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"I'm a social scientist, Michael. That means I can't explain electricity, or anything like that, but if you want to know about people I'm your man."
-J.B. Handelsman in Cartoonbank. com (The New Yorker Collection, 1986)
My situation is somewhat different, Michael. I knew enough about electricity to work on power lines for the U.S. Army before falling into disfavour with my superiors, and later I designed terminal installations for the U.S. Navy, but although I have taught social science (i.e. economics) in 14 universities, I am still unable to understand why so many people are willing to risk the economic futures of themselves and their families by falling in love with bunkum put into circulation by persons with a psychotic hatred of technological excellence, although they are quite capable of enjoying its material advantages. Something to be aware of here is that the rich will never be without reliable and plentiful energy, regardless of its availability or lack thereof to the less fortunate. One reason is that they are fully aware of its importance.
Perhaps the most straightforward reasoning in favour of nuclear-based electricity is in the non-technical article of Rhodes and Beller (2000). They say that "Because diversity and redundancy are important for safety and security, renewable energy sources ought to retain a place in the energy economy of the century to come." The meaning here is clear, especially if you add that we probably will never possess what is known in intermediate economic theory as the optimal amount of nuclear power. Next they unambiguously state that "nuclear power should be central. Nuclear power is environmentally safe, practical and affordable. It is not the problem -- it is one of the solutions."
Everyone of course does not welcome this kind of reminder. The construction of the Swedish nuclear sector and its later development was one of the most impressive engineering phenomena of the 20th century, however eventually a glib argument began to circulate that nuclear energy was just a "parenthesis" in world energy history, and a recent prime minister called nuclear "obsolete". Just for the record, the Swedish nuclear sector -- comprising 12 reactors, and supplying almost half of the Swedish electric power -- was constructed in only 13 years. In the period before electric deregulation gained momentum, the cost of electricity generated in Swedish nuclear facilities was among the lowest in the world -- and occasionally the lowest. In addition, to my great surprise, I discovered that the Swedish electricity price was also extremely low. This was especially favorable for the Swedish industrial sector.
In the most nuclear intensive country in the world -- which is France -- the intention from the beginning was to create a nuclear sector that would provide some of the lowest priced electricity in the world, and to use that electricity to make it possible for the country to optimize its macroeconomic performance. Unlike the situation in Sweden, the French decision makers made plans to stay in the forefront of nuclear development, and in addition to provide both the industrial and household sectors with reliable and comparatively inexpensive electricity. They have also expressed a desire to achieve and maintain a low level of carbon emissions.
Assuming that this is comprehensible, I would like to emphasize that nuclear cost issues need to be examined in greater detail for a meaningful discussion of electricity generation to take place. For France the basic comparison was between nuclear and coal, and given the various costs associated with importing and using coal, it was easy to show that nuclear was preferable. It might be possible to argue successfully that this is not true for the U.S., but I happen to enjoy another opinion. This assertion cannot be treated at great length in the present short paper, but my energy economics textbook (2007) presents a more detailed clarification. The core of my argument turns on the supply of reactor fuel, the length of 'life' of a reactor, the lack of carbon emissions, the possibility of a radical improvement in reactor technology and the time required to construct reactors (which is important for the investment cost, which in turn is important for the capital cost). Below I consider only the latter, but I would like to inform readers that I will soon publish a long survey of nuclear, which I hope will be examined by the curious. The same is true of the mostly non-technical chapter on nuclear in my textbook.
I have had the misfortune to see many estimates of the cost of a kilowatt of capacity of nuclear energy. Too many as far as I am concerned! They range from $1500/kW by the director of an electric generating firm, to $9000/kW by a gentleman who is convinced that most of my work on the economics of nuclear energy hardly deserves to be called nonsense. In my own calculations I often use $2500-3000/kW.
In a similar vein, a (3rd Generation) reactor is being constructed in Finland at the present time that has a capacity of 1,600 megawats (= 1600 MW), which makes it the largest in the world from the point of view of capacity, and initially the intention was to construct it in 5 years. An early estimate of its investment cost was 5 billion dollars. Now it appears that it will take 8 years to construct this reactor, and it has been claimed that before grid power is attained, its cost may reach 8 billion dollars, and perhaps slightly more.
None of this bothers me, because although much of this depressing news originates with engineers who have a far more thorough knowledge of industrial management and engineering than I ever possessed, I am satisfied with my ability to examine the issue on the basis of economics and history. First of all we can consider the time from construction start to commercial operation of nuclear power plants in six important industrial countries. The figures that will be given below originate in the database of the International Atomic Energy Agency, and are quoted in an important article by Roques, Nuttall, Newbery, de Neufville and Connors (2006). I have also questioned Fabien Roques -- who wrote the chapter on nuclear energy in the latest IEA survey -- and he assures me that he finds them realistic. I quote them here employing the scheme [Country (Minimum Time, Maximum Time, Average Time)], where the times are of course construction times, and these are measured in years. China (4.5, 6.3, 5.1); France (4.9, 16.3, 7.1); Japan (3.3, 8,1, 4.7); Russia (2.1, 20.3, 6.8); UK (4.9, 23.5, 10.8); U.S. (3.4, 23.4, 9.2). In examining these it should be clear that the average times are weighted in terms of capacity (i.e. power) or energy.
Worldwide, since l991, the figures given by Roques (et al) are (4.0, 8.0, 5.2). With an average construction time of 5.2 years, it might therefore be possible to argue that taking 8 or 9 years to construct a nuclear facility is an aberration, and in the fullness of time, the average plant will be constructed in about 5 years. My position of course is that once the nuclear renaissance get up steam, the average plant will be constructed in 4 years or less. As I informed someone in one of the forums to which I contribute, unlike most concerned citizens, I know what happened in e.g. the United States during the Second World War. The battle of Midway took place in l942, and in the approximately 3 years following that major naval clash until the end of the war, the United States constructed 17 fleet (i.e. large) aircraft carriers, 10 medium carriers, and 86 escort carriers. In addition crews and pilots were trained to efficiently and successful utilize these assets, and hundreds of other warships were produced. It should be appreciated that before the U.S. entered the war, nobody in their right mind would have claimed that the 'miracles' of modern technology and management skill that became commonplace during the war were possible.
It also needs to be stressed that the U.S. industrial capacity and morale of the work force in 1941 was far less robust than that existing today. A Japanese engineer with whom I worked at Camp Gifu (Japan) prior to being unexpectedly promoted to the infantry, once informed me that the radio broadcast in which President Franklin D. Roosevelt called for tens of thousands of aircraft to be constructed was transmitted verbatim to himself and his colleagues as an example of American pretentiousness and hysteria.
Another quantitative triumph was the U.S. armoured force, although techologically I regard it as deficient. The main U.S. battle tank, the Sherman, was produced in the thousands, even after it was discovered that it was an inferior piece of equipment. What is still not adequately understood is that it would have been extremely simple to produce in large numbers the qualitatively superior Pershing tank. Had that been done, and the approaches to the port of Antwerp cleared when they should have been cleared, American armor would have been across the Rhine and in Berlin before Christmas of 1944. I call this a gigantic failure to exploit existing technology, and the same kind of flaw applies to the inability to greatly reduce the time of construction of nuclear plants.
According to Donald E. Carr in his brilliant book (1976), the Japanese were able to construct a nuclear plant in 4 years in the l970s, which leads me to believe that they will be able to construct one in 3 years when their decision makers and voters eventually comprehend what awaits their standard of living if they do not get the energy message. (I was also told some years ago in Vienna that the Japanese government is in no hurry to increase the size of the present nuclear inventory. What they want instead is to introduce breeder reactors, which would enable a greater utilization of the energy in a reactor's fuel.) It might also be possible to argue that if at the present time if it takes 5 years or more to construct a nuclear plant, then coal is a more economic resource for electric generation than nuclear, but since I expect nuclear plants to eventually take less than 4 years to construct, this should not be the case.
I can close this short contribution by pointing out that when the next (or 4th) generation of nuclear plant appears, it probably won't make a great deal difference if it does take 5 or 6 years to construct a nuclear facility: in theory, 4th Generation equipment is greatly superior to previous models.
I would also like to stress that I am familiar with many of the claims of nuclear failure that are in constant circulation throughout this old world of ours, but as it happens I am singularly unimpressed. American industry was able to bring about miracles during WW2 because for the most part pessimism and failure were not encouraged -- as is NOT the case today with both nuclear energy and the U.S. macroeconomy. At the same time I am willing to admit that while many beliefs about the energy future that are often found in the U.S. and Sweden do not make any economic sense at all to me, I am convinced that if the citizens of those two countries continue to accept that more money is preferable to less money, then a different attitude toward nuclear energy will eventually appear.
Banks, Ferdinand E. (2009). 'Economic theory and nuclear energy: a long survey'. (Forthcoming)
______ . (2009). Energy and economy: a global approach. (Forthcoming)
______ . (2007). The Political Economy of World Energy: An Introductory Textbook. Singapore and New York: World Scientific.
Carr, Donald E. (1976). Energy and the Earth Machine. London: Abacus.
Constanty, H. (1995). "Nucleaire: le grand trouble" L'Expansion (68-73).
Martin, J-M. (1992). Economie et Politique de L'energie. Paris:Armand Colin.
Rhodes, Richard and Denis Beller (2000), 'The need for nuclear power'. Foreign Affairs (January-February).
Roques, Fabien and William J Nuttall, David Newbery, Richard de Neufville, Stephen Connors, (2006), 'Nuclear power: a hedge against undertain gas and carbon Prices'. The Energy Journal (No. 4).
Rose, Johanna (1998). "Nya Krafter", Forskning och Framsteg (September).
Thunell, J. (1979). Kol, Olja, Kärnkraft -- en Jamförelse. Stockholm: Ingenjörsförlagen.
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There have been numerous technical advances in nuclear energy that include the development of mini-reactors from Toshiba, Hyperion, NuScale Power and Adams Nuclear. There are also developments in radiation-free nuclear power using boron. Despite public objection (NIMBY) there will be an expanded role for nuclear power over the long-term future. I expect that the costs of new generation (unsubsidized) nuclear power will be competitive against other power generation technologies.
