As for Hayek, I still remember the scene at the Nobel banquet when Gunner Myrdal - who received a Prize at the same time - told that scholar (at the top of his voice) that he (Hayek) did not speak for him. Hayek got the message, and stuck to platitudes.

Normally I would suggest that you lshould peruse my energy economics textbook, but after looking at this article I think that you should visit your local library and check out an Econ 101 textbook.

What Econ 101 textbooks don't teach, and neither do others commenting on this website, is that consumers will demand choices even if those choices are not necessarily the most economical all of the time. The regulators of our electricity generation industries will eventually heed the wishes of the voting public since it is the voters they and our politicians must ultimately answer to and work for.

It isn't economics that you should be thinking about here - assuming that you are capable of doing any thinking on this topic - but history. The history of electric generation and transmission shows a movement from local to regional generation. The explanation is economies of scale: the large plants feature ECONOMIES OF SCALE. Nobody in their right mind is capable of denying that.

As for what the voters want, they want inexpensive and reliable power. This is what choices reduce to. In Sweden that meant large nuclear installations, although ignorant busybodies appeared who told them that small-scale technologies were better. And Valentine is NOT correct when he tries to identify small-scale technologies as the wave of the future. There is a place for these of course, but not much of a place - unless the voters prefer expensive to inexpensive power, which may well be the case, although I doubt it..

By the way, did I ever mention to you that I designed terminal installations for radar and sonar for the US Navy. In any event, I don't remember any occasion in which I ran across anything about electric deregulation in any of my electronics books. I therefore find it possible to conclude that what you know about nuclear economics and deregulation wouldn't fill the preface of any book on any subject written since Adam and Eve.

As for your beliefs concerning the sovereignty of voters, in the US the voters gave us 8 years of George W. Yes, I believe that Bush was preferable to GOre, but choosing Bush instead of Kerry was insanity, and what it showed was the inability of voters to identify and protect their best interests. But the present meltdown will smarten them up. I hope that it smartens you up.

It's not particularly me that needs to "smarten up", it's the rest of the world that doesn't believe you. It would appear that much of the world thinks nuclear is economically disastrous, just read the article titled "The NYTimes Finally Reports the Economic Disaster of New Nukes" by Mark Goldes on the Energy Central Blogs page. Granted many readers here may not like Mark Goldes as a reputable source, but the NY Times is a very highly respected source as far as I know.

Like I said Fred, the voting public will demand choices even if those choices are not the most economical, so you will have to wait a very long time before substantial numbers of new nuclear plants get built. In the nearer future though we should see a few get built.

Fred. I do grant you that economies of scale combined with a fully regulated government-owned electrical system should be capable of providing the lowest-cost nuclear generation possible. The only problem with that approach is that in most jurisdictions its politically impossible to implement for any time period, since keeping it running requires treading a very fine line between right-wing and left-wing political influences. (And yes, I think economics should consider politics). Current leftist politics, being aligned with a lot of "environmentalist" movements dislikes nuclear for a whole lot of purported reasons relating to dangers of radiation etc. but I think there must be an underlying hidden one involving "power down, back to non-mechanized agrarian living" Current rightist politics wants to "dismantle government", "de-regulate", "let markets handle everything", for obvious reasons of opportunity for capital investment to make a high rate of return.

Very few countries with genuinely democratic systems of government have been able to tread this fine line, only France, Finland and Japan fit there so far as I can see. Most european countries have fallen off the line to the left, Canada/Ontario fell off to the right as a reaction after leftist federal and provincial governments falsly gutted and discredited our nuclear industry from a position of control. US as a special case has never had the "government owned" model, so has essentially been off-track to the right all the time. Interesting is that the only countries able to maintain a balance on the fine line are those without any alternative domestic generation fuel option.

We both dislike the present situation (except for in the three countries named above). You are arguing that every country should attempt to "get back to walking on the line", which I see a too unstable a situation to be worth trying to re-implement. I argue that since we must be off the line, it is better to be off to the right, but with a new market paradigm.

Bottom line is, I must respectfully disagree with your proposal of returning to government-owned-and-operated electrcal generation as an impossibly unattainable/unmaintainable utopia.

You have it exactly right ! - especially about government-owned-and-operated generation conflicting with politics, and the fact that economics should / must consider politics. The latter is the message I have been painfully trying to tell Fred in our past mud slinging episodes on this website many weeks ago.

Most Canadian and American governments at all levels are so committed financially and legislatively now to fostering smaller-scale generation technologies that it is too late to go back to building only just highly regulated large central generators, nuclear or otherwise.

I can hardly wait until PHEVs or PEVs come out in the next few years, and they will surely come as a result of Obama’s CAFÉ target of 35mpg. When me and my co-workers will need to plug mine in at the office during the day to recharge (to get home again), my employer will never want to pay for all this extra energy, so I am betting on see lots of local solar panels and mini-wind mills popping up all over the place to handle it.

1) Present and anticipated economic condition. 2) level of education 3) religious affiliation

Nearly all public discussion pretends that all three above issues can be merged into a single indicator mappable in one dimension. I suspect Carl Rove knows better.

Bob's talk about windmills and solar panels "popping up all over the place" is basically ignorance. Yes, there will be more windmills and solar panels, and that's good, but the base of the system should be large generating firms - and it will be those, and most likely they will be burning a lot of coal.

