obama may be pressing for the nation to increase its supply of nuclear power, but the market is pushing in the opposite direction-at least in the view of one of the leading figures in the U.S. nuclear business.

John Rowe, chief executive of Chicago-based Exelon, operator of the nation’s largest fleet of nuclear power stations, says the economics of the electricity business have changed sharply in just the past two years, dimming the prospects for a significant number of new nuclear reactors in the United States.

Though Obama has touted nuclear as “our largest source of fuel that produces no carbon emissions,” cleanliness is not a benefit that currently shows up on the bottom line. Without congressional action to make competing fuels that emit greenhouse gases more expensive, Rowe says, fossil fuel plants are still cheaper to build. “I just don’t think nuclear has a chance in a pure marketplace without a carbon price,” Rowe said last week in Washington, D.C., in a speech hosted by Resources for the Future, a think tank focused on cost-benefit analysis in environmental policy.

While Rowe noted that some companies are still working on nuclear projects, he pointed out that they tend to be in “rate-based jurisdictions.” In other words, they are in traditionally regulated states where monopoly power companies can sometimes recoup the costs of building nuclear plants during construction through the rates they charge their customers.

Exelon, in contrast, operates only in states where deregulation has created competitive markets. In effect, it sells the power it produces into the electricity marketplace. And because electricity prices have dropped-particularly due to new, abundant supplies of natural gas-Rowe thinks that building new nuclear plants does not make economic sense now.

What to make of this?

A massive increase in the use of natural gas for electricity generation would be a colossal mistake. It emits a lot less CO2 than does non-CCS coal[2], but when you consider the long lifetime of generating plants, the percentage reduction in CO2 from replacing coal-fired generation with NG-fired capacity, and the extremely aggressive CO2 reduction schedule the US must meet, you find out that such a conversion very quickly leaves us “above the curve”, i.e. emitting more CO2 than we can afford.

Putting a price on carbon is indeed going to happen, one way or another, and that will certainly help the nuclear industry, possibly as much as all the direct financial help and loan guarantees it gets from the federal government. The economics of a complex situation can’t be any simpler than that.

Will a price on carbon help or hurt the expanded use of natural gas? Well… I’m not so sure there’s a cut and dried answer to that one. If we wimp out and put only a low price on carbon, with not much prospect for it increasing to what’s needed to effect the CO2 reductions science dictates, then natural gas will likely continue to boom and we’ll see things like coal fired plants being converted to NG plants.[3]

But if we get a much more appropriate carbon tax, meaning one with a real chance of getting US emissions on the needed glide slope, then we might not see a rush to embrace natural gas for new or converted electricity generation. The reason is that “above the curve” issue I mentioned above. If you’re going to spend a lot of money to build a brand new electricity plant, then you’re counting on it being in service for a long time, likely 40 years at a minimum. In fact, you need it to be in service for decades just to produce electricity at anywhere near a market-friendly price. But why would you do that when you see that the current carbon price (or the price likely to be in effect in merely 10 or 20 years) will be so high that you’ll be forced to choose between paying a high carbon levy or spending a lot more money to retrofit CCS technology (assuming it ever becomes a mainstream technology)? And I don’t think that the relatively lower cost of converting a coal plant to natural gas would be a much rosier prospect, given that you’re starting with a facility that’s already been in service for anywhere from years to decades.[4]

The bottom line is that we’ll likely wind up making much greater use of nuclear power, but only after we’ve exhausted and/or re-priced the CO2-heavy ways of pushing electrons and figured out that renewables can’t grow fast enough to pick up the slack in a country that thinks “conservation” is a commie pinko Nazi homo plot to corrupt our children, curve our spine, and lose the war for the allies. Will we have good solutions to the problems of waste management or reprocessing, proliferation, supply concerns, etc.? Of course not, but that won’t stop us.

[1] Two things about this statement:

First, I don’t really try to piss off anyone, except climate change deniers, and even then I’m much more interested in mocking them until they’re wracked with shame and self-loathing until they sit in a corner and weep uncontrollably. I’m merely making a joke about the hate mail I get almost every time I say something about nuclear power.

Second, if you don’t understand that “mindlessly pro-nuke” is not a redundancy, not an oxymoron, and not an insult aimed at all pro-nuke individuals, then please leave this site and go read something that’s a better match for your intellectual capacity.

[2] By “non-CCS coal” I mean “the only type of coal-fired generation that will be a major contributor to the electricity supply in the US, ever”. Again, it’s brute-force economics. The high cost of CCS will keep it from being a mainstream solution to coal plant emissions, whether we’re talking about new plants or retrofitting old ones. And that’s assuming we can get past all the technical and political hurdles along the way.

[3] My understanding is that the cost of converting a non-CCS plant to a non-CCS NG plant are small compared to the cost of retrofitting CCS onto a coal plant or building a new non-CCS NG plant. If anyone has solid numbers from a reliable source, let me know in the comments.

[4] This is much the same reason why I think natural gas as a vehicle fuel is a non-starter. It takes far too much infrastructure investment for a paltry 25% savings in CO2 emissions when we need to do dramatically better than that for the transportation sector overall.