Edward Reid, Jr. 8.7.09
If we are to continue to have a reliable electricity grid and we must reduce CO2 emissions dramatically, we will need major sources of reliable, dispatchable, carbon-free baseload and intermediate power. Nuclear will be a major contributor, unless some other technologies offer better reliability and delivered power cost. Right now, that looks like a major challenge.
Bob Amorosi 8.7.09
Yes large central nuclear plants can be close to, if not are, the lowest operational cost source of power. One must ask why large numbers of new nuclear plants are not getting built yet at a time when alarm bells are sounding an urgent need for much more generation down the road in much of North America.
The answer is simple. The real problem is getting investors and / or governments to open their wallets up front to build them. Putting more energy efficiency into products and machinery and retrofitting residential or industrial buildings is also plagued by the same problem.
Ferdinand E. Banks 8.8.09
The nuclear renaissance has probably already started, since our political masters are apparently being told by a number of smart people what will eventually happen if it does not get started. But that doesn't suffice for me. What I want is for nuclear to be considered a public good, or maybe a public-type good, like streetlights and parks and police and armies, and if e.g. Wall Street can't provide the money then the tax payers will have to provide it. In the case of the US this should not be a problem, because if those two stupid wars that were won four or five years ago were officially declared over and done with, there would be plenty of billions available for the energy that American voters absolutely must have - although they seem to be a little vague on the details of this subject.
The other part of this 'thing' for me is found in the comment by Ed Reid. In the old days I quite simply would have stood outside the venue for the big talkathon in Copenhagen this coming december, and passed out some handbills with that message, along perhaps with a little ad hominen. But I don't do that sort of thing any more. And if I did do it I don't know whether I would do it there, because there are going to be some gigantic lies told about wind energy that would turn my delicate stomach - and probably send me racing to the Tivoli for a glass or two of that excellent Danish beer.
Fred, Why do you think that political leaders listen to smart people? Further, there would be plenty of money for nuclear except for the problem of limiting liability in the event of a catastrophic accident.
Ferdinand E. Banks 8.9.09
James, frankly I think that it is my duty - and yours - and most of the people publishing articles and comments on this site - to give advice to politiciians and their helpers, and if they don't take it and like it to keep giving it to them until they get the message. I don't agree with some of the people and ideas on this site from time to time, but i regard EnergyPulse as the first team. In fact from time to time I'm amazed that they haven't asked for my resignation.
A catastropic accident you say. Read the article by Rhodes and Beller. According to them there is the equivalent of a catastropic accidents every year as a result of the use of fossil fuels and the like, only instead of calling them accidents they are called progress.Admittedly, a bad conventional accident could take place at any time, but a little clarity my be useful here. According to what I read, Three Mile Island was a meltdown, but not a catastrophe; and fairly close to Sweden - in Lithuania - was a plant (Ignalina) which must have been one of the most dangerous in the world. I believe that I was the first person to suggest that it should be scrapped and that country should receive some big bucks for doing so - which may have happened.
John Droz, jr. 8.11.09
Mr. B: Good comments all on nuclear. In my experience the main reason for delays in US nuclear construction are: 1) archaic regulations, and 2) obstacles put in the way by so called environmentalists.
If you are writing a book I may have some data that might be of interest to you, so feel free to email me.
My online energy presentation also discusses nuclear quite a bit "www.slideshare.net/JohnDroz/energy-presentationkey-presentation". (My email address is there.)
Richard Vesel 8.11.09
I think we might be seeing a situation where the line from "A Field of Dreams" will apply...
"Build it, and they will come..."
Lots of designs on paper, lots of permits in place, lots of people wanting a positive result. But no plants built - is there anything under actual construction right now?
I think the industry sits back and waits for as much of an "incentive package" as they can get, but there is only talk of such in the halls of Washington. So nothing happens, yet.
I guess that's what happens when you try to save a billion or two on a new plant, in a private market economy...
One thing that I will suggest about the driver behind America's tremendous output and success in WW2, which you cite as monumentally impressive...
It was ALL public spending. The government bought and paid for every bit of output that we could deliver. Who wouldn't bust their behind to sell to so willing a buyer?
Right now, no one is filling the buyer's role ... no one is guaranteeing a market ... no one has the seemingly bottomless pockets to make the machine run.
I don't know the answer to this question, and rather than research it, I will just ask you here: Were the earlier Swedish, French and Japanese nuclear buildouts publicly or privately funded?
To me, such huge projects beg for the security (and typically the accompanying inefficiency) associated with publicly funded projects. Perhaps a workable model in the current time would be public funding for the buildout, and then selling the facilities to the highest bidder AFTER they have been proven to be reliable cash-cows. What do you think?
Ronald R. Cooke 8.11.09
There is nothing in the proposed House Energy Bill H.R.2454 that encourages the development of nuclear power.
USEC's loan guarantee application has been turned down by DOE. That apparently leaves America without a "up to date" domestic nuclear fuel production capability.
The storage site in Nevada for nuclear waste is being closed down.
Politicians routinely deride any thought of reprocessing nuclear fuel.
Influential environmentalists don't want nuclear power because it is "dirty".
Additional nuclear electric power is a fantasy, and will continue to e a fantasy until there is a shortage of electricity. Look at what happened in California as a political policy model.
Don Giegler 8.11.09
Gee, Fred, your enthusiasm knows no bounds. USDOE EIA 2008 Electric Power Annual says average nuclear power plant operating expenses for major U.S. IOEUs inflated from $0.0182/kWh in 2005 to $0.0200/kWh in 2007. Are you sure we should continue on such a reckless trajectory? 2009 EPA with 2008's damages should appear sometime this October.
Don Hirschberg 8.11.09
Phooey. Nothing here to carp about.
James Carson 8.12.09
Perhaps you should consider that there is no shortage of generating capacity in the US and Canada at present. Yes, I know that there are shortages in NYC and the mid-Atlantic. Nevertheless, we are awash in excess capacity nearly everywhere else, and the shortages could be addressed with added transmission.
James Carson, RisQuant Energy
Ferdinand E. Banks 8.12.09
I'm not worried at all Don G. and folks. I woke up this morning to read on the front page of my newspaper that someone had burned down a school in a Stockholm suburb, and more than 500 children will not be able to begin school there next week. Yesterday a couple of policemen with H-K submachine guns were on the front page, prowling through some kind of structure in Gothenburg.
When Sweden constructed those 12 nuclear plants in 13 years, things like that simply didn't happen, What has gone wrong here is that there has been a cultural meltdown, and instead of doing something about it the prime minister and his moronic foreign minister are concerned about what is taking place on the outskirts of Kabul.
About this abundance of generating capacity in the US and Canada, I say great. That's another problem that I don't need to worry my pretty head about, and so I can sleep soundly at night And Richard Vesel, I agree that the key thing where energy is concerned is that it appears BEFORE it is needed, and if those sweethearts on Wall Street will not mobilize the necessary capital, then the government will have to do it. In Sweden the government made the necessary arrangements for the nuclear plants, and then - somehow, I don't know - the private sector took/bought a big slice of the pie. Vattenfall, the largest Swedish utility, is owned privately AND by the government. In the old days complete private ownership would probably have been best, although after deregulation all the crooked tendencies in the management appeared. As for the crooked tendencies in the government, they are just as bad - or worse - than in the private sector, but that is what the voters get for not protecting their interests.
Richard Vesel 8.12.09
Perhaps YOU should note that the excess capacity we enjoy at this particular instant is due to the recession and generally reduced economic activity. Should we assume that you see this as a long term solution for our energy picture - keep the economy restrained to insure we have enough capacity??? Silly as though that thought may seem, you should consider that even with that "plan" - generation plants will eventually age and have to be taken offline...
I have to assume you are being facetious in your quoting operating expenses of nuclear to be a mere 2-cents per kwh, right? Sometimes one has to wonder in these forums...or maybe I just have a problem differentiating sarcasm from dumb comments (no personal reference intended).
We do have a past model for public funding of a large power system buildout here in the states - the Tennessee Valley Authority (TVA) - I am sure you know of it. The following is courtesy of Wikipedia:
================================================================ "The Tennessee Valley Authority (TVA) is a federally owned corporation in the United States created by congressional charter in May 1933 to provide navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee Valley, a region particularly impacted by the Great Depression. The TVA was envisioned not only as an electricity provider, but also as a regional economic development agency that would use federal experts and electricity to rapidly modernize the region's economy and society.
The TVA's jurisdiction covers most of Tennessee, parts of Alabama, Mississippi, and Kentucky, and small slices of Georgia, North Carolina, and Virginia. It is a political entity with a territory the size of a major state, and with some state powers (such as eminent domain), but unlike a state, it has no citizenry or elected officials. It was the first large regional planning agency of the federal government and remains the largest. Under the leadership of David Lilienthal ("Mr. TVA"), the Authority became a model for America's governmental efforts to modernize Third World agrarian societies." ================================================================
TVA owns and operates the following generation mix - hydro, coal-fired, nuclear. It is a pretty well run organization at this point, not perfect mind you, as any large utility organization always has its problems.
I personally think that model would work again, and I offer the following mechanism. Sell TVA (or parts of it) to the private sector, and use the proceeds ONLY to fund a new set of TVA-owned nuclear units. Build those between now and 2020, and sell off at least some of that new capacity for a profit (presumably). On a more distributed scale, a Federal Green Power Authority with a New Energy charter, and a specificied CO2-free generation mix, might be the right thing to do now... It would show a clear commitment by the administration to the US, backing its verbal commitments with action, and give the world a clear signal that this country IS taking action on both the energy and CO2 mitigation fronts.
We wouldn't necessarily have to privatize TVA assets to fund the program, but it would keep the neo-con public-program-funding critics a little quieter.
Don Giegler 8.12.09
Far be it from me, RW. Bye the bye, the same tired old statistics indicate fossil steam generated electric kilowatt-hours advanced from $0.0277 per in 2005 to $0.0309 per in 2007. Those generated by gas turbine, internal combustion, photovoltaic and wind made it from $0.0589 per to $0.0621 per over the same interval.