I'm also sorry that I asked Bob to smarten up, because obviously in his present frame of mind that's impossible. DENYING HISTORY IS DUMBER THAN STUPID, AND SMALL SCALE INSTALLATIONS IS THE WAVE OF THE PAST. The nuclear renaissance has already started, though in some places in name only. I have a few ideas as to how that should go, but I think that I'll keep them to myself for the time being. And listen, Bob, you say that the US government is committed to "fostering" small scale generation, but what you should say is that they are committed to encouraging it. They are committed to encouraging it for POLITICAL REASONS. becaise Dr Chu is as capable as I am when it comes to understanding investment mathematics

Another misnomer on his part is the use of the work "encouraging" the development of small-scale generation. There's a big difference between encouragement as he puts it, and actually spending money in public budgets with generous feed-in tariffs, and through substantial tax relief for those developing and commercializing it. The latter is more commonly known as fostering new businesses. So much for his command of the English language, it’s a blessing I never had him as a university professor.

The burden of proof is on the people who claim the wonders of the green and the new rather than the tried and true.

Assuming that your knowledge of the English language is still as fluent as you think, Bob, you should read the comment by Joseph Rosenthal a couple of times, and try to understand what he is saying. I'm prepared to believe that President Obama is on the right track, but his energy program - such as it is - could easily degenerate into a half-baked welfare scheme for corporate upstarts.

Please note however that I am NOT advocating a nuclear reactor on every street corner. Basically what I want is a situation of the kind THEY SAY exists in the quaint Swedish town of Växsjö, where renewables can be optimally exploited because - I think - of the presence of large nuclear reactors in the background. Something else should perhaps be noted here. The general public, the voters, the connoiseurs of mid-day soap operas on TV, are under tremendous pressure now to believe nonsense about the energy future, and it is not impossible that they will do so, BUT NOT YOURS TRULY, and definitely not in this forum.

If anyone chooses to call government programs that are fostering small-scale energy developments "corporate welfare schemes", then they better call the government bailouts of the large financial institutions in the US the same thing. In fact, in the case of the bank bailouts in the US, they essentially had no strings attached, none, whereas the coming industrial handouts will at least have performance goals to meet, meaning taxpayers will actually get some benefits from the handouts instead of simply lining the coffers of the recipients.

Now that's what I call brilliant: sounds to me like the rendezvous of the century.

But I do like the expression "a street corner near you". Reminds me of certain days in Uncle Sam's army, but I don't think that I will examine that subject today.

You had better believe it because the current electricity grid capacity in most places WONT handle the surge in peak demand during the daytime hours from electric vehicle recharging. And it's dreaming to think consumers will want to only recharge at night when excess capacity exists.

Distributed local sun and wind generators will gradually appear on every street corner, not overnight. So at first the existing grid generators will recharge most electric vehicles, but as more of these vehicles appear everywhere, the economic forces will make these micro-generators very much in demand. And sorry to disappoint Mr. B, but voters wont tolerate waiting years or spending billions on beefing up the grid with many new nuclear plants. Neither will governments.

So there!

Can't you understand that comments of yours like the one directly above are crank. Why doesn't somebody tell this man that he has started to talk nonsense. "Distributed local sun and wind generators will gradually appear on every street corner..." Why don't you wake the town and tell the people those news.

Yesterday my wife was rambling on about who she should vote for. Her favorite candidate is against the European Union but also against nuclear. Vote for him I told her, because the EU is the real enemy, and in the long run we are going to get the nuclear we deserve. How much is that? Well, that's for the likes of me to know and you to find out.

It is very sad a university professor with the writing ability that Mr B has is reduced to propaganda and mudslinging to anyone who disagrees with him on this forum. I suggest he take his own crank into the bars in Sweden where he at least some jokers will perhaps listen to him.

Why a State like Georgia, Utah, or the other 30 states that have low energy prices would even think about DG is beyond my ken. Sure, cap-and-trade may be shoved on them but we can all be assured that anything that doubles electricity prices in places like Indiana (new Obama territory) ain't going to last. So, they'll continue to use central power stations for coal and do quite well, though not quite as cheaply as before.

Meanwhile, if we do somehow manage to lower coal usage, China and India will enjoy our lower demand for coal, and the resulting low prices, and burn more.

My suggestion is to buy natural gas futures. The demand will inevitably go up as states unwilling to use coal will use natural gas instead (not wind, although you can expect some windy pronoucements).

And of course, the cheapest way to get technological advancements is to make the Scandinavians, Germans, Spaniards, and other happy talkers do the R&D, then steal it. Works for China.

... No?

"Deregulation", as used by many, is just another canard being used to justify forcing the consumer to pay for expensive renewable energy that generally can not compete.

Micro generation on street-corners! Where will the prostitutes go if you are correct? Maybe into those bars where you want me to hold forth. You are not just wrong Mr Amorosi, but completely wrong, so why not back up and do a little thinking. You can also do a little reading, starting with the above posts, but making sure that you skip your own. Use this opportunity to learn something.

And incidentally, I am and have always been a democrat, although I have voted for republicans, and nothing would please me more than to see President Obama succeed, but his energy ambitions don't seem to make sense - although I could be wrong.

How about absorption refrigeration to use the waste exhaust heat of a DG unit in hotter climates?

I think many of you need to stop and think.

However that is not the issue here. What I am talking about is the attempt by certain people to do away entirely with nuclear energy. For them nuclear energy is the enemy, because they see it as a creation of the evil corporate empires. Everywhere I turn I find myself arguing with ignoramuses who think that wind can replace nuclear: when the nuclear plants are phased out for one reason or another, the theory is that they can be replaced by windmill parks with the same nameplate capacity.

As for this article, the references to von Mises and Hayek is strictly an anti-Obama departure. I run into it all the time in another part of the blogosphere. Definitely fruitcake.

