https://www.forbes.com/sites/amorylovins/2019/11/18/does-nuclear-power-slow-or-speed-climate-change/#1c5781c5506b
[Given this considered study of nuclear fission as a climate change
mitigation option (spoiler alert: it's not), naturally, tomorrow we are
expecting the Canadian and Saskatchewan governments to announce new
government subsidies and supports to bring on a 'new' generation of
nuclear reactors about a decade from now, which will be late,
over-budget (both sacred traditions in the Canadian nuclear industry)
and be net GHG emissions contributors.
links and images in online article]
Most U.S. nuclear power plants cost more to run than they earn.
Globally, the World Nuclear Industry Status Report 2019 documents the
nuclear enterprise’s slow-motion commercial collapse—dying of an
incurable attack of market forces. Yet in America, strong views are held
across the political spectrum on whether nuclear power is essential or
merely helpful in protecting the Earth’s climate—and both those views
are wrong. In fact, building new reactors, or operating most existing
ones, makes climate change worse compared with spending the same money
on more-climate-effective ways to deliver the same energy services.
Those who state as fact that rejecting (more precisely, declining to
bail out) nuclear energy would make carbon reduction much harder are in
good company, but are mistaken.
If you haven’t heard this view before, it’s not because it wasn’t
published in reputable venues over several decades, but rather because
the nuclear industry, which holds the microphone, is eager that you not
hear it. Many otherwise sensible analysts and journalists have not
properly reported this issue. Few political leaders understand it
either. But by the end of this article, I hope you will. For the details
and documentation behind this summary, please see pp. 228–256 of the
World Nuclear Industry Status Report 2019. A supporting paper provides
simple worked examples of how to compare the “climate-effectiveness” of
different ways to decarbonize the electricity system.
Nuclear power’s potential role in the global climate challenge
If the nuclear one-tenth of global electricity generation displaced an
average mix of fossil-fueled generation and nothing else, it would
offset 4% of fossil-fuel CO2 emissions. So in an era of urgent climate
concern, should nuclear power continue, shrink, or expand? Should its
successive previous rationales—replacing insecure oil, then replacing
dirty coal, then fighting global poverty—now add a fourth one,
protecting climate?
Six months ago, a report by the International Energy Agency claimed that
not sustaining and even expanding nuclear power would make climate
solutions “drastically harder and more costly.” To check that claim, we
must compare nuclear power with other potential climate solutions. What
criteria should we use? Here I’ll use only two—cost and speed—because if
nuclear power has no business case or takes too long, we need not
address its other merits or drawbacks.
How should we compare different ways to provide electrical services in a
carbon-constrained world? Our society built coal-fired power plants by
counting cost but not carbon. Nuclear advocates defend their preference
by counting carbon but not cost. But to protect the climate, we must
save the most carbon at the least cost and in the least time, counting
all three variables—carbon and cost and time. Costly options save less
carbon per dollar than cheaper options. Slow options save less carbon
per year than faster options. Thus even a low- or no-carbon option that
is too costly or too slow will reduce and retard achievable climate
protection. Being carbon-free does not establish climate-effectiveness.
Most analysts ignore common-sense comparisons of both cost and speed.
The result is akin to arguing that since people are hungry, hunger is
urgent, and caviar and rice are both food, therefore both are vital to
reducing hunger. Since in reality money and time are both limited, our
priorities in feeding people or in providing energy services must be
informed by relative cost and speed. Lower cost saves more carbon per
dollar. Faster deployment saves more carbon per year. We need both.
The bedrock economic principle of “opportunity cost” means you can’t
spend the same money on two different things at the same time. Each
purchase foregoes others. Buying nuclear power displaces buying some
mixture of fossil-fueled generation, renewable generation, and efficient
use. Nuclear owners strive to beat coal and gas while their allies often
disparage or suppress renewables. Yet most US nuclear plants are
uneconomic just to run, so many are closing. To keep milking those old
assets instead, their powerful owners seek and often get
multi-billion-dollar bailouts from malleable state legislatures for
about a tenth of the nuclear fleet so far, postponing the economic
reckoning by shooting the market messenger.
Such replacement of market choices with political logrolling distorts
prices, crowds out competitors, slows innovation, reduces transparency,
rewards undue influence, introduces bias, picks winners, invites
corruption, and even threatens to destroy the competitive regional power
markets where renewables and efficiency win. These are high prices for
small or negative benefits (so far, displacing fossil-fueled or
renewable generation, or savings, of about 2% of U.S. electricity).
Yet many political leaders think climate’s urgency demands every option,
including preserving nuclear power at any cost. So what is that cost,
construed in the narrowest economic terms?
Costs of new nuclear power vs. competing options
On 7 November 2019, the eminent 170-year-old financial house Lazard
published its 13th annual snapshot of relative 2019-$ prices for
different ways to generate a megawatt-hour of electricity. The analysis
is authoritative though imperfect. Lazard removed renewables’ temporary
and declining tax credits, but tacitly retained nonrenewables’ larger
permanent subsidies—which for new US nuclear plants rival or exceed
their construction cost and also subsidize nuclear operating cost more
than, say, windpower gets. Lazard also favored fossil-fueled and nuclear
power plants by assuming the same financing cost and structure for every
kind of generator, though actually renewables win cheaper capital
because of their faster construction and lower risk. And Lazard assumed
nuclear operating costs below the actual average reported by the Nuclear
Energy Institute, the industry’s lobbying organization. Nonetheless,
Lazard’s comparison between new electricity resources is stark:
Nuclear power: $118–192/MWh (of which $29 is typical operating cost)
Coal power: $66–132/MWh (of which $33 is typical operating cost)
Combined-cycle gas power: $44–68/MWh
Utility-scale solar power: $32–42/MWh
Onshore windpower: $28–54/MWh
Previous editions also listed efficient use of electricity at $0–50/MWh,
typically around $25/MWh. Efficiency, being already delivered to your
meter, also avoids roughly $42/MWh of average delivery cost that all
remote generators incur.
The other preeminent data sources—Bloomberg New Energy Finance, Lawrence
Berkeley National Lab, National Renewable Energy Lab—show market prices
for renewables broadly similar to Lazard’s, though BNEF says new nuclear
power ranges from Lazard’s high value to nearly twice that big. Either
way, new reactors are many-fold out of the money, with no material
relief in prospect from any new technology, size, or fuel cycle. Nuclear
costs are also rising while renewable costs keep falling. New nuclear
plants will save many-fold less carbon per dollar than competing
carbon-free resources, in proportion to their relative costs. And new
reactors’ expected performance must be tempered by historical
experience: of the 259 power reactors ordered in the US, by mid-2017
only 28 units or 11% had been built, were still competitive in their
regional markets, and hadn’t suffered at least one outage lasting at
least a year. That high dry-hole risk reinforces capital markets’
skepticism.
Should existing nuclear plants keep operating?
Today’s hot question, though, is not about new US reactors, which
investors shun, but about the 96 existing reactors, already averaging
about a decade beyond their nominal original design life. Most now cost
more to run—including major repairs that trend upward with age—than
their output can earn. They also cost more just to run than providing
the same services by building and operating new renewables, or by using
electricity more efficiently. So let’s go step by step through an
eyechart about nuclear operating costs—which exclude original
construction and financing costs (all sunk and usually amortized), but
include those costs that need not be paid if the plant is closed.
The blue-green zone shows the range of US wholesale electricity prices
for the past 15 years in constant 2014 dollars. The blue dots for
windpower, and the brown dots for utility-scale solar photovoltaics,
show the average fixed prices set in long-term private-market Power
Purchase Agreements or PPAs. You can see that average new wind and solar
power now sell at or below the lowest wholesale prices from
nonrenewables, and trend downward, so windpower in 2018 is as low as
$11/MWh or 1.1¢/kWh. That’s net of wind and solar power’s temporary
federal subsidies, now phasing out, but they’re no longer important: the
lower-right corner of the graph shows as diamonds the comparable
unsubsidized prices of wind and solar in Chile, Mexico, and Morocco. The
open squares at the far right are bids for Colorado solar and windpower;
the filled squares add electricity storage with only modest cost.
Actually, battery storage, though often cost-effective today, is rarely
needed to “firm” the output of variable renewables (photovoltaics and
windpower), because there are eight ample cheaper methods. Empirically,
variable renewables’ firming costs are small, typically below $5/MWh,
but appear to be considerably larger for central thermal power stations,
which are allowed to ignore them as socialized system costs, whereas
renewables are often expected to pay their own firming costs.
Now compare US nuclear plants’ average operating cost excluding all
original construction cost. Average nuclear operations, the small
magenta triangles, now cost more than new modern renewables, with or
without their temporary subsidies. During two recent three-year periods,
the magenta horizontal bars reported by the Nuclear Energy Institute
show that those average nuclear operating costs by quartile fell as the
worst reactors were closed—but renewable prices fell even faster.
Nuclear operating costs will be hard to cut much further in reactors
averaging four decades old, but renewable prices promise strong further
declines for decades to come. International nuclear operating costs tend
to be even higher.
These operating-cost data reveal an important climate opportunity.
Operating cost (opex) exceeds $40/MWh for the costlier-to-run half of
the 96 US power reactors, or $50 for the costliest quartile. Owners
demand big new subsidies to keep running these money-losing plants. Yet
customer efficiency costs utilities only $20–30/MWh on average—less if
they shop carefully. Therefore closing a top-quartile-cost nuclear plant
and buying efficiency instead, as utilities could volunteer or
regulators require, would save considerably more carbon than continuing
to run the nuclear plant. Some modern renewables too can now rival
efficiency’s cost and could compete for that opportunity.
Thus, while we close coal plants to save carbon directly, we should also
close distressed nuclear plants and reinvest their large saved operating
cost in cheaper options to save carbon indirectly. These two
climate-protecting steps are not alternatives; they are complements.
Replacing a closed nuclear plant with efficiency or renewables
empirically takes only 1–3 years. If owners don’t give such advance
notice—a common tactic to extort subsidies by making closure more
disruptive—more natural gas might temporarily be burned, but then more
than offset over the following years by the carbon-free substitutes.
California’s biggest utility will therefore replace its well-running
Diablo Canyon reactors with least-cost carbon-free resources to save
money and carbon and to help the grid work better.
To get these outcomes, we must track not just carbon but also money and
time. Investing judiciously, not indiscriminately, saves the most carbon
per dollar. What about per year?
Which technologies are faster to deploy?
Claims that nuclear generation grows faster than renewable generation,
making nuclear power desirable or even essential for climate protection,
use cherry-picked old data and a strange methodology based on not
absolute but per-capita growth. This makes the climate importance of
decarbonizing power plants depend on the population of the country where
it occurs, so Sweden or Slovakia look far more important than China. A
2016 paper with some distinguished coauthors in the leading journal
Science used that methodology—more suited to comparing countries than
technologies—to claim in this widely republished graph that nuclear
growth is generically “much faster” than renewable growth:
But once I’d corrected that paper’s seven analytic flaws and
distortions, the opposite finding emerged, despite using the same flawed
per-capita methodology and the same data source: nuclear and renewable
output can actually grow at similar speeds, and adding the three latest
years of data reveals that renewables are pulling ahead, as the
following graph shows. If, unlike the Science authors, we compare
nuclear in ten countries with renewable growth in the same ten
countries, renewables are faster in seven. But rapid nuclear growth
occurred over three decades ago under conditions that no longer exist,
while comparable or faster renewable growth is here, now, and
accelerating. (In two years, China and India have just both increased
their renewable generation by more than all their nuclear plants
produced in 2018.)
Interestingly, all nine of the Science authors’ exemplary nuclear
programs—not only in the United States—are in trouble. Sweden’s booming
windpower will pass its capped nuclear capacity this year; France cannot
afford to fix or replace its troubled nuclear fleet; Belgium’s capped
nuclear capacity is unreliable and safety-challenged; Slovakia’s
newbuild project is hobbled by delay, cost, and corruption; Taiwan,
South Korea, and Germany have nuclear phase-out policies; and in Japan,
most reactors remain shut down eight years after Fukushima, and their
lost output plus energy to support Japan’s 11% GDP growth has already
been 97% offset by savings and renewables.
The graphed speed comparisons reflect the technologies’ basic
attributes. Nuclear plants take many years to build, typically around a
decade, while renewable projects can take a year or less—even months or
weeks. Further, national nuclear power programs need three times as much
lead time for institutional preparations as modern renewables need. For
both reasons, renewables can start saving carbon many years sooner. Both
project-level and program-level nuclear slowness incur a big carbon
penalty. Being both slower and costlier than its modern competitors
makes nuclear power doubly unhelpful for protecting the climate.
Yet undaunted by actual data, propagandists keep spreading the myth of
nuclear speed. The 2016 Science paper, though discredited by three
devastating journal critiques, was the sole basis cited (“several
studies” were mentioned but no others cited) by the World Nuclear
Association’s 24 September 2019 press release “Combatting climate change
faster with new nuclear build.” A day later, with no citation, WNA
trumpeted: “Nuclear energy is the fast track to decarbonization.” These
headlines have no basis in fact. WNA seems as challenged by math as by
truth: it cannot even correctly describe what the previous graph shows.
The evidence about relative speed becomes simpler and stronger if we
simply compare different power sources’ total output growth worldwide,
requiring no international comparisons that mix countries with
technologies. Worldwide, you can see that the blue curve, modern
renewables, grew faster in the past decade than the magenta nuclear
curve’s fastest growth, which occurred more than three decades ago.
Total renewables (green), which include big hydro, already outgenerate
natural gas. Modern renewables, which omit big hydro, passed nuclear
generation in 2016, quietly passed a trillion watts—a terawatt (TW)—of
installed capacity in 2017, and are accelerating. That first TW took ~15
years; the next TW is set to take 4–5 years and cost about half as much,
with most of the renewables made and nearly half bought by China. In
2013, China added more PV capacity than the US had added in total since
developing it 59 years earlier. In 2016, China doubled the pace to three
football fields per hour, including 11 GW in June. In 2018, China added
more PVs in June than the US added all year. The world’s installed solar
capacity is now >50⨉ IEA’s 2002 forecast. In 2028—sooner than building a
typical nuclear plant—Bloomberg predicts solar electricity alone will
exceed 2018 global nuclear generation in 2018, and even sooner, solar
power is set to add 1 TW each year.
Global carbon-free electricity is now less than one-third nuclear.
Counting also carbon-free production of non-electric energy—biofuels and
modern renewable heat—nuclear power struggles to sustain less than
one-fourth of the world’s carbon-free final energy use. Why pay more to
revive it at the expense of faster and cheaper competitors? Sustaining
uneconomic reactors would not only divert public funding from more
climate-effective competitors but also constrain their sales and degrade
the competitive markets where they thrive. Slowing and blocking the
fastest and cheapest climate solutions harms climate protection.
Why should a particular low-carbon solution, unable to compete after a
half-century, now be awarded walled-garden market preferences (blocks of
demand mandatorily served by nuclear power and not contestable by
competitors) and new subsidies unavailable to other low-carbon
solutions? Shouldn’t policy, as IEA agrees, be technology-neutral?
How high can US nuclear subsidies go?
Meanwhile, back in the United States, the climate-effectiveness of
continued nuclear operations is not discussed; the conversation focuses
solely on carbon, not on cost or time. Indeed, the industry’s immense
lobbying power has now hatched a brazen new way to make taxpayers or
customers pay for existing nuclear plants for a seventh time, and
disadvantage their most potent supply-side competitor (modern renewable
power), and reduce and retard climate protection while claiming to
increase it. Rarely have so many been so deceived so thoroughly, for so
long, at such cost.
The previous six forms of payment were:
1. Taxpayers paid to create the nuclear industry, build its fueling
infrastructure, and finance the reactor fleet via a vast array of often
opaque and generally permanent federal subsidies that cost more than
building the plants and more than the value of their output.
2. Through generally regulated utility tariffs, customers paid for
the plants’ construction and financing, including a just and reasonable
return on capital.
3. Customers paid over decades for the plants’ operation, including
major repairs, power upratings, and safety upgrades.
4. Many customers reimbursed owners for “stranded-asset costs”
totaling upwards of $70 billion to support the owner-demanded transition
to competitive wholesale markets.
5. Over the past few years, when reactors generating 2 percent of
U.S. electricity proved unable to compete in those wholesale markets
(though most of their owners kept their finances secret and kept
reporting profits to investors), the owners persuaded state legislators
in Illinois, New York, New Jersey, Connecticut, and Ohio to vote
billions of dollars a year for new multi-year operating subsidies.
6. Exelon, the nation’s largest nuclear operator and the leading
player in the previous two steps, successfully sought Federal regulatory
approval for greater capacity payments from power pools whose auctions
found nuclear power uncompetitive and whose own rules were thrown
off-balance by the new state subsidies. And now, as the annual
logrolling season of “tax extenders” rolls around in Congress:
7. For the third year, Exelon is advancing a “Nuclear Powers America
Act” to create a new federal investment tax credit on nuclear fuel and
maintenance expenses to “help level the playing fuel with other clean
energy sources”—whose temporary tax credits are meanwhile being phased
down or out. This follows a longstanding pattern of giving different
kinds of subsidies to renewables than to nuclear, then “leveling the
playing field” by trying to duplicate renewables’ specific forms of
subsidies with new ones for nuclear, but never the reverse.
This saga of selling the same hay seven times—and those clever lawyers
aren’t done yet—doesn’t include many additional federal and state
subsidies. It also doesn’t include an emerging potential scam that could
end up with ratepayers’ and federal taxpayers’ getting stuck with vast
decommissioning and waste-management liabilities. This emerging pattern
has an LLC buy a closed reactor. Absent oversight or rules to stop
misbehavior, the LLC could then choose to strip the accumulated
customer-funded multi-billion-dollar cash decommissioning fund, not
finish the job, and walk away, leaving the parent company whole and
electricity customers or taxpayers holding the bag. Watch this space.
Exelon’s proposed “nuclear investment tax credit” has ingenious new
features:
- By redefining normal accounting categories so fuel becomes a
capital investment, it repays utilities for an “investment” that’s
really just a normal operating cost—thus trying to make nuclear
operating costs look small by shifting much of them to taxpayers.
- The nuclear operating costs it covers have no counterpart for
renewables (fuel, nuclear waste management, protection against
catastrophic releases of radioactivity), or almost none (operation &
maintenance costs), so a tax credit for them would specifically
advantage nuclear against renewables.
- Nuclear owners may be able to double-dip, collecting the new
federal subsidy and new state subsidies for the same plants and thus
turning dead dinosaurs into juicy cash cows.
- There’s virtually no “means test”: the new federal subsidy
would apply to about 95% of US operating reactors, including those that
the industry claims are currently profitable.
- The proposed legislation, obscurely written in tax-law jargon,
appears to be a 30% tax credit (phasing down to 26% in 2024, 22% in
2025, and a permanent 10% in and after 2026), and to cost ~$22–26
billion over the first decade, or ~$33 billion counting the crowding-out
of cheaper competitors. Every billion dollars thus bilked from taxpayers
is unavailable to provide more electrical services and save more carbon
by cheaper means.
- By further distorting the delicate balance between federal,
regional, and state regulation, the subsidy seems tailored to weaken or
destroy the efficient regional power markets where renewables beat
nuclear power. The goal is thus to pay nuclear power for values it
doesn’t deliver, while blocking its most potent competitors from
continuing to provide the values they do deliver.
- Unlike renewable credits that have helped to mature important
new technologies, the nuclear credit would elicit no new production,
capacity, or innovation. It would simply transfer tens of billions of
dollars to the owners of uncompetitive nuclear assets bought decades
ago—if they apply for license extension by 2026, as nearly all have done.
This covert attack on renewables is logical because renewables are now
the supply-side competitor nuclear must beat but can’t. The nuclear
industry is reluctant to admit that renewables are a legitimate
competitor, since this would contradict its claims that renewables can’t
supply reliable power. Renewables, unlike nuclear power, are also widely
popular. Nuclear advocates therefore tend to blame their woes instead on
cheap natural gas. However, new and often even existing combined-cycle
gas-fired power plants no longer have a business case: a September 2019
study found that at least 90% of the 88 proposed US gas-fired plants are
pre-stranded assets. Oddly, the nuclear industry has also ignored a
suggestion that would advantage nuclear power (but also renewables and
efficiency) against natural gas by properly counting the market value of
its price volatility. (Basic financial economics requires such
risk-adjustment when comparing a volatile cost stream with a fixed one,
such as efficiency and renewables incur.)
While some nuclear advocates favor carbon pricing (which would
comparably advantage nuclear power, renewables, and efficiency over
gas-fired power), many do not, presumably because the same utilities
often run both nuclear and fossil-fueled plants. Nuclear advocates must
awkwardly straddle the need to oppose fossil-fueled generation when
seeking supposedly “green” state subsidies while cozying up to
fossil-fueled generation at the federal level, where the Secretary of
Energy wants to bail out both nuclear and coal plants.
In sum, the nuclear industry seeks its own sales arrangements protected
from competition, its own prices determined by political processes
rather than markets, and diminished opportunities for its carbon-free
competitors to express their value, reach their customers, and discover
their own prices. This could be good for compliant legislators’ campaign
contributions, but hardly in the national interest or helpful for
climate protection.
Such anti-market monkey business cannot indefinitely forestall the
victory of cheaper competitors, but it can delay and diminish climate
protection while transferring tens of billions of unearned dollars from
taxpayers and customers to nuclear owners. That would save less carbon,
more slowly, than letting the best buys win, yet some politicians
fervently favoring climate protection mistakenly endorse it, and most
journalists reinforce their misconception.
Citizens who care about climate or markets or both should therefore pay
attention not only to carbon but also to cost and time—and should
vigorously defend markets’ ability to choose climate solutions that can
save the most carbon per dollar and per year. Doing otherwise makes
climate change worse than it could and should have been, stifles
economic competitiveness and innovation, and suppresses market
competition. That these errors are often bipartisan does not excuse
them. Our best climate strategy would be to start taking economics
seriously.
--
Darryl McMahon
Freelance Project Manager (sustainable systems)
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