As an aside, good ol' Wendell Lewis Willkie probably would be tickled by your plan to sell TVA to the private sector. Don't believe he qualifies as a neo-con, though. He checked out 65 years ago.
James Carson 8.12.09
Richard, your snappish response was ... let's just say not appreciated.
The US has been awash in excess generation for several years, LONG pre-dating the recession (since 2004-05) and the surplus will persist long after it has ended. You don't seem to be aware that, from 1998 through 2004-05, the US built an enormous amount of new generation capacity, most of it natgas fired. Further, I am not sure that there is firm evidence that the recession has actually lessened power demand. Yes, demand is down this year, but we have also had a particularly mild summer in the east and midwest.
Please examine the document (link below) entitled '2008 Long-Term Reliability Assessment'. This is the annual document that grownups reference. Table 13c on page 70 (pdf page 75) shows the 2012 Summer Margins. The far right column shows the NERC standard while the second to right shows the expected 'Total Potential Resources Margin%'. There is exactly ONE sub-region that is expected to be in deficit, the region around Las Vegas. Ten years ago, most of the US was in deficit three years out. The 2017 table reflects similar expectations.
James Carson, RisQuant Energy
Jeff Presley 8.12.09
Fred, Another Gold-Star article, thank you. The most telling point in it was that Sweden managed to build 12 reactors in 13 years. I believe in America today we couldn't build ONE reactor in 13 years for the following reasons:
1) NIMBY lawsuits 2) BANANA* lawsuits 3) EPA lawsuits 4) Sierra Club lawsuits 5) Everybody else lawsuits 6) Nowhere to store spent fuel (included in lawsuits above) 7) Lack of equipment (virtually EVERYTHING will need to be imported) 8) Lack of funding 9) Lack of insurance 10) Lack of worker expertise 11) Lack of management expertise 12) Lack of political backing and will 13) Lack of vision
Richard Vesel 8.12.09
Since we're playing a game of grownup poker, I see your NERC reference, and raise you one back...
"While these figures indicate some improvement in capacity margins over the 2006 forecasts, certain areas will still need additional supplyside or demand-side resources in the near-term to ensure adequate margins."
Additionally, are we currently adding a net 10% per year to our capacity? The trail of projects that *I* happen to follow says not, and it hasn't been happening since 2008, when many projects were delayed or cancelled.
Regards, Mr. Snappy
James Carson 8.12.09
Ummm.... So your point is that there are some localized problems? I do not disagree.
Argue with NERC, then, about the growth rates. I am merely citing the experts.
We can only hope that some of these projects are 'delayed or canceled', since we do not need them and are already saturated with capacity. Keep in mind, however, that any project that is expected to be onstream in 2012 is already well on its way.
Jeff: I would add, "Lack of need".
Jeff Presley 8.12.09
Now now James and Richard, be nice or Mr self-appointed-wannabe-moderator will complain. ;)
Today's WSJ article should be both illuminating and timely to this discussion. A relevant quote from said article: The falloff in demand represents a reversal of what has been one of the steadiest trends in business. For decades, the utility sector could rely on a gradual increase in electricity demand. In 45 of the past 58 years, year-over-year growth exceeded 2%. In fact, there only have been five years since 1950 in which electricity demand has dropped in absolute terms. But this year is shaping up to have the sharpest falloff in more than half a century, and coming on top of declines in 2008, could be the first period of consecutive annual declines since at least 1950.
The obvious reasons are the recession and the 3 fold reduction in natural gas prices, which as noted by Mr. Carson above are a large part of the new capacity mix.
Jeff Presley 8.12.09
James C. The "need" may not be new generation, but replacing current generation. How old are some of these plants today? How much duct tape and bailing wire will keep them running? What about the coal and CO2, NOX and SOX produced? Don't we want to fix that?
Richard Vesel 8.12.09
I used to live adjacent to the little community of Perry, Ohio, where First Energy has one of what should have been two large BWR units. Perry has enjoyed a remarkable gain in community standard of living due to the tax revenues coming from the plant - even AFTER the state of Ohio usurped part of that revenue and said the rest of the state should benefit from it, too. Downwind and downstream of the plant, less than two miles, is a delightful park and beach on the shores of Lake Erie, where my family and I have recreated many times. In the eight years I lived in the area, I heard not one single compaint from any local citizen about the nuke that was literally in their backyard.
A really good PR campaign on the part of industry would surely find SOME communities who would invite a facility to be located there ... or we could simply co-locate new facilities on property not used by original projects. Those were presumably located well in the past, and Perry 2, for example, could yet come to be. I had some past connection to the WPPS program, and formerly sat on a standards committee of the ANS (in the early 80's). Even then, as the industry was entering its comatose phase, we were still trying to reduce costs by creating equipment safety qualification standards that could be reused for equipment at multiple sites, rather than require each site to have its own specific equipment qualification standards. That alone would have cut many percent out of the cost of building a new unit.
I hope to see some spiffy new units online, before I leave the energy business and retire to some tropical island ... ;-)
Ferdinand E. Banks 8.12.09
Let's go back to my favorite 'mantra' for the Xth time. The important thing is not to come up with new ideas: there are always plenty of those around. Instead it's necessary to get rid of bad ideas, and to do so as quickly as possible.
As Ronald Cooke indicates, Washington appears to be full of bad ideas, but I'm not sure any longer how far they are going to get. There are some very smart people in or associated with the US government now, and I wonder if they are really and truly prepared to let politically correct dummies ruin the country's energy future. Steve Forbes is NOT my favorite human being, but unless I am mistaken he once suggested that regardless of what Mr Obama said, he is actually in favor of nuclear, and will support the introduction of more capacity when he thinks that the political backgound is right..
More nuclear - what does that mean? I can't answer that, but I can say that it doesn't mean a reactor on every street corner. The smart people seem to accept that the right energy solution is diversity, and at the heart of this diversity some extra nuclear capacity probably makes economic sense. The issue then reduces to when that capacity should be constructed, and I wouldn't be surprised to find out that the correct answer is as soon as possible.
Edward Reid, Jr. 8.12.09
Much of the capacity currently relying on " duct tape and bailing wire" could rapidly disappear if the Administration decides to impose a "command and control" approach to mercury emissions reductions. Most of the older, smaller coal plants would probably not be economic sites for 90% mercury reduction systems.
That capacity could also disappear, rather than be converted to natural gas firing, if the fuel switch triggered NSPS.
That could have some very interesting implications for future capacity planning.
James Carson 8.12.09
Jeff: I pointed out that we have built an enormous amount of new generation. The paint is hardly dry. Also, the worst generators have already been retired, refurbished or repowered. In particular, there has been a very active effort to refurbish coal generators to modern standards.
I reiterate my disagreement that there is any evidence yet that the falloff in demand has much to do with the recession. That may well be the case, but we need to consider that mild weather may have been the overwhelming factor. Also, I suspect that some of that falloff may not be due to reductions in demand per capita, but rather that immigration flow has slowed.
As for SO2 and NOX, we have made great progress over the past thirty years. While electricity consumption has risen by 80%, absolute pollution has dropped by over 40%. As to the Congressional crap shoot on carbon, who knows?
Banks: I quite agree that getting rid of bad ideas is a good idea. Let's start with the notion that there is any general shortage of generation in the US. I disagree that there is any particular urgent need to add generation. Transmission is another matter.
bill payne 8.12.09
What are your thoughts on Iran's nuclear electricity generation facilities?
Jeff Presley 8.12.09
Richard. I have my own experiences with WPPSS (properly called Whoops). In fact I had a friend from high school who walked away from a full ride scholarship to CalTech because he opted instead to get a job as a union pipe fitter at WPPSS. Back then (circa 1978) he was making the ungodly sum of $35/hr as an APPRENTICE, which when you factor in inflation is like making $250/hr today. Realize this was when minimum wage was $2.15/hr. He bragged to me how little work he and the crew would do in a day (measured in inches, not feet), and how he intended to retire on the job. WPPSS defaulted on the bonds because they were no closer to finishing those 5 plants in '83 than they were in '78. 15% of my utility bill still goes to paying the interest and principal.
The idea for building WPPSS in the first place was that the aluminum industry, attracted to the northwest because of cheap electrical power rates, would be the perfect built-in customer. The problem was Alcoa, and Kaiser had no interest in the kinds of rates that a factor of 10 cost overrun was going to deliver. WPPSS was considered a quasi-government entity, something like Fannie Mae. The difference is, it WAS allowed to fail. My fear is that if we WERE to build nukes again in this country it would be another boondoggle, with otherwise smart people deciding to defraud the government and "work" at jobs they can never be fired from, indefinitely. So perhaps Mr. Cooper was right, given incompetent management and political meddling, it is entirely possible IN THIS COUNTRY that nuclear plants will cost $10K per kwh of capacity.
Ferdinand E. Banks 8.13.09
Well Mr Carson, it could happen that it's you against just about everybody, because a lot of very serious people in the US believe that more electric capacity might be useful, and soon.
Of course, your argument that it might not make ECONOMIC sense to build a nuclear facility if you can satisfy your electricity requirements with a new transmission line can't be dismissed. The decision makers in Florida do not seem to have bought this option however, since they have given permission for the first reactor to be constructed in their state in 33 years..
Maybe that reactor will eventually be built, and maybe not, but it could be that the folks in Florida are right - despite all the sun that is available - and you are wrong. It might also be so that they feel that there is not as much natural gas in the U.S. as you believe, and so they don't want their fortunes tied to a resource that might be very expensive in 20 or 30 years, assuming that the alternative to nuclear is gas..
Bill Payne, years ago I heard a sensible economic argument for constructing nuclear installations in the Middle East, to include Iran, although I don't remember the details, and I am not certain whether that argument would be applicable now. However the issue at the present time is not economics but some applied game theory, and unless I am mistaken the Strangeloves at Israel's Rand Corporation - or Bland Corporation, as it was called in the film - would have a problem approving the presence of facilities for the large scale enriching of uranium in e.g. Iran. Of course, Iranians are some of the most intelligent people in the world, and some of them know a lot more game theory than I do, but whether their logic would have any effect on the movers-and-shakers in their country is uncertain.
To my way of thinking the only solution that makes any sense here is for the US to become heavily engaged, where by the US I mean the present government, and not a government like that of George W. and Condoleeza, whom I see as responsible for spoiling the opportunity to get the North Koreans to act reasonably in nuclear matters, just as I hold Bill Clinton responsible for the war in Iraq. And if you think about it, financially and socially that war is the equivalent of the worst single nuclear disaster imaginable.
And Jeff, incompetence seems to be the real thing these days in a lot of countries, and not just the Big PX. But what can you expect? The first law of nature - the one in which self preservation is mentioned - seems to be going out of fashion. For example, I still haven't figured out why so many elderly Swedes decided that their money should be sent to Brussels instead of the hospitals that will cure their ailments, and which they are constantly bitching about now.
Bob Amorosi 8.13.09
"Well Mr Carson, it could happen that it's you against just about everybody, because a lot of very serious people in the US believe that more electric capacity might be useful, and soon."
I have to agree with professor Banks here too.
Imagine what will happen if eventually there are 100 million Plug-In-Hybrid Electric Vehicles on American roads as is predicted by some. Most will be pluggable to recharge at any time and at any place there is a standard 120VAC outlet. So don't fool yourself, they will be recharging at random times during the day all day long, not just overnight when excess capacity exists.
An electric vehicle charger is typically going to draw hundreds of watts, say for argument's sake on average a kilowatt each, times say 10% of 100 million vehicles charging at any given time. That's 10 Gigawatts of continuous extra demand spread out across the whole country, which BTW can/will be higher at some times when more than 10% are recharging. For example some utility people are afraid that when many commuters return home from work in late afternoon during peak demand hours, they will need to charge up in order to use their vehicles again later that evening. The resulting spike in peak demand could be very substantial.
My numbers are obviously not based on any hard data but the total extra demand on the grid can easily be somewhere in the Gigawatts. So the excess capacities in most places in America today won’t last very long Mr. Carson. And if you think Americans won't want to buy PHEVs because they love their gasoline cars performances much better, just wait for the next oil price hikes that send gasoline prices into the stratosphere again and watch how fast Americans change their car buying habits.
Kenneth Kok 8.13.09
Mr. Carson you might also consider that the proposed Waxman-Markey energy legislation also aims to reduct the CO2 production in the US to 80% of the 2005 level by 2020. This will require the replacement of about 20 Quads of fossil energy by sources which do not produce CO2. Replacing 20 Quads will require the equivalent of 750 power plants producing 1000MW apiece. These estimates are based on DOE EIA data.
James Carson 8.13.09
Banks:: I cited the NERC '2008 Long-Term Reliability Assessment' issued last October. It is authoritative, argue with them. The numbers say that we have more generation than we need. The real question should be: which projects should be terminated or delayed. THERE IS NO SHORTAGE OF GENERATION IN THE US.
As for Bob's 100mm electric vehicles, where are they? We could chase our tails for months arguing hypotheticals.
Kenneth: Your point is well taken wrt Waxman-Markey. It may be a game changer, or it may be sound and fury without consequence. We do not know since the bill has not passed.
Bob Amorosi 8.13.09
Just about EVERY car manufacturer is announcing introductions of hybrid or electric vehicles within the next couple of years.
"As for Bob's 100mm electric vehicles, where are they?" the answer is... coming to a dealership near you and soon.
Richard Vesel 8.13.09
(does a General Comment outrank a Private Remark?)
A recession plus a moderate winter and summer have temporarily cut our energy demand. This is a happy conicidence for some, and provides a one year reprieve to let us consider further how to refine our response to what we know with almost certainty what will be in our future energy needs picture. I think it is a mistake to let one or two year blips or tips in demand overshadow long-term prognistication and planning. Knee-jerk responses to crisis are always WAY more expensive then well-reasoned and executed solutions. Having a general capacity margin of at least 15% is typically the accepted value for maintaining a reliable grid. To me, this means 15% capacity on an upper 1-sigma demand day, not in the mean, or down in the dirt.
This 2008 article may be a bit "over the top", but does contain substantial information on the need for new & replacement capacity...much of it coming direclty from NERC itself:
============================================================ Rick Sergel, President of the North American Electric Reliability Corp., the agency that oversees the nation’s power grid, said, “We’re to the point where we need every possible resource: renewables, demand response and energy efficiency, nuclear, clean coal — you name it, we need it. And we especially need the transmission lines that will bring the power generated by these new resources to consumers.” ============================================================
Regarding all those plug-in hybrids - These are ideally suitable for recharging by on site solar arrays at malls and other large sites. I do take issue with those planners who see the PIH's as some sort of reserve for leveling out daily demand peaks. I see that charging demand from these vehicles coming twice in a day ... once after the morning commute, where charging demand will coincide with normal peak demands, and after the evening commute, adding to end of day demand between 6-10PM. Smart chargers at home could manage the latter, but the mid-day recharging has got to be compensated for in another way, otherwise they will be merely adding to the local demand.
By 2020, I don't see 100mm PIH here in North America, but I can easily believe 30-50mm. Regular hybrids have been around for ten years, and don't have that kind of market penetration yet, but I feel the performance of the Tesla and upcoming Volt will start us down a vigorous PIH market path. I just warn people to be very skeptical about this concept of "rolling storage" to back up the grid. I think it's a bad model front to back.
Base loaded nuclear, augmented by a good, distributed mix of other sources, is the smart longterm way to go. It was true in the 70's, and even more true now. Managing nuclear issues in third world areas is going to be a lot easier if we promote technology which does not create weaponizable byproducts, and promote oversight, processes and procedures which manages the waste properly... in parallel with our efforts to promote stable and rational governments in those same places.
Jeff Presley 8.13.09
I think the problem here is a matter of semantics. Carson is looking at generation CAPACITY, while the rest of us are looking at generation period. In fact, contrary to his supposition, old coal plants are still running all over this country, I've toured several of them. The reason is obvious, they are BY FAR the most profitable energy producers in the US. I've been quoted 3 cents per kwh for old coal power as a retail customer. New gas plants are there to fill the peaks and valleys and are doing a bit more today because of the cheap price of natgas. But when the price explodes again, don't be looking for those gas plants to be running 24x7.
Way back in school I had an economics class where the teacher used utilities as the perfect example of marginal production. He had the stats that showed power consumption went up steadily about 1.5% per year. He also showed how expensive new production was, so utilities would do all kinds of back-flips to avoid having to expend all their capital to add another 10-15% capacity, just to meet that 1.5% growth. I've never seen Banks' textbook, but I would hope it has nice charts and graphs that illustrate this point.
Just like all MIN/MAX equations, the interesting stuff happens at the edges, either a Min or a Max. How comfortable can a utility be sitting at 101% capacity versus 110%? As long as the grid is strong and you can buy excess power from that utility down the road, you're probably fine. But what happens when THAT utility is at 101% too? If 100 utilities are at 101% some fine mathematician can add all those 1's together and say we've got 100% additional capacity in the system. His numbers are right but his reality is wrong. Utilities need reserves for a reason. Or should we run them like banks, on "borrowed" power? We've all seen how THAT worked out.
Don Giegler 8.13.09
Interesting link, Jeff. Are you sure that you and Pope haven't got the source of that extra 15% on your bills mixed up? Could it be for Energy Northwest's "more significant investments in wind and solar energy"? Then too, there is that embarrassing Columbia Generating Station sitting there cranking out a reliable 1100 Mw(e) since 1984. Looks to me like your erudite, chiseling fitter friend must have gotten past a few inches a day after all. You might want to defend that part of the economic disaster he helped create. After 25 years on the books, it's likely to become what those cursed financial buzzards call a "cash cow". As for Pope, anyone who conflates WPPSS' "failed tests of economic principles and hardheaded business practice" with nuclear energy economic failure might charitably be called confused. The country and long-term construction projects, in particular, suffered from near hyperinflation between 1976 and 1982. Perhaps one could conclude that it would be better to initiate long-term projects like the hydrostations in the the Northwest during deflation. IAM and IBEW might be more reasonable. Though, after their experience with the UAW, GM and Chrysler bondholders might disagree. Incidentally, the monotonous Electric PowerAnnual statistics show IOEU hydrogeneration operating expenses surged from $0.0089 per kilowatt-hour in 2005 to $0.0129 per kilowatt-hour in 2007, a testament of sorts to those huge capital expenditures made 50 to 75 years ago.
You might want to keep the difference between power and energy a bit more distinct. $10K per kilowatt-hour is a mite high.
James Carson 8.13.09
BobA: We are a very very VERY long way from substantial market penetration of electric vehicles, never mind 100mm. I might pay attention when actual annual US sales reach, say, 1mm units. Hint: Worldwide sales are less than half that.
RichardV: My point is based on the authoritative analysis of long term capacity performed by NERC, not on any "happy coincidence" of economy and weather. Why are you being obtuse?
JeffP: I am well aware of the "old coal plants" running all over the country. I am ALSO well aware that many of them have already been refurbished or repowered and most of the rest have been scheduled. Very few are scheduled for decommission.
As for your old econ classes, there is nothing relevant that what you were taught concerning utilities prior to 2000. As for your final paragraph, you are a decade out of date. Your point is a non sequitur. In most of the US, utilities do not directly supply the power they sell to consumers. All energy flows through large, regional ISO/RTOs based on security constrained economic dispatch.
Bob Amorosi 8.13.09
Electric vehicle manufacturing costs are gradually coming down and performances are gradually going up. Combine this trend with the looming pain in consumers' wallets as soon as the next oil price spike boosts gasoline to well over $4 US a gallon, and with the sizeable direct consumer tax subsidies that the feds are offering on all electric vehicle purchases, then watch how fast consumers can/will change their buying habits - much faster than you can imagine. Witness how quickly gasoline vehicle sales plummeted by the millions in the US during the year merely as a result of the recession and last year's oil price spike.