The Obsolete Generation Economies of Scale Argument

By José Antonio Vanderhorst-Silverio, Ph.D. Systemic Consultant: Electricity EWPC Systems’ Architect

First posted in the GMH Blog, on June 8th, 2009.

Copyright © 2009 José Antonio Vanderhorst-Silverio. All rights reserved. No part of this article may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, without written permission from José Antonio Vanderhorst-Silverio. This article is an unedited, an uncorrected, draft material of The EWPC Textbook. Please write to javs@ieee.org to contact the author for any kind of engagement.

Wishful thinking of an old world that doesn’t care about environmental risks abounds. However, energy poverty is a highly likely scenario of clean energy to be expected in North America. Even in China and India, people need to be prepared for such a culture changing scenario.

Whether considering or not the above statement, Harry’s emerging scenario will be only possible under the EWPC-AF, as explained in the article Innovation Needs to Belong to the Small. To ease the large value destruction in the making, the government needs to make a revolutionary move in the power industry to enable business model innovations to develop the resources of the demand side in order to increase significantly the efficiency of the power industry.

What Harry should be telling readers is that large generating stations are being protected from competition from disruptive technologies, by successive incremental extensions of the investor owned utilities (IOUs) architecture framework (IOUs-AF). In that process, a huge and highly complex legacy stock is now blowing a bubble with taxpayers’ funds, which will explode as the smart grid “innovations” regulated bets, including those that actually make it through, fail at early obsolescence, as it historically happened with 75% of all projects during the reengineering revolution. That is the Greek Tragedy that is explained in the discussion to the article Competitive Markets for COMPETE Coalition Potential Losers.

Two years ago I wrote the GMH post Lowest Cost Electricity Generation is Just Intuitive, but I will add more. Missing from the generation economy of scale thinking is the fact that most of the value being added in the power industry has been found close to customer premises, as explained in the EWPC article Just as Pogo, IOUs Found the Enemy. As the IOUs-AF developed resources of the supply side saturated long ago, they left the resources of the demand side highly undeveloped. The new economies of scale and scope are to be found in the development of the resources of the demand side and its integration to power system planning, operation and controls. See also the EWPC article Demand Integration is NOT the Province of Politics.

Ethically, we should calculate how much GHGs exports are still accumulated so far in the atmosphere. Do you know what that figure is? I bet that the Chinese have added only a small percentage of the total, which mostly belongs to the U.S. Maybe something like that is what is in store for the end of the year.

I guess that there is nothing than a good example for the peasants, who would like to have 6000 square foot homes to be comfortable with some shiny DG units on their roofs to export what they don't need to the grid for the factories to use. Maybe the Chinese government will own the homes and the production of the shiny disruptive technology.

And that's just how it is.

"Um, we're not shutting down our coal plants." How can you be so sure. That is a perfect example of the certainty of wishful thinking.

As a planner under uncertainty, I have indirectly admitted that I can not be certain what the future will bring. That is why I wrote “Whether considering or not the above [environmental] statement, Harry’s emerging scenario will be only possible under the EWPC-AF.”

However, the EWPC-AF is a predetermine element of all plausible scenarios that is also able to satisfy not shutting coal plants down. In addition, there is at least another plausible scenario in which a large number of the coal plants will be shut down sooner than 25 years. In those situations, the EWPC-AF works just as well, but the barriers set by the IOUs-AF, which unnecessarily protects the coal plants while slowing progress, means that it is not a predetermined element.

Whether you want it or not, electricity produced with coal power plants may involve subsidies not accepted in the global market, as border tax is also a likely action to discipline markets.

Ontario's provincial government has MANDATED that all of Ontario's coal plants must close down permanently by 2015 or so. Luckily coal is not the majority of central generation in Ontario as just over half is from nuclear and some is from hydro. Natural gas and renewables (wind and solar) are small but emerging sources in Ontario that are growing. And once the coal plants shutter, the lost capacity is expected largely to be taken up by growing conservation and efficiency programs, and of course more renewable energy sources.

Now you may think this is ludicrous since coal is one of the lowest cost sources, but the carbon and other nasty emissions from coal plants has been cited by the government as costing too much in added health care costs and climate change. So the higher energy costs once they close is a price the public will be forced to pay, and it will be gradually eased onto our energy bills through the use of Time-Of-Use energy billing rates.

Initially the TOU rate structure will be almost revenue neutral, but over time they will surely widen the gap between on-peak and off-peak rates to extract more overall revenues, and anyone in the consuming public that doesn't like it will be told to mitigate their higher energy bills by practicing more load shifting to off-peak hours.

What makes you believe the same won't gradually be foisted onto the American public over time?

“There is nothing more powerful than an idea whose time has come… Victor Hugo” You are partially right, but as I will explain next I am not confusing them.

According to wikipedia "Economies of scope are conceptually similar to economies of scale. Whereas economies of scale primarily refer to efficiencies associated with supply-side changes, such as increasing or decreasing the scale of production, of a single product type, economies of scope refer to efficiencies primarily associated with demand-side changes, such as increasing or decreasing the scope of marketing and distribution, of different types of products.”

Thomas, I don’t have to confuse them. As you can see in the article EWPC as a Timely Basic Innovation (http://www.energyblogs.com/ewpc/index.cfm/2009/2/22/EWPC-as-a-Timely-Basic-Innovation ), the EWPC-AF may “… involve not just a single new technology but a collection of new inventions, practices, distribution networks, businesses and business models, and shifts in personal and organizational thinking.” So it should not be any surprise that EWPC involves economies of scope with water and gas for Second Generation Retailers (2GRs). But most importantly, 2GRs business model innovations are mainly information systems projects that get economies of scale on the Federal and Global markets.

