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Fighting for the environment – keep nuclear in the mix

Earlier this month I enjoyed a week of vacation sitting on the beach in front of a beautiful camp (or cottage, cabin or country house, depending on where you are from) staring at a stunning view of the north shore of Lake Superior, the world’s largest fresh water lake.  This is pretty far north (at the 49th parallel), and this year the summer has been very hot.  Once again, July has been the hottest month ever recorded.

Environment

It’s times like this of quiet reflection that the issue of environment comes to the forefront.  Contrast this idyllic view to that of some of the world’s cities where pollution is rampant and health is impacted every day.  This is the short term need – make the air breathable for all those that are having their health impacted negatively by pollution primarily coming from burning coal to generate electricity and from burning fossil fuels in cars each and every day.  And then there is the issue of climate change.  Harder for many to understand as the consequences are not as easy to see in the short term; but clearly the environmental issue of our time.

Let me start by saying that I am not one of those people that believe we should directly tie the future of nuclear power to climate change but rather that the case for nuclear needs to be made on its merits – reliability, economics, sustainability and yes, its environmental attributes.  In fact, today environmental attributes of any generation technology should be the price of entry – low carbon and low polluting technologies are the ones that should make the list to be considered for deployment.   However once on the list it is the other attributes that need to be considered when planning and implementing a robust electricity supply system.

Looking at this beautiful view, I find it hard to understand how so many are trying to disadvantage the environment by excluding nuclear power from the list of technologies that are environmentally friendly.  And not just for new generation, but many are fighting to close existing plants that have been providing clean, economic and reliable electricity to the grid for decades.  Examples abound.

In California, a decision was recently taken to shut down Diablo Canyon in 2025 rather than extend its life and replace it with renewables and demand management.  This decision has recently been severely criticized by Dr. James Hansen, one of the world’s most prominent climate scientists who has asked the Governor for a debate on the issue stating “Retirement of the plant will make a mockery of California’s decarbonization efforts. Diablo Canyon’s yearly output of 17,600 gigawatt-hours supplies 9 percent of California’s total in-state electricity generation and 21 percent of its low-carbon generation. If Diablo closes it will be replaced mainly by natural gas, and California’s carbon dioxide emissions will rise…” [Read the entire text of the letter here]

In New York state there has been an important victory as nuclear has been included in the clean energy standard as legislators have acknowledged the important role that nuclear plays in reducing carbon emissions; and in fact accepts that meeting carbon objectives is simply impossible without nuclear.   However, this is just a first step. It protects existing nuclear but also maintains the future target of 50% renewables, making nuclear a bridge to the future.  Well if existing nuclear is good, then so should new nuclear – but that fight is for another day.

Of course the battle to include nuclear as a low carbon energy option is not uniquely a US issue.  A new study * by the University of Sussex and the Vienna School of International Studies suggests that “a strong national commitment to nuclear energy goes hand in hand with weak performance on climate change targets”.  While the authors do note that “it’s difficult to show a causal link”, this does not stop them from suggesting it is likely there.   It is easy to say that Germany has done a good job and reduced its carbon emissions by 14% since 2005.  What is not said is that Germany’s carbon reduction efforts have really struggled since it closed a number of nuclear plants in 2011 after the Fukushima accident and has yet to get back on track; which was likely a key factor in Sweden where the Greens have accepted the need for continued nuclear operation to meet its climate goal.

Here in my home jurisdiction of Ontario Canada, we had the largest carbon reduction in all of North America as coal was removed from the generation mix in 2014.  This was not done by replacing coal with renewables although renewable generation has increased, but was made possible by refurbishing and returning nuclear units into service.

I have written extensively about peoples’ belief systems over the years and this is what is standing between nuclear and success.  Ask anyone in the street about clean electricity and you will hear that renewables, primarily wind and solar, are what is needed to transform our energy systems.  Ask about nuclear and the response is much more likely to be mixed.

It is great news that many environmentalists are now seeing the necessity of nuclear in the mix.  As concluded by James Hansen in his letter” It would be a tragedy if we were to allow irrational fear to harm the climate and endanger the future of our children and grandchildren.”  So if we are to avoid a tragedy, we in the nuclear industry have a lot of work to change the narrative and continue to increase public support.  The agreement in New York is a good beginning but the hard work has only just begun.

* The study referenced above was retracted by the authors on November 25, 2016 as they admitted mistakes in the analysis.  The link to the retraction on Retraction Watch is here.

It is broken markets, not uneconomic plants that are putting nuclear plants at risk

A huge milestone has been achieved in the United States as Watts Bar Unit 2 produced its first electricity; becoming the first new nuclear plant in the US to start up in 20 years since Watts Bar Unit 1 came into service in 1996.  Unfortunately, this good news was overshadowed by the announcement by Exelon that its Quad Cities and Clinton power stations in Illinois would close.  This decision was the most recent but not the first, with headlines such as “Nuclear plants need boost to stay open, industry warns” or” Nuclear power plants warn of closure crisis” pointing to more nuclear plants that are at risk of premature closure because they are no longer economic in the competitive markets in which they operate.

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Watts Bar – America’s newest nuclear plant

There are many explanations as to the cause of this “crisis”.  Gas prices are currently very low, renewables are subsidized and the costs of some of the smaller oldest single unit nuclear plants in the country have been rising as they age.  While all of these points are true, they are not in and of themselves, the direct cause of the problem.  They are symptoms of deep structural issues in those parts of the country where electricity is bought and sold in so called open or deregulated markets.(Note: Watts Bar, owned by the Tennessee Valley Authority, is in a regulated market.)

This was the topic of a recent DOE summit on how to “save” the nuclear fleet (“Summit on Improving the Economics of America’s Nuclear Power Plants) to address the crisis and take steps to avoid the unnecessary closing of a significant number of plants.  So here we are and once again, we fall into the trap of incorrectly defining the problem as costly inefficient nuclear plants. After all the US summit is on how to improve the economics of nuclear plants, not how to fix poorly structured markets – the real problem.  (Note: In Europe there are similar issues driven by a high level of subsidized renewables rather than low gas prices.  But the need to find a solution is the same.  A European Commission official assured delegates at a recent nuclear financing conference held in Paris that the design of European wholesale electricity markets and the emissions trading system (EU ETS) will be improved to help – and no longer hinder – nuclear energy as a low-carbon source of electricity.)

In the guise of providing the lowest cost to ratepayers, most markets are completely focused on the short term.  There is little consideration of risk built into the pricing mechanisms, only what is the lowest cost to generate electricity right now.  This means that there is no value attributed to any of the other important operating attributes required for a reliable and secure electricity supply system such as fuel availability, maneuverability, flexibility and price volatility.  On top of this, things like government environmental policies and subsidies further distort the markets to ensure that mandated renewables have a role in the system.  (Of course nuclear has not benefited from such support even though it is a low carbon option.)

This may have all worked fine 25 years ago when markets were opened with the objective of creating efficiencies in the existing operating fleet –a time when many jurisdictions were in oversupply.  But when it comes to adding capacity or making other substantive changes to the system, electricity markets are not nimble.  While there may be a desire to respond to price signals in the short term, building new plant takes time.  And one thing is for sure, no one will build new plant of any kind without some confidence that they will generate sufficient revenue to operate for their projected lives and earn a return on their investment.  Or as stated in the OECD report Project Costs of Electricity, “The structure of the electricity generation mix, as well as the electricity demand pattern, is quite inelastic in the short term: existing power plants have long lifetimes and building new capacity and transmission infrastructure may require a considerable lead time as well as significant upfront investments. In other terms, electricity systems are locked in with their existing generation mix and infrastructure, and cannot quickly adapt them to changing market conditions.”

It is also important to understand that not all market participants are equal.  In most markets gas is the price maker, not a price taker.  So when gas prices are high, everybody else in the market makes money and when gas prices are low, everybody struggles.  And yes, today gas prices are very very low.  Yet gas operators are relatively indifferent as they are the risk free players in the market.  Even in this enviable position, gas generators did not have sufficient incentive to build new plant, so many markets have responded with the development of capacity markets.  These capacity payments then compensate gas plants for sitting idle – effectively removing the risk to gas generators of building new plants.

So you may ask, what’s the problem with that as long as we have low energy prices?

If open markets are so efficient then we should expect that prices in these areas should be lower than in areas where regulated markets have remained.  Not so, says an April 2015 study by the American Public Power Association.  In fact, in 2014 prices in de-regulated markets were as much as 35% more than those in regulated states.  (Note: this study has been done by an organization with an interest in the result and as such may contain bias.)

So let’s go back to electricity system structuring.  When it comes to managing risk, we know risk is generally reduced through a diverse portfolio of alternatives.  The more diverse, the more risk can be reduced.  The current path will result in systems that are not diverse, but rather all gas, currently the most economic alternative.  If markets do not adapt to better accommodate risk management into their pricing strategies, we face a future of volatile energy prices, possible energy shortages as new plant construction lags market needs and increases rather than decreases in carbon emissions; all in the guise of more efficient markets.  Back to the decision in Illinois.  As stated in the referenced article, not only are these two plants Exelon’s best performers, they “support approximately 4,200 direct and indirect jobs and produce more than $1.2 billion in economic activity annually. A state report found that closing the plants would increase wholesale energy costs for the region by $439 million to $645 million annually. The report also found that keeping the plants open would avoid $10 billion in economic damages associated with higher carbon emissions over 10 years.”

We only need one major market disruption to remind us all of the importance of truly reliable baseload power at a stable and economic price and how that protects us from the risk of higher prices and lower security of supply.  And today, there is only one low carbon highly reliable baseload option, nuclear power.

So while a short term fix to keep operating nuclear plants open is required and more urgent than ever, let’s stop talking about how plants are uneconomic and work to properly improve market structures to build and maintain the strong, reliable, economic and low carbon systems needed to power our modern economies.

Let’s create awareness for all the benefits that nuclear technology brings to mankind

When a report on the benefits of nuclear technology starts with “The public are often unaware of the extent to which aspects of their everyday life involve products and processes originated from the application of nuclear technology via the nuclear industry”, it tells me that the time has come to tell this story and increase public awareness.

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I had the opportunity to attend the Nuclear Industry Summit in Washington last month and was privileged to participate in Working Group 3 which had the mandate to summarize the role of the nuclear industry globally.  The NIS was a very successful event.  It was a companion event to the Nuclear Security Summit held by President Obama and provided an opportunity for the nuclear industry to interact and present its views to global leaders on the key