Toyota ALONE is shooting for 1mm hybrid electric sales next year.
James Carson 8.13.09
BobA: You may not have noticed, but the rest of the energy sector, power included, took the same ride as oil, at least wholesale. Interestingly, as for the 2009 oil run up, that has not happened. Yet.
As for Toyota alone doubling or tripling the industry's electric car sales in one year, I ... let's just say I am skeptical. I suspect that natgas vehicles are more likely to supplant gasoline.
Don Hirschberg 8.13.09
In only a few days I have learned a great deal:
The UN says we have less than ten years to avoid irreversible climate change. (A little hard to build thousands of nuclear plants in that time.)
A think tank in the UK warns us about imminent $200 oil.
The head Wave Theory guy says oil is going to go down to $4 to $10 a barrel.
Hooray, shale has solved our natural gas problem for a hundred years.
Oops, fraccing of shales may not be as easy as advertised. (Couple days later.)
The Volt will get 340 mpg and is on schedule.
We still have problems with the Volt. (One day later.)
China says they make very little CO2 per person. Therefore others must reduce their emissions by so agreeing in Copenhagen.
China announces they will increase their coal production 30% in the next 6 years. (This INCEASE world would raise world coal use by about 5%)
Indian Industry says they cannot be productive when they are only getting power 5 or 6 hours a day. (They are the number 3 coal user, need many more coal burners.)
Nancy Pelosi tells us natural gas is a good substitute for fossil fuels.
The production of Canadian tar sand oil is not really so dirty after all.
The coal industry in the UK will revive and prosper by making gas in situ far underground.
Seems to be resolved: We must have a smart grid, and quickly, to increase energy use efficiency.
Is a smart grid worth the its cost in developed countries? (EnergyPulse)
So what will those worthies tell us to do from Copenhagen?
Don Hirschberg 8.14.09
I have just found information (doe.gov) that tells us China’s coal production is far more than what I based my comments on above. According to this information China produced 2.795 billion short tons in 2007. The world used 7.080, that is, China used 39.5% of world coal.
If, as they claim, they are going to increase coal production by 30% in six years that means they are going to add 0.839 billion tons per year. 0.839 billion tons is 11.8% of 2007 world production. I suggest there is no way the rest of the world can reduce CO2 to offset what china is increasing, much less to even dream of decreasing world CO2 emissions.
I have no idea how accurate the data are, but I did not want to let stand without caution what I posted above.
Ferdinand E. Banks 8.14.09
In case you didn't know, or didn't want to know Mr Carson, this year alone nine coal plants have been cancelled in the US, with a potential capacity of about 6.5 MW. I feel more or less sure that there are some other items that have been planned, and may or may not have been cancelled.
That doesn't sound to me like a country with excess generating capacity.
IIt seems like only yesterday the population of the US reached 200 million, and now it's 300 million; but they say that it is going to 400 million. I would suppose that this jump will not take place all at once, but gradually, and assuming that these new Americans are not going to live in pup tents or their cars, their places of residence will have to be heated. That means new generating capacity.
And thank you Don. Your observation about the output of coal in China goes into the first paragraph of a section on coal in my new book.
Edward Reid, Jr. 8.14.09
China apparently has some secret new technology, since they consume 39.5% of world but produce only ~20% of global CO2 emissions. Someone call Waxman and Markey and let them know.
The cancellation of the nine coal plants is more a reflection of a country with excess environmental activists and plaintiffs' lawyers than of a country with excess generating capacity.
Before you write the first paragraph of the section on coal in your new book, check out the inconsistency I noted to Don above. If you can "out" the secret new technology, it could make your new book a NYT non-fiction best seller. :-)
Edward Reid, Jr. 8.14.09
Should read "39.5% of world coal". Ugh!
James Carson 8.14.09
Banks: Do you suppose that those nine coal plants were canceled because the planners concluded that they were not needed? Your point reinforces MY point. Fyi, NERC would not have included them in their 2012 planning.
Jeff Presley 8.14.09
Don, Yes, the kwh was a typo, should have said kw. But you knew that. Thanks for the correction. As to the rest, I'm more aware than you think, WPPSS' successor corporation was my customer for years in my previous business and I've been to their facility dozens of times. That plant got finished because they canceled the others and more importantly fired the incompetent management and contractors. They were a MUCH better organization in bankruptcy than before.
You misunderstood the thrust of my post. I'm all in favor of nuclear, done right. The previous posts were leaning towards government involvement in construction, and at least in THIS country, that scares the hell out of me. I've dug around a bit and found this more-balanced history of WPPSS. Interestingly, and an aside, the WPPSS bond failure that took 13 years to wend its way through the courts prompted some smart guys to figure out a way to INSURE these kinds of activities, which directly led to AIG FP (Financial Products), which directly and indirectly led to our current economic meltdown.
Bob Amorosi 8.14.09
I'll bet those nine coal plants in the US were cancelled because they were viewed as currently not needed in light of recent demand decline in the recession, and because of looming carbon taxes or cap&trade making them much less financially attractive.
A few years ago Ontario mandated to be completely rid of all coal plants by 2014 or so for the sake of the environment, and the impact their emissions have on respiratory illnesses and bumping up health care costs. And even if this didn’t happen, Ontario recognizes the need for much more generation down the road and was planning to add some new large central nuclear, but this has all been put on hold indefinitely. Aside from pulling teeth to get government or investors to open their wallets to build large central nuclear, the recent demand decline has given them another reason to do delay and do nothing for now.
Ontario however is still pushing forward with building some new NG plants plus a heavily subsidized push to build new solar and winds farms, while the rest of the generation shortfall is expected to be partially met by throwing public money at consumers and businesses to achieve large conservation and efficiency gains.
Jeff Presley 8.14.09
Fred (and JamesC) I know about those 9 coal plants and it has little to do with projected demand and MUCH to do with current politics. A good friend of mine is the project manager on one of them, and it was converted (brand new) from coal to nat gas so they could get past EPA and insurance issues. They had already installed all the scrubbers etc. it was state of the art for coal, but of course nothing for CO2. The insurance companies couldn't come up with an algorithm to deal with potential CO2 legislation and since it was a new plant, there was no grandfather protection. The power IS needed, Fred had his own typo, he meant to say GW not MW.
James, you're deluding yourself if you believe in the whole McKinsey: MarkCo, DisCo, GenCo and TransCo model. That was SUPPOSED to happen 10 years ago, but the reality hasn't quite worked out that way. Yes, billions in shareholder wealth has disappeared and utilities stopped being the safe bet for widows and orphans to invest in, but reality still has a way of coming around and biting those "smartest guys in the room" in their less smart bodily appendages. That whole "energy trading" dream scenario went out the window with Enron. If you have reliable power today, thank your local utility. If that utility is part of a bigger consortium, so be it, it is still a local utility the rest is just stock market.
Ferdinand E. Banks 8.14.09
As I understand it, 5 years ago about 150 coal plants were on the 'to do' list, and only 60 are left. Will any of that 60 get built. Well, I think so. Maybe as many as 9. So somebody, somewhere, has fooled the dumb capitalists and investors into thinking that more capacity is required. Makes a fella sick in his tummy.
James Carson 8.14.09
JeffP: As to whether those projects were also canceled because of politics, I suspect you are right. I do know, however, that, in 2012-2017, we will continue to be awash in excess capacity, and that excess capacity played a key role in their cancellation.
As to your second paragraph, the disaggregation of the wholesale power sector has happened, and continues to move forward, not backward, despite Enron. Since Enron imploded, New England implemented their day ahead market (2003), Midwest ISO implemented both real time and day ahead markets (2005). California ISO implemented both in 2009. SPP implemented a balancing market in 2007. ERCOT, NYISO and PJM markets predated ENRON. You are deluding yourself if you think it hasn't or won't.
Your point that "the rest is just stock market" is nonsense. ISOs are large, sophisticated operating companies, not "consortiums". I don't know what McKinsey had in mind, but I do know what has happened. Fyi, there is more power trading today than when Enron was at its height. Unfortunately, the banking crisis has adversely affected the sector.
Jeff Presley 8.14.09
James. Again you miss my point. There has ALWAYS been power trading of one form or another. I personally helped set up an inter company pool for this region that was the first in the world to run on the Internet (before that they just used telephone, unfortunately that got too slow). Left to their own devices, engineers just "borrowed" power to deal with fluctuations and paid it back to help their brethren when they needed it. Once the accountants and lawyers got involved, we got "power trading", and Enron among others.
Here's where the delusion comes in. Do you believe setting a price and having economic penalties for not delivering power has much to do with PRODUCING power? Think of it another way, so-called speculators can play in this market just like the oil markets, but it is just numbers on paper to them, they have nothing to do with production or delivery. When the stinky stuff hits the proverbial spinning object, those players aren't going to be helping matters, and let's not forget the real time nature of electric power. They might just take their lumps and head off to another poker table, but meantime power isn't getting produced where it is needed and customers are sitting in the dark. Ask any engineer on this form how much "slack" they like to have in their designs, 1%, 10%, 50%? If you're comfortable with a system that is operating with a 2% buffer or less, enjoy.
James Carson 8.14.09
JeffP, Prior to the implementation of FERC Order 889 in 1996, it was practically impossible to buy or sell power more than one hundred miles away. There is FAR FAR FAR more power trading today than there was years ago. Today, power is readily traded a thousand miles away. From your second paragraph, I take it that you don't believe in markets. We will have to agree to disagree.
Jeff Presley 8.14.09
Ok James, so PG&E sells FP&L some power. How exactly does it get there? Does it EVEN get there? I'm talking electromagnetic waves here, not numbers on a computer screen. You know, and I know and every engineer here knows that it does NOT get there at all. Given that information, what precisely IS being traded?
I believe in REAL markets trading REAL goods, not imaginary markets trading imaginary products. THAT is what has gotten the world into the financial mess it is in today. Dig deep into "synthetic derivatives" as I have and you'll know exactly what I mean. The further removed from reality a market becomes, the more dangerous it becomes.
Don Hirschberg 8.14.09
Did they ever determine how many angels can dance on the head of a pin?
James Carson 8.15.09
How such a transaction works when PG&E sells FPL power depends on where you are. Since you reference PG&E, I presume you mean California ISO. I am at a bit of a handicap because I am least familiar with CAISO. Let me try anyway and fill in a few details.
PGE and FPL execute an on peak deal for 50MW for September 2009 for a particular locational marginal pricing location (aka LMP), say SP15. (I presume without checking that the SP15 has been defined by CAISO as a zone.) This particular deal is not exchange traded on ICE, it is bilateral under a standing ISDA agreement with a power and credit annex. This is about as vanilla as it gets.
PGE sells and FPL buys at some price, say today's ICE closing price of $33.95. This is a FINANCIAL deal only that then settles on either the real time price or the day ahead price as specified in the contract. Settlement means that after the month concludes, the accountants tote up the settlements hour by hour and determine who made money and who lost on the particular deal, and money is transferred. These prices are determined and published by CAISO hour by hour throughout the month.
Whether some PGE generator actually delivers energy into its buss during those on peak hours depends entirely on whether they are dispatched by CAISO. The physical power never flows from PGE to FPL. PGE sells the physical to CAISO and FPL buys the physical from CAISO. Any trade they do is a financial trade that uses the ISO published prices for settlement.
As for trading "real goods" in real markets, there is nothing different in principle between how power trades and how wheat or gold has traded for centuries. Commodity trading has long been based on standardized contracts. In addition to being a playwright, William Shakespeare was, himself, a wheat trader who well understood this.
In fact, the power markets today are more grounded in "reality" than what you described because the ISOs are very concerned with the physical flows and constraints of the transmission system. Their dispatch models work very well and have substantially improved efficiency.
The arguments you have made about derivatives markets have been made since they began. Are they perfect? Of course not. Nevertheless, to deny that they are useful and, on balance, contribute substantially to economic efficiency, is sheer ignorance. True, engineers know a thing or two, but so do economists.
Ferdinand E. Banks 8.15.09
Mr Carson, if you want to claim that derivative markets have contributed to the efficiency of physical oil, gas, copper, pork bellies, and the like, I agree whole heartedly.
But nobody is going to convince me that derivatives and 'models' have made the electric markets in e.g. Scandinavia more efficient. How 'models' got into this I don't know, and neither does anybody else. I remember asking a brilliant student who went to the US, and stayed there , what he thought of NORDPOOL - the Nordic electricity exchange. "Just a scam," he said.
Maybe things are better elsewhere, but before his boss told him what a horrible person I am, a very smart man in this country told me that the electric exchanges he had visited were little better than criminal enterprises.
Don Giegler 8.15.09
Certainly agree that the "...more-balanced history of WPPSS..." reflects what was experienced 35 years ago. Those of us working on an HTGR at Ft. St. Vrain near Platteville, CO at the time discovered that FOAK meant encountering and dealing with much of what was experienced at WPPSS and then some. The 1995 decision to demolish unit 5 leftovers at Satsop is interesting. The 2000 Grays Harbor Community Development Corporation photo in the less-prejudiced history shows substantial remaining structure. Was there an attitude adjustment? Understand that such occurred at TVA's Bellefonte site.
Jeff Presley 8.15.09
James, Thank you for a very thoughtful response. Unfortunately although it shows me that you are likely a trader (or were), it doesn't solve my problem with the system. Your key statement says it all right here: Settlement means that after the month concludes, the accountants tote up the settlements hour by hour and determine who made money and who lost on the particular deal, and money is transferred
Yes, it is a very fluid system, but no this isn't one big lake (as McKinsey would have us believe) with lots of inflowing and outflowing streams. I admit lots of money can be made, but again, it is just another form of gambling. Here is an oversimplified but approachable description of synthetic derivatives. MUCH of the power contracts bought and sold today can be considered synthetic, and while they have a hedging component, they produce misleading statistics, stats I believe that have mislead you.
Don, I Google-mapped Satsop, WA and looking at the satellite photos it appears the cooling towers are still standing (they weren't finished) and some buildings in the neighborhood seem to still stand. Maybe Energy Northwest decided they had better uses for their money than tearing down derelict buildings. It is a shame they weren't properly mothballed, or in a pinch they could be finished, but the same old quality issues remain, so perhaps tearing them down or using them in future issues of Mythbusters is the best bet.
James Carson 8.16.09
Banks: "Models" entered into the discussion because I referenced the method whereby ISOs and RTOs use a security constrained dispatch 'model' of generation, transmission and load to determine prices in their respective regions. As for Nordpool, I have no idea, and couldn't care less. I have never looked at that market. I have quite enough on my plate at the moment with North American markets. As for locational marginal pricing making North American markets more efficient, that much is undeniable.
JeffP: Yes, I have traded electricity. I have been involved since 1998. Currently, I make my living modeling power market forward curves in MISO, NY-ISO, ISO-NE & PJM out thirty-six months. As of today, I have added ERCOT to the list. Thirty-seven markets and growing. In addition to prices, I also model volatilities and power/natgas delta sensitivities.
As for the power market not being "one big lake", I am quite well aware of that. I never implied that it was. ***rolling eyes*** That is what "security constrained dispatch" means. I couldn't care less what McKinsey said.
Power trading is no more "gambling" than trading in any other commodity. In fact, US power trading has the highest proportion of hedging activity of any commodity that I am aware of, and therefore the lowest level of speculative activity. Nevertheless, we could use more speculative activity to improve liquidity and transparency.
As for "synthetic derivatives", I am a subject matter expert as they pertain to power trading. I do not need links to an "oversimplified but approachable description". ALL power trading contracts in ISO regions are "synthetic derivatives" by your definition since they cash settle on an index and there is never any physical delivery. Nevertheless, they are essential for hedging.
Your comment "stats I believe have mislead you" is needlessly patronizing. Nevertheless, to take it seriously... you seem to be laboring under a misconception about what I do. I don't study forward trading, per se. I analyze terminal LMPs (day ahead settlements for the most part) to estimate a fair value for forward trades. My work applies to trading decisions, capital planning, position marking and anything else where you might want a forward price curve for power.
James Carson, RisQuant Energy
Don Hirschberg 8.17.09
Here is a quote that seems to tell us that China (already the largest CO2 emitter) will emit more CO2 every year for the next 41 years.
“China’s carbon emissions will start falling by 2050, its top climate change policymaker said, the first time the world’s largest emitter has given such a time-frame.” From Financial Times, 8/14/09
Who among us says the emperor is not wearing clothes? Who among us believe Copenhagen (Kyoto II) can be effective? Who is not in denial?
Ferdinand E. Banks 8.17.09
Mr Carson, those people you mentioned can have all the 'models' they want, but just as you dont care about the Nordpool nonsense, I hope that neither you nor them find themselves in a seminar room with my good self where the discussion is about 'models'. Of course, you have enough on your plate if you run around the United States trying to convince intelligent people that more electric capacity is not needed.
Let me note again that the power trading in Europe is probably still a scam, but I would never use that description for most of the other trading. I can also mention that I don't understand what point you are trying to make when cash settlement is referred to as 'synthetic derivatives'. But, for pedagogical reasons, I appreciate your mentioning of cash settlement, because that option is not given the attention that it should be given in the academic literature.
Don, I'm not in denial about Copenhagen, and neither should you be. In fact if it was summer, Copenhagen might be the right place to be. I came out of the train station there about a century ago, with my tennis racket in my hand, and 'somebody' walked up to me and said TENNIS ANYONE. That kind of thing doesn't happen in every city.
Michael Keller 8.17.09
Few observations on WPPSS units WNP 3/5 (Stasop) - These were not first of a kind units; they were Combustion Engineering "System 80" standardized reactors just like the 3 Palo Verde units currently operating in Arizona. - Unit 3 (nearly 90% complete) was properly mothballed for future completion, with the exception the containment dome. - Unit 5 was pretty much abandoned in place and became flat out dangerous to enter.
With the bond defaults on the WNP 5 and 4 units, WPPSS could not borrow any more money to complete the WNP 1 and 3 plants.
Curriously enough, a combined-cycle plant was also built at the WNP 3/5 site but was never completed.
... the WNP 3/5 site must contain an Indian burial ground.
Jeff Presley 8.17.09
James, didn't mean to offend. Since a good friend of mine setup an energy trading company 4 years before you got into the business (and did it for some 14 years before that) I'm reasonably familiar with the space. Perhaps they were even a customer? Enron clearly caused a lot of problems and even caused a censure for my friend since he figured out some of the mischief Enron was up to but didn't report same to the SEC (instead using said knowledge to money for his shareholders like he thought he was supposed to). Clearly speculators spent SOME time in the energy trading market since we can call Enron speculators (and market manipulators, being the biggest fish in a heretofore small pond). I think I better understand your "excess power" mindset. After all, in energy trading, real or manipulated shortages will make the trading skyrocket, so why have everyone with boring 20% capacity margins when it is far more thrilling at 2%?
The link to synthetic derivatives wasn't for your edification, but the others reading this thread who might want to educate themselves on the subject. Because of clumsy deregulation efforts in this country we have a hodgepodge of fixed retail with variable wholesale prices, which is what caused bankruptcy for PG&E and other California utilities. Because electrical energy is already an artificial environment, and can't be like other commodities such as wheat, there really can't be a "free market" in electrical energy trading, hence I don't wear my free market cheerleader hat when talking about it.
I've read your website now, and better understand your business. You are spot on when you talk about opaque markets, nothing better describes energy trading today. More people might want to get involved, but it makes FOREX look like child's play by comparison.
Don Giegler 8.17.09
Columbia Generating Station, WPPSS 2 in its previous life, is a GE BWR-MARK2. Its construction permit was issued on 3/19/73. As Jeff's second history link essay points out , the unit was subject to all of the usual suspects that FOAK plants like the FSV HTGR were exposed to. As a result, its operating license made the scene on 4/13/84 and commissioned operation commenced on 12/13/84. Licensed operation was scheduled to expire on 12/20/2023. I do not know if the "Northwest distaste for nuclear power" has precluded an operating license extension for the unit.
James Carson 8.17.09
Banks: I don't "run around the country" saying anything of the sort. I am merely pointing out that NERC doesn't expect a capacity shortage in 2012 or 2017. I pointed to the source, argue with them.
JeffP: Your friend set up an energy trading company in 1994? Where?
The source of the problem with Enron was that the CFTC was not regulating their activities. Having worked with them before, I think they would have ended a lot of Enron's abuses early. The provision of the 1992 EPACT pulling the CFTC away from energy regulation was one of the more brainless acts of congress.
As for me desiring capacity shortages, where did that come from? I have looked at the available resources, and NERC estimates of what will be needed, and wonder about the fuss. Show me where I ever said that a 2% capacity margin was desirable. Also, I make a fair amount of my revenue forecasting merchant prices for new capacity.
Finally, we already have extensive free markets in electrical energy trading in the US, so I don't understand your point. You are quite right that power markets are perhaps the most difficult to analyze. There are many factors at play, and power markets violate certain assumptions that are made by conventional analytic tools. The most important of those would be the arbitrage assumption. Still, difficult is not intractable.
Don Hirschberg 8.17.09
Prof. Banks, I too have a soft spot for Denmark. Some of my ancestors came from Schleswig Holstein (Nielsens) and never could figure out whether they were Danes or pre-Bismarck Germans. And a relative spent nearly all his life here but died still sounded like he got off the boat yesterday, and as committed to acquavit.
I was quite aware of their wind turbines; I heard them while sleeping on a cruise ship.
Ferdinand E. Banks 8.19.09
Don, the person who asked me about tennis wasn't wearing combat boots. Incidentally, according to some information coming my way, it appears that about 20-25% new capacity - at least - will be required in the US by 2050 (or maybe that should be 2030). The main reason seems to be the one given by Jeff - replacing old facilities.
Speaking of 2050, you say that the Chinese plan to stop emitting by then. Well thank you, now I can breathe easy.
Richard Vesel 8.19.09
A little teaser for all to consider:
Q: What is in the best financial interests of any commodity traders, and their "advisors"?
A: Constrained supply, and demand which approaches or exceeds that supply...
Happy debating, gentlemen! RWVesel
James Carson 8.19.09
Richard: I am not a trader anymore. My work mostly helps hedgers. I have never advocated constrained supply. I merely point out that NERC does not forecast any substantial capacity shortfall for 2012, even as far out as 2017.
Nevertheless, the vagaries of wind and carbon limits will keep me busy for years.
Jim Beyer 8.19.09
I'm a little vague about who NERC is. It seems to be a private company, not like, (for example) the NRC. I guess when it comes to forecasting capacities, I'd trust someone like the EIA over a private company. Like Richard has noted, a tight supply might benefit some interests more than others.
Jeff Presley 8.19.09
James, when I have time I'll email you my friend's company info, don't think he wants it spread around a public forum. Your trader comments aside, can you comment on the VIX rate in your energy markets under consideration?
Jim NERC has been around for awhile. NERC is overseen by FERC. I wouldn't think of them as a "corporation" in the traditional sense of the word, closer to EPRI, without the research. ;)
The caveat in the NERC chart is that they are basing their projection on information submitted to them. Now we only have to hope they have complete info and the little surveys that showed up weren't filled out by college interns. ;)
James Carson 8.19.09
JimB: NERC is a none profit industry regulatory organization founded in 1968. They are responsible for power system reliability in all of Canada, the US and parts of Mexico. They set and enforce standards for safety and reliability, while training and certifying operators and utilities. NERC is THE FINAL authority on reliability. They may well be the most powerful and effective non-governmental, non-banking regulator anywhere. While they set standards as to how much capacity, spin, regulation, etc., they do not regulate the markets for those services. Those are governed by FERC.
The EIA is a government agency that collects and publishes data and forecasts. To my knowledge, they don't regulate anything beyond that. FERC is the federal agency that regulates energy. FERC and NERC work closely together. Jeff is only partially correct that FERC oversees NERC for certain limited purposes, but they are mostly independent.
NERC functions through divisions, WECC for the western Interconnect (western US and western Canada). ERCOT governs Texas and also operates the RTO. Midwest Reliability, NPCC, Reliability First, SERC & SPP are the suborganizations in the Eastern Quebec Interconnects. Incidentally, NERC governs ERCOT, however, FERC does not.
JeffP: Yes, NERC does rely on their members to submit quality information. However, the consequences for willful deception are pretty serious. They have severe penalties that can impose "instant death", for example, by de-certifying a utility as a control area, and they are not bound by the niceties of due process.
I well recall an incident in 1999 when ECAR (a former NERC region) threatened the death penalty to a large utility if they ever leaned on the ties again. Final sentence of the letter from ECAR: "If you fail to comply with this request and/or continue to disregard NERC and ECAR operating policies and procedures, *****’s authorization to operate as a Control Area will be considered for revocation." That would have meant instant bankruptcy. NERC is not an organization to mess with.
Volatilities in the power markets vary widely. I partition volatility into two parts, by time. While "forward", this would be the period before delivery, all of the power markets I follow move in tandem with the fuel markets, mostly natural gas. They move, however, at considerably different speeds, typically ranging from .50 to 1.5, centering on .80. So, in general, if natgas volatility is 40%, forward power volatility will usually be 30-35%.
The other partition is the delivery period. Once the timeline gets into the weather forecast range, weather takes over as the volatility driver. Delivered volatilities are a de-annualized 10-20%. Delivered volatility differs from usual volatility in that it does not dissipate just because time passes. When a year out, they look "small" relative to natgas. However, when two weeks forward, they look huge.
So, when deep in the forward period, say four months out, I measure and report both volatilities, using them for different purposes. They can be combined using conventional portfolio techniques.
On several occasions, I have tried to measure daily volatility. The conventional way to measure historical vol in stocks or derivatives is to take STDEV(LN(P1/P0))xSQRT(#intervals/year) where P1/P0 is the price on one day divided by the previous day's price. The rest is Excel notation. Most stocks are 20-35%, while natural gas has been 60% for spot month over the long term. Day ahead power markets are over 300% while real time markets are 500% and UP. There is powerful mean reversion, however, which those other markets do not exhibit.
Richard Vesel 8.20.09
I am at Coal-Gen this week, listening publicly, and talking privately about the future of coal. I find it interesting that this year, just as like last year, carbon (dioxide) sequestration is still the "hot topic". In the very same discussions, people are quoting $20 to $150 per ton of CO2 as a cost for capture and sequestration.
People here either can't or won'tt do the simple math to see that at $20/ton, it essentially doubles the fuel cost to burn coal (on average), and at $150/ton, it makes it go up by tenfold. (Remember that, on average, burning a ton of coal produces about 1.5 tons of CO2 ... more as the quality of the coal goes up, less as the quality goes down).
Now compare that to the cost of a nuclear solution. It is an economic "no brainer" decision. Short term nuclear CAPEX needs are dwarfed by long-term coal+CCS OPEX needs.
How can we possibly convince ANYONE if they won't do the math?!?
Professor? What does your experience tell you about converting the powers that be?
Ferdinand E. Banks 8.20.09
Richard, if by Professor - which I find unnecessary - you mean Fred or Banks, my experience is that the powers that be are not easily convinced. If they were, there might be a sensible energy bill in the US. I must say though that I did rather well in Hong Kong with my rants agains electric deregulation. Damned well in fact, since Enron was just a few months short of being 'found' - as they reportedly said at 'The Point'.
Incidentally, your figures about coal will go into the first chapter of my new book tomorrow. How much of that can I use, and what about your name?
Jim Beyer 8.20.09
I'm told you get about 2,460 kw-hr/ton of coal. Your mileage may vary. So assuming 1 ton coal produces 1.5 tons of CO2, that ton of coal will cost $30 to $225 to sequester. That adds about 1.2 to 9.1 cents to a kilowatt-hour of electricity.
The lower value isn't so disruptive, but the higher value clearly is. So I guess it depends how much this sequestering will actually cost. The above cited range is too broad to figure out what might happen.
James Carson 8.20.09
JimB: Are you aware that a $12/MWH (1.2 cents per kwh) increases the marginal cost of coal by over 70% at current prices??? How is that NOT disruptive?
Jim Beyer 8.21.09
It's not (that) disruptive because obviously the price of coal is only a small part of the total cost of electricity production in a coal-fired plant. The same argument is tried with nuclear power when pundits argue the price of nuclear fuel may rise 50% or 100%. Even if that happens, the price of nuclear power does not rise that much.
If you are saying that CO2 issues threaten to make coal less competitive, I would say that I agree with you.
James Carson 8.21.09
JimB: You really need to relieve your ignorance about how power markets work. A 70% increase in the marginal cost of coal production will cause off peak power prices to increase by at least 50% and on peak by somewhat less.
Jim Beyer 8.21.09
Gee, thanks for the gratuitous insult. What do you mean by "marginal cost of coal production" and "marginal cost of coal"? It sounds like you are referring to mining of coal, but that can't be the case. Do you mean electricity production from coal? If so, please clarify.
Just looking at my electric bill, it looks like my electricity costs 6.5 cents per kwh. Add the delivery and other surcharges, and I come to about 11-12 cents. Are you saying a 1.2 cent increase in "marginal cost of coal" (whatever you mean by that) will increase my bill to 18 cents per kwh? If so, then who gets the other 4.8 cents, and how do I sign up?
Again, as I stated earlier, if you are saying that CO2 issues threaten to make coal less competitive, I would say that I agree with you.
James Carson 8.21.09
JimB: I mean the marginal cost of producing a megawatthour of electricity from coal. This was not a "gratuitous insult". I am amazed that you have so little understanding about the fundamentals of power market economics, yet make such grandiose pronouncements.
So here is your lesson: Wholesale power prices are set in real time by the marginal cost of the highest cost unit dispatched. When coal has the highest cost on the margin, then coal is setting the marginal price. During the vast majority of off peak hours, coal is on the margin. During the vast majority of on peak hours, natgas is on the margin. That is why on peak hours are more expensive than off peak. Average costs are irrelevant to short term power prices. They only play a part when making long term capital investment decisions. The question then becomes, are the gross margins enough to justify this capital expenditure?
In ISO regions, the markets are set up such that this really bites hard. That is the principal reason why we have them, in fact. However, even in bilateral regions (SERC, Pacific Northwest & Mountain West, the same principle applies, it's just not as efficient.
So, if you increase the marginal cost of producing power by 70% in offpeak hours, you will increase the price of power during those hours by no more than 70%. I picked "over 50%" because I know that well over 80% of the marginal cost of a coal burner is fuel, but that that also varies a lot and so I took a conservative number.
Let's carry the implications of your "not so disruptive" lower bound. The off peak part of the energy portion of your energy bill will increase by my rough estimate of 55%. The on peak portion will also increase, but how much will depend on where you are. Most of the US would see on peak energy increase by ... 25%, give or take a lot. The overall increase in cost of your energy would be something like 35%. That means your bill would likely rise by about .35x$0.065 or roughly 2.5-3c. If your overall bill is now 11c, then your power bill will rise by 25%. BEST CASE. And this is only if none of these generators are retired. This is "not so disruptive"?
Let's consider what happens when part of the coal fleet is then retired. This will happen in pretty much every region of the country, depending on how much coal they use to generate electricity. More where I live, btw. By deleting this resource, you change which unit is now on the margin at any given time in EVERY HOUR. In many hours, that will mean moving from efficient CCGT natgas setting the price, to OCGT natgas setting the price. During relatively high load periods, that will might mean a lot more movement from OCGT natgas to ... OCGT fuel oil. Do you have any idea what that will do to the cost of energy on your bill???
Given that the topic of this thread is about nuclear, impose this "not so disruptive" cost on coal, and you will see a massive move to replace them with nuclear. To which I ask (again), what about the waste?
Jim Beyer 8.21.09
I am aware of how the power markets work, including how everyone is paid at the highest marginal cost. 14 cents would still be less than what much of the Northern East Coast has to pay for electricity today.
For the third time, If you are saying that CO2 issues threaten to make coal less competitive, I would say that I agree with you. I'd rather not pay higher electricity prices either, but that doesn't mean (by itself) that CO2 emissions should be ignored.
FWIW, I don't think $20 per ton for CCS is very feasible. It's probably going to be much higher than that. So we really aren't even in disagreement.
The best fate for nuclear waste is to burn it up in 4th generation reactors. Probably an easier sell than trying to re-start Yucca Mountain.
James Carson 8.21.09
I never made the point about coal becoming "less competitive", so I never addressed it when you brought it up. I simply took exception to your point that the increased costs were "not so disruptive" and gave you my arguments why I believe that. I couldn't care less whether coal is made less competitive. I am much more concerned with what happens to the market, to the overall cost of energy, and to the consumer's bill. As for CO2, I am not convinced that there is a problem that warrants a substantial increase in anyone's power bill.
As for G4 reactors, they are more than a decade away, at best. CO2 sequestration is much more immediate.
James Carson 8.21.09
As for Yucca Mountain, it cannot be worse than storing nuclear waste on an island in the middle of the Mississippi River.
Jim Beyer 8.21.09
I agree that Yucca Mountain should be opened. I'm not sure how politically tenable that is at this point.
Richard Vesel 8.24.09
A couple of points...
First: Storage and processing of nuclear "waste" is a problem already solved technically, by France and Japan, true?
Massive sequestration (gigatons per year) of CO2, at dozens to hundreds of facilities, involving completely new transportation and sequestration infrastructure, as well as advancing "immature" technologies, when compared to one or two nuclear waste reprocessing facilities, using current, and yet still advanceable technologies, seems like a no-brainer decision (technically, at least).
Second: The cost of CCS amplifies the fuel-cost portion of the cost of generating power, in at least a simple picture. Currently, coal costs for a MWh of electricity costs as little as $7, for some western mine mouth operations, to more than $30 for some eastern hard coal burning plants. Now add the cost of CCS per ton, at a more realistic one ton per MWH. Best case - $27 fuel + exhaust cost per MWH - worst case $155 fuel + exhaust cost per MWH. "Nominally" call it $90 as a SWAG.
Now add in the front-end capital investment and buildout needed to put this so-called solution in place...of at least $5B per net GW new or replacement capacity.
For those who crank the investment numbers for the major utilities, I wonder what they would candidly say to such scenarios? If they had no political background to deal with, what would they choose based on "the numbers"?
I think, technically AND economically, nuclear beats Coal plus CCS hands-down.
One thing I saw at Coal-Gen as new, compared to last year. A couple of companies with literature on modular nuclear units...at a coal-based show. I think these equipment manufacturers have already come to the conclusion that there is a limitied future in one direction. B&W has a 125MWe product, and NuScale a 40MWe design...how many other players are there in this space?
PS - Yes, Fred, of course - but perhaps we should tie down the numbers with some explicit calculations, to complete the picture?
James Carson 8.24.09
The problems with nuclear disposal/reprocessing are political, not technical.
Len Gould 8.25.09
"The problems with nuclear disposal/reprocessing" is that the anit-nuc crowd are getting worried that nuclear may become economically viable again if CCS costs too much. They'll attack it on the waste disposl front to try to head that off.
James Carson 8.25.09
The problem with that, Len, is that the anti-nuke crowd has been hyper-active since we were worried about global cooling, never mind thinking about hare-brained schemes like carbon sequestration.
Jeff Presley 8.25.09
Here's an interesting post comment from a different article my RSS picked up here.
William Ernest Schenewerk, Ph.D. says: President Obama has run smack into the choices that has plagued energy policy for 3 decades: Do coal, do nukes, or do without. The greenies ruin their image if they do nukes, so the default choice is do coal. Organized labor prefers coal over nukes because coal plants can only store 45 days worth of fuel. The residual "renewable energy" policy is a result of an anything-but-nukes energy policy. Just producing the steel required to deploy "renewable energy" on a World scale will trash the atmosphere. Biofuels have given us record corn and sugar prices. Energy policy lurches away from choices that gain enemies and toward choices that have so far offended the least number of people. So far pipeline natural gas has gained the least number of enemies. At least as long as pipeline natural gas is not being replaced by LNG, it is rougly 1/3 better than coal. Most of the energy used to deliver LNG occurs offshore and remains unknown.
Here's another even more interesting link where this apparently German PhD opines. Review Journal Does anyone else find it interesting the government co-opted a $23B fund that ratepayers have been contributing to for decades?
Len Gould 8.26.09
Jeff: "Just producing the steel required to deploy "renewable energy" on a World scale will trash the atmosphere." -- My intuition is that statement looks suspect at minimum. What is the reference?
Regarding the $23B. "Nuclear utility advocates have argued that the $23 billion that ratepayers put into the Nuclear Waste Fund for building a repository and hauling spent fuel to Yucca Mountain should be returned if Yucca Mountain won't be licensed. " -- I don't see any logic in that argument. The money belongs with whomever is legally responsible for eventually disposing of the waste. At now accoring to many utility lawsuits, that's the government. End of discussion.
James Carson 8.26.09
Well, Len, when the courts rule that way, then the government can have it. Until then, no.
Jeff Presley 8.26.09
Len, the question your intuition needs to ask itself is how much CO2 and coal goes into making a ton of steel? Coke ( a coal byproduct) or electricity are the two common methods to smelt steel. I'll leave it as a simple exercise to you to figure out the rest. Realize also that the newest breed of wind turbines have blades bigger than a 747's wingspan, so have to be quite high off the ground on a post made of steel on massive reinforced concrete pads made with steel also.
I didn't make the statement BTW, just said I found it interesting.
As to your second point, the gov't mandated the collection of the fees to solve the problem and in the meantime the utilities have had to spend money to deal with the waste themselves AND have a fund they can't access to deal with moving it. Let's say, as JamesC implies that the government is ultimately responsible for the waste. Do you really believe that? I can see lawsuits ad infinitum but I don't see a solution. Perhaps as many suspect, this is merely a ruse to keep more nuclear from being built. Good luck with your CO2 levels without them.
Bob Amorosi 8.26.09
North America is not presently pursuing a great expansion of nuclear with the same fervor and economic support as they are for all the other renewable sources. Indeed it will be a challenge for nuclear to just maintain their current levels of generation as existing plants reach end of life or are threatened by shutdowns.
This begs the question are all our politicians and regulators that ignorant or are they all being duped simultaneously ? I doubt it very much. I suggest they are all depending on another solution - reducing total energy consumption and more importantly consumption growth. The question is how are they going to do this without imposing draconian economic measures.
The pathway of total reduced consumption (TRC) goals is being pursued perhaps most aggressively here in Ontario where our government is attempting to foster a public culture of energy conservation. Through its provincial power authority agency that administers all new generation contracts, it has also mandated fostering enormous TRC targets by 2020. If met they will avoid building gigawatts of new generation, and even allow them to retire our existing coal generation without replacing all of it at once.
It is being implemented by throwing public money into wide-ranging consumer and commercial rebates for purchasing energy efficient products and upgrading building efficiencies. Homeowners and businesses can receive large grants to upgrade buildings or industrial processes. Companies receive rate incentives to enroll in active demand response programs through our local utility companies.
Other measures include setting new commercial standards in energy efficiencies for lighting to residential appliances to heating and air conditioning, and others. They are being set to have increasing efficiency levels over time, and any products that don't eventually meet them over time by defined deadlines will be banned from sale here. Incandescent light bulbs have been the first on their hit lists, and now widescreen televisions are being sucked into it too.
The latter is also placing huge new demands on manufacturing industries to develop new more efficient products. Recognizing this Ontario is also pumping substantially more public money into university and commercial research and development efforts to help them.
The plan is working in Ontario but they have a long way to go yet to meet their TRC targets, and from what I have seen over the past year on this website forum, these ideas are also starting to catch on in the US, Australia, and in Europe.