And let me repeat, the wishes of that comparatively small group of voters and colleagues who are hooked on renewables should be respected. But insofar as my personal standard of living is concerned, energy-wise it would be best served in this country (Sweden) by the appearance of two new large nuclear plants.

I'd love to explain that some day in this forum, but as in certain other forums of one description or another, there is no market for that particular truth. As a Canadian billionaire said not too long ago, we are living in the most dishonest period in human history, which means that things like truth and logic have about the same intellectual value as a video clip..

So I suggest all readers must face that we're going to pay considerably more for electrical energy over time, and I suggest you either start saving your pennies or start learning to practice much more conservation and efficiency upgrades. That is of course if you want to maintain any semblance of your current standard of living.

In Canada, the cards may play out that coal goes away. But in America we have something called the Senate, with two representatives from every coal-using state (there are probably thirty States and sixty such senators) as well as the electoral college. So, my strong expectation is that once people see the electricity cost impacts of "going green," we will reverse course in the U.S. You say that "all readers must face that we're going to pay considerably more." You may be right that that would be best. But it won't happen here, in my estimation. Not for long, anyway. If cap-and-trade doubles the electriicty price in say, Indiana, a key victory State for Obama, or in Ohio (same), it will be reversed. You may be sad about that and I may shrug my shoulders, but that's the likelihood, in my view.

Meanwhile, China will enjoy the lower-priced coal resulting from whatever coal demand reduction is achieved in the U.S. or Canada. So we may get higher electricity prices and a reduced standard of living without much reduction in global emissions. That would be policy that sounds good, not good, sound policy.

Fred wrote the following: “Bob, you and I had some disagreement earlier on something, and now you have decided to interfere in something that you don't know anything at all about, so I am going to take the gloves off… It isn't economics that you should be thinking about here - assuming that you are capable of doing any thinking on this topic - but history. The history of electric generation and transmission shows a movement from local to regional generation. The explanation is economies of scale: the large plants feature ECONOMIES OF SCALE. Nobody in their right mind is capable of denying that.”

While I do not regard that Fred is interfering in my responses to Joseph and Thomas, I do think it is improper to tell anyone that they “don't know anything at all about,” because it may come back to hunt us. I repeat that I do not know what the future will hold. However, the world has been undergoing a discontinuous historical transformation from cheap energy, expensive information, and the environment as an externality, that used to made, for example, what Thomas Tanton calls "large central stations” feasible, to a new world order which clearly reverses to expensive energy and cheap information, and which seem to be making a plausible scenario that denies large plants economies of scale.

The truth is that the economies of scale of the U.S. grid had more to do with the whole power systems interconnections (coordination savings that have been known since the 1920s) than that of the generating units themselves. However, that is a story already told almost two years ago (and posted above) in response to the same Joseph Rosenthal in Lowest Cost Electricity Generation is Just Intuitive.

In fact, the emerging order has already given us a shift from the central computer to the micro computer and from the central telephone system (not to the microphone, which we had) to the cellular phone. Even more, both technologies have already converged into for example, the Apple iPhone, the Palm Tre, etc., which transfer real choice to the demand side. No end in sight yet as Moore’s law has displayed its potential effects.

For the power industry, at least one disruptive technology is now increasing its potential according to that law, as explained in the highly read recent article Solar Makes Sense Now (see what Len Gould responded on 6.4.09 to Fred about nanotechnology progress). Dick Maclay even rephrased it as “Solar Will Make Sense and Obsolete the Utility Mind Set Real Soon Now." Whether it actually makes sense now, there is no doubt that it is a highly likely scenario.

I may conclude that Joseph's contribution is not misunderstood at all. It is just plain wishful thinking, which may result if the specific business as usual scenario remains. Just as it happens in the ICT's industries, as mentioned above, there is an emerging plausible scenario where the micro grid is where most of the value creation is generated instead of the macro grid. As the Internet shows, the macro grid does not disappear, but the demand side micro energy is where value migrates. As seen above I am not inventing that scenario. The key problem seems to be the temporary barrier of the IOUs-AF, which as I said will keep generating huge value destruction. A shift is needed to the EWPC-AF basic innovation because it is a predetermined element of all plausible scenarios.

The reality can be boiled down to a few hard facts.

1. Renewable energy will always be more expensive than nuclear power. Even with some miracle solar cell, you still have the storage problem.

2. Nuclear Power will always be more expensive than coal. Prior to this global warming business, utilities were RUNNING, not walking away from nuclear. It just wasn't worth it for them.

3. Global Warming and the concerns about CO2 emissions are probably real.

Given the reality (or at least political reality) of number 3, it would seem the best course would be to try to steer the politicians to nuclear power, if possible. The only debate as I see it between Bob and Fred is that Bob thinks this is unlikely, and Fred thinks it is essential. As far as I can tell, both might be right.

I think Bob may be failing to acknowledge how much of a cost disparity there may be between renewables and nuclear. True, these costs may be ameliorated by conservation and a smart grid, but these would benefit nuclear power as well.

I think Fred might not notice his own inconsistency in railing about "ignorant politicians" supporting renewables at the expense of nuclear, whereas nuclear power requires political help as well, as it is NOT being well-supported by the private sector. Perhaps this is the problem of "ignorant capitalists".

And Joe, the solution to China burning coal is trade sanctions. Since CO2 emissions are a global issue, it is suicide for a country to adopt such policies without expecting the same from its trading neighbors.

And, as a brief response to Jose, I don't "wish" for coal to continue. We in Connecticut are merely on the receiving end of the coal emissions. I do wish for reliable, relatively inexpensive power that doesn't unduly harm the environment, which may actually end up causing the use of natural gas for baseload (we are already starting to do that). Absent energy storage advances, I don't put in my trust in renewables or efficiency to accomplish our goals. I think efficiency is overestimated as a potential "resource." Also, average folks without much air conditioning don't have much to conserve. Wealthy people in big homes that write to politicians, on the other hand, do enjoy when the rest of us pay to make their central air more efficient.

I fully realize and agree that renewables are today considerably more costly than nuclear or coal. However my other main point in the "Bob and Fred show" has been that there are huge efforts going on in industry and in research institutions to reduce that cost gap. And it’s not crooks or vested interests or environmentalists driving all of it, it is pure and simple capitalism by smart business people who smell massive opportunities to compete with conventional power system companies.

Storage for solar and wind are a crucial factor of course, and granted a breakthrough in battery storage would also benefit nuclear too. Just today I read the Obama administration is pumping new money in the range of billions into the US domestic battery industry for R&D. The US government also realizes a breakthrough is needed. And more money for R&D drastically increases the chances we'll get one someday, I know because I work in R&D in another industry, and money for R&D is the lifeblood for successfully engineering AND commercializing new discoveries or new design techniques for products.

Let's say hypothetically a breakthrough occurs for battery storage and as a result the cost of renewables came down to something at least comparable to today's large central generators. Not necessarily equal but at least comparable. What do you think politicians will choose - spend money gradually on incremental deployment of large numbers of micro-generators, or spend huge sums of money up front on large central nuclear plants (and cope with their waste problems), or spend money on many new large coal plants up front and deal with their emissions and the carbon taxes or cap&trade schemes soon to unfold.

The breakthroughs in any R&D venture are never guaranteed by any means, no matter how much money is thrown at it. But it's no different than playing lotteries - if you don't spend money on tickets you are guaranteed never to win. It's easy for Fred or anyone else to ridicule those who are working towards making renewables practical on a large scale - until it happens someday. And seeing renewables grow as they have in recent years, the chances they become widespread on every rooftop and every street corner grows, figuratively speaking.

http://blogs.wsj.com/environmentalcapital/2009/04/13/better-batteries-general-electric-a123-and-the-power-grid/

It is also summarized in the Electronics Design News article June 8, 2009 titled "Stimulus package’s $2B investment in domestic US battery manufacturing" by technical editor Margery Conner, found at

http://www.edn.com/blog/1470000147/post/120045412.html?nid=3357&rid=1670042

"Ignorant politicians", Jim. How did George W. get into this? Actually I was thinking about the kind of Swedish politicians who make George look like Einstein..

Since it seems very difficult, no to say impossible, to get on the same page, I must say that I respect your opinions. So, I will give you my humble take on all this so far, even if I make myself vulnerable to gossip.

To me the issue is clearly not the Bob and Fred show, but the need of an Architecture Framework that opens the power industry to innovations. I tried to show that the IOUs-AF obstruction to progress might cost the American taxpayers billions of dollars in addition to maybe losing the hard earned leadership that the U.S. had in the past. I also tried to show that the obsolete generation economy of scale argument has not been an issue either since a long time ago.

To open the power industry, and face the real issue, I suggest adopting the basic innovation EWPC-AF that is a predetermined element under two or three highly plausible scenarios. By the way, I don’t discount a scenario having base load generation for years to come, but they should need to compete without the help of externalities to avoid shifting their any excess risky costs, which they may have, to the customers. As in the ICTs industries, value creation migration to the customer also seems to be a predetermined element that will be exploited by 2GRs in the development of the resources of the demand side to enable their business model innovations.

Although I may be wrong, I feel that that the essential issue have been sufficiently discussed. Thank you very much for input and for as usual being a great sounding board.

Regards,

José Antonio

A breakthrough in battery or some other electrical storage would indeed change the world. But it is very unlikely to occur. And even if it did, would not address seasonable differences in renewable energy generation (such as solar).

If we assume a battery pack is sold for $300 per kw-hr and lasts for 1000 cycles, how much would that add to the cost of the electricity stored? It would add 30 cents per kw-hr! Yikes! This is a real problem. Batteries or any other kind of electro-chemical storage are unlikely to be able to store electricity economically (for broad usage) anytime soon. Please note the economics of batteries for vehicles are much different as they are competing with gasoline (about 40 cents per kw-hr usable at today's prices) and not line electricity.

What if a new battery came that was good for 5000 or 10000 cycles for the same $300 per kw-hr. Now that 30 cents per hw-hr becomes only 6 cents or 3 cents added to line electricity. Perhaps tolerable. Some battery people are working on improving charging life cycles an order of magnitude better than current Li-Ion.

Maybe we won't get any breakthrough, but we had better hope we do because we're going to need it for electric vehicles if not the power grid.

As I said earlier, the economics of vehicle energy storage are quite different than grid storage. (Which is a big reason why V2G is probably nonsense except in specialized cases.)

Also, any battery breakthrough which would make renewables more attractive would also make nuclear more attractive as well, though perhaps in a more muted sense, as nuclear is already reliable, non-seasonal, relatively inexpensive, etc.

FWIW, I don't really "like" nuclear either, but my reasons are a bit foggy and not a little paranoid. I think, in theory, renewables COULD displace both coal and nuclear, but it would be a tough road indeed involving both huge infrastructure changes and greatly reduced energy use by people. I think if we actually went down that path a bit, my "fog" about nuclear power would clear up and I would feel better about it.

I'm becoming more radical than ever on that point, or maybe fanatic is the right word. The more I study this thing the more I become convinced that there is no reason why it is impossible to put a reactor in operation in 3 years - from ground break to grid power, to quote Len. Of course, reactors will have to be constructed the same way that they construct Boeings, or ships in WW2, but so what. This will be possible when there are sufficient orders.

I respect very much your radical or fanatical believe that "that renewables can not be substituted for nuclear." Think hard that we don’t know what the future will bring us. So that believe should play out as a predetermine element in the two or three plausible scenarios. I have two questions for you.

1) What if one of the scenarios includes that politics say NO on the usual grounds.

2) So try to fully test your believe, Do you agree that this could be done under the EWPC-AF to enable a leveled playing field? That is, to open the power industry to innovation in renewables? The EWPC-AF is meant to enable a competitive and fully functional retail and wholesale markets for private parties that invest to try to share ALL of their risks in the open market to compete with renewables. No subsidies allowed for nuclear as a mature industry.

However, Nat Gas GHGs emissions are lower as a resource of the demand side. That means that the EWPC-AF basic innovation is even more valuable in those areas.

I thought it both humerous and relevant to the present economic crisis in the light of neo-conservative economics.

Great input Len!

With a lot of respect to you all, contrary to Len's believe, the first of his last two post has great significance to the emergence of the EWPC-AF basic innovation, which I claim should not be consider irrelevant. Thank you Len for bringing behavioral economics to this dialogue. In what follows, please forget what may be perceived as rough by some readers, as I will be quoting old posts.

In December 2006, I posted a message that is found on the GMH post Playing With Fire and Collapse (must see post), in which a behavioral economics argument, exactly the one that Len is suggesting Fred, was posed by Professor Jay W. Forrester, on the need for economics to become a profession, to which Fred made the following comment:

'Dynamics"! Let's see what we've got here, Jose. In my servomechanisms class at UCLA, when I heard that word I brushed the cobwebs out of my eyes. When I hear it in an economics lecture I check my watch and start thinking about being somewhere else. I believe it was Nicholas Kaldor who said that economists use the word dynamics about their own work in order to imply that the statics approach of other ecoomists is yesterdays news. I also heard the word dynamics used a great deal a few years ago in discussions about the oil supply. Pardon my English, but the people using it usually didn't know what they were talking about.

About Professor Forrester. As far as I am concerned, he's both right and wrong in those pronouncements you cite. Any work by e.g. economists, and especially model building, automatically leads into forecasts at one level or another...

Thank you Fred,

Your post is very good, as you engage the generative dialogue as I asked.

From what you wrote, I infer that you confirm that Len “. . . is seduced by the early chapters in his econ 101 textbook, and so he didn't bother to read the later chapters, where he might have been informed that regulating [and re-regulating under EWPC as explained below] the electric industry makes a lot of sense.”

One of the followers of M.I.T. Prof. Forrester, who is “The creator of the discipline of System Dynamics," Andrew Lo’s comments are quite similar to those of his leader. As an example, Dr. Lo wrote the very timely Systems Dynamics paper Functionality of Banks and Hedge Funds and Contagion Between Financial Institutions that I think Fred and other readers should also be interested in.

My advice Jose is to stay away from the - timely or untimely - genius of Dr Lo. And by the way, when I talk about not being able to substitute various things for nuclear I am strictly thinking about Sweden, where both the government and voters seem to have lost it.

Fred

I like to understand what’s in your mind to see if I agree with you about the EWPC-AF relationship to systems dynamics, which is not mentioned in your post.

I don not see the logic of your argument about Dr. Lo, the follower, not the leader, of Systems Dynamics. You are writing about Dr. Lo econometrics performance instead of his performance on systems dynamics.

Is that logic supporting that M.I.T. should fire Prof. Lo for incompetent while using Systems Dynamics or what?

I see that the Swedish scenario is at the moment not plausible.

I don't believe I said any such thing (renewables can replace coal and nuclear). I said, in theory, they COULD, but at a huge cost.

Do completely displace domestic coal electricity plants, we'd need to build about 300 more nuclear power plants in the U.S. I don't see that happening anytime soon either.

Contrary to what Fred insinuates above, I never believed renewables could TOTALLY replace large central generators of any type, nuclear included. I only predict renewables are will become much more widespread and contribute substantially to the grid's generation capacity. We will still need some large central generation, and some nuclear will get built, just nowhere near as many nuclear plants as Fred says is absolutely necessary.

No, I dont like what is going on in the energy world in the US and Sweden. As for the other countries, I dont give a you-know-what about them.

The amount of demand side resources that will get utilized are completely unpredictable since it involves all consumers of energy, so on that note I agree with you the future is very unpredictable. Sadly utility companies are not going to make use of the full potential of demand side resources until governments give them more freedom to do so with changes to their regulatory environment. Under current regulatory systems utilities have no easy way to recover the full costs of developing and exploiting all potentially available demand side resources.

Regulation engages more than meets the eye, causes work though doesn't it? This forum would be non-existant if re-regulation ocurred, what would we talk about?...we wouldn't be taliking ...because we would be working...too tired, and or no time to get on a personal computer and show everyone how much brains you have, we have... Problem is, there is not enough regulation of anything....responsiblity and accountabliity missing along with it. Who in their bright brilliant mind decided WE can "borrow" through the infinite range of negative numbers?

Electricity is a finite pure science, simple....the more you use, the more you need to make. The more electricity you make, the more money you make. The more we can make things..."let's buy and sell kilowatt hours instead" , what a practice. Yep, you can do it with the keyboard.

Why build something, "used and useful", as in something that will keep a 350 ton turbine turning, enablng a large liquid gas cooled unit to "generate" something "used and useful"....nah, the keyboard is so much easier! Oh btw, quad trillion, comes after a trillion in terms of debt.

Optimistic as I remain to be, any re-regulation may be too far out to sea (see). Too many tails wagging the dog, too many dog and pony shows, too many carts before the horse....distracting the great visionaries of our time, that's it... No wonder we're losing time.

What are the costs of power plants as of today? The last figures I saw put nuclear plants out of sight. Hard to believe. Is this still true?

I say amen to that. 25-30 years ago it was possible to construct a nuclear plant in 4 years, which meant that with a little care it would have been possible in 3 years. The entire Swedish nuclear sector was constructed in about 13 years, and this consisted of 12 reactors that supplied approximately 45% of this country's electricity. The cost of that electricity eventually became - occasionally - the lowest in the world, and the price was also relatively low.

And then the ignoramuses, parasites, charlatans, careerists, drifters, hustlers got into the game, and of late they are claiming that e.g. wind can replace nuclear where the supply of reliable and comparatively inexpensive power is concerned. The Finnish plant was suppose to cost 5 billion (for the largest reactor in the world) but apparently it will cost 8, and they are talking about 10 billion for similar plants. Why stop at 10? Truth and logic don't mean anything any more - the important thing is access to money and some of the things money will buy. (I won't bother going into that complicated subject.)

What about the future? At some point in the future reactors will be constructed in 3-4 years, or maybe less. The television audience is living in a dream, but if their political masters can't reverse the macro and financial meltdown taking place now, they will be forced to smarten up. Even in Sweden, where the dumbest of the dumb are apparently trying to dictate energy policy, the pro-nuclear booster club is coming out of the closet. .

However I also know that the Cdn federal govt. who owns AECL is now run by a bunch of neo-cons from the oil patch in Alberta, and they've decided its "best" for AECL to be broken up and sold off as scrap. Too funny, the motives are so transparent I can't believe they have the nerve. Taxpayer voters are so gullible. Looks like none of them remember when the exact same bunch of western conservatives busted up Avroe corp and put all the prototype Arrow figher/bomber jets (nost advanced supersonic fighter of it's time) into the crushers and burned all the drawings and documents. Conservatives claimed fear of it falling into the hands of foreign spies. I think they were just nuts. Now here go the cons aainst another high-tech Candian company.

"The (1957) test flights went surprisingly well; the aircraft demonstrated excellent handling throughout the flight envelope. Much of this was due to the natural qualities of the delta-wing, but an equal amount can be attributed to the Arrow's stability augmentation system. The aircraft went supersonic on only its third flight and, on the seventh, broke 1?000 mi/h (1?600 km/h) at 50?000 ft (15?000 m), while climbing and still accelerating. A top speed of Mach 1.98 was eventually reached at three-quarters throttle, even with these lower-powered engines.No major problems were encountered during the testing phase"

http://en.wikipedia.org/wiki/Avro_Arrow

The greater complexity (steel, concrete, systems, etc), the greater the opportunity for cost and schedule problems. Large nuclear plants are inherently complex.

The best way to drive down costs is more competition.

The evolution of the combined-cycle plant over the years is a pretty good example of how market competition drives simplification to produce lower costs. Today’s combined-cycle plants are substantially simpler than the 1st generation, due in large measure to a number of suppliers and constructors competing against one another. The cost of today’s combined-cycle plants is substantially lower than the 1st generation, on a relative basis.

However, I’m not so sure today’s new nuclear plants are amendable to competitive forces because their large size and inherent complexity means the plants cost a lot and thus, not too many companies (suppliers/constructors or utilities) are willing to take on the risk.

My hunch is the developing group of smaller sized nuclear plants (and advanced reactor types) will result in substantially reduced risks (basically, lower capital cost), because of greater competition from more suppliers/builders as well as greater demand for the reasonably priced plants. More simplifications will occur with more competition.

Big new nuclear plants may be somewhat of an endangered species in the private sector, although “government utilities” may continue to build them. Also, not so sure the big nuclear plants fit well in today’s grid because (1) the power demand fluctuates so much and (2) there are increasing numbers of smaller generators better able to readily accommodate the fluctuations (although the renewable generators may actually cause the fluctuations). Big nuclear plants generally do not maneuver (change power output) real well.

At least some of the motives behind fostering wind and solar distributed generation is to compete with large central generation. Environmentalists are not in my opinion the only reason as so many would suggest.

In Ontario when the government tendered contracts to sign up wind generation companies last year, the response was so overwhelming that companies literally lined up with proposals for many more contracts than they planned on awarding. Yes indeed competition will thrive in electrical generation if smaller players are given the chance to play.

"I’m not so sure today’s new nuclear plants are amendable to competitive forces because their large size and inherent complexity means the plants cost a lot and thus, not too many companies (suppliers/constructors or utilities) are willing to take on the risk."

Well said Michael. It explains exactly why it is so difficult to get large numbers of new nuclear plants approved to be built, since financing them is a mean and tough dog. It also explains why professor Banks is so dead set against any level or sort of deregulation, because by keeping the electricity industry heavily regulated, governments stifle competition from many smaller players and instead favor the big central generators like nuclear plants.

My bottom line is that lowest cost power e.g. that large central nuclear plants can provide, is not the only factor that governments or private investors consider. The other factors lately often win out, and not just in Ontario.

"The operating lifetime of a modern nuclear plant will extend possibly 60 to 100 years beyond the date at which the conceptual design is completed, or 50 to 90 years past the plant’s first startup."

[QUOTE] In addition, both new-build CANDU designs, Enhanced CANDU 6 (EC6) and ACR-1000, are capable of deep, planned load-following. For EC6 this means an ability to cycle down to 60% full power and back (or 50% full power by bypassing excess steam directly to the condensers). For ACR-1000 this means an ability to cycle down to 75% and back (or 50%, using condenser bypass).

The CANDU design is well-suited to load following since on-line refuelling allows such operational flexibility at any time during operations (rather than at certain times in the fuel cycle), while also allowing the immediate removal, without disruption, of any defective fuel that may appear. The load-following operation would also be performed completely under automatic control of the reactor, steam generator and turbine-generator. [/QUOTE]

Canadian Nuclear FAQ - by Dr. Jeremy Whitlock

Today there little needs to be invented to build a nuclear plant. What’s wrong with taking all the CAD drawings, all the specs, all the sophisticated computer generated programming and scheduling and building a nuclear plant?

Good grief, we went form the Wright Brother’s flyer to jets in a shorter span of time. How can a plant cost billions more than an adjusted estimated if it is a copy? Have we become so stupid, fat and venal?

And if this life is 70 years or more, then not only will oil production have peaked but also natural gas, and coal will be selling at premium prices. In this situation I think that I can provide a pretty good argument for the cost-efficiency of nuclear if a pretty good argument is necessary, but in this anti-nuclear country (Sweden) nuclear engineering is coming back into style, and so there will be more presentable persons than my good self who are capable of providing that argument.

Where your comments are concerned, Don, there are some attractive and influential people who really and truly and completely do not want nuclear. I recall the gorgeous and brilliant Richard Quest on CNN saying that nuclear has been tried but it is hopeless. The highest energy bureaucrat in Sweden. a PhD in technical physics is anti nuclear, and a physicist in Geneva challenged to a debate of some kind on the internet, as did Amory Lovins. A debate on the internet - I wonder who first thought of something as moronic as that? Mr Quest would be a good candidate.

But they are going to get nuclear no matter what they want: YOU CANT FOOL ALL THE PEOPLE ALL THE TIME (Abraham Lincoln). They think that they have a choice, but the only choice they have is sooner or later. HOWEVER, let me say that we need these anti-nuclear people if we are going to get safe nuclear. Otherwise they might turn the operation of those things over to...Gordon Brown(?).

I think the nuclear industry might be wise to go straight to the public with the discussion in advance of the event, if it hopse to survive it.

Large central nuclear plants need not cost astronomically so much if they have been built before and you only want to copy the designs. In my humble view the exorbitant costs to build them is rife with profiteering by engineering companies using cost overruns as an excuse. Granted there are other variables tough to predict like the prices of materials for construction, but these are not the whole story.

Perhaps emerging competition for other forms of generation will encourage nuclear engineering companies to trim their salaries and profit expectations. They had better do so if they want a much bigger piece of the future pie in generation. And getting a much bigger piece of the action is critically necessary as many here say. Just ask Fred.

In order to efficiently maneuver, need to reduce coolant flow while maintaining the reactor temperature constant. Nuclear subs do that by changing the pump speed. Conventional nuclear units have single speed pumps.

Can nuclear plants be built in 4 years or less? Seems unlikely for the big units because just too much to assemble and put together and then test. It is possible? Yes, but only if the effort is exceptionally well engineered, planned, managed, and implemented, with material showing up when it is needed. Standardized designs would tend to support that, but to be standardized, need a large number of plants. Seems unlikely that will occur in the US, although the French have done exactly that – however, the utility is owned by the government.

Best way to build fast is to keep it simple.

Bob, Engineering costs are typically around 10% of job cost, construction very roughly 35%, in-directs maybe 15%, with the rest being largely material. Therein lies the problem with large conventional nuclear plants; too much steel, concrete and equipment. Also, expecting and engineering/construction firm to assume all the risks on a +6 billion project is not reasonable, particularly given all the elements over which they have virtually no control.

Renewable energy receives stunningly high subsidizes from Ontario's government. That is why everybody and their brother want to build renewable energy projects; they are lining up at the government’s pig trough.

Fail to see how Ontario's actions are good for industry and the consumer. Certainly throws the idea of free-market competition out the door.

The stunningly high subsidies in Ontario are unsustainable, and ultimately they are intended to come down at some point in the future. The Ontario government is counting on these projects to someday fend for themselves without subsidies.

Lining up at the government pig trough as you say is certainly part of the frenzy to get a piece of the action, but it's also the prospect of setting up businesses that have a virtually guaranteed growing market for its product - electricity for the grid. I mean what other industry can you find such rosy conditions to make a business plan to start a new business.

Incidentally Ontario has admitted that since renewable projects are today more costly per kilowatt that large central generators, the Ontario public will almost certainly be facing higher electricity prices down the road as the percentage of renewable generators grows. We're hoping (perhaps praying) that the higher prices won't be massively high by the time the subsidies vanish.

It promises to be a very interesting future for consumers of electricity in Ontario.

Qunishan Startup Picture

Good grief, we went form the Wright Brother’s flyer to jets in a shorter span of time. How can a plant cost billions more than an adjusted estimated if it is a copy? Have we become so stupid, fat and venal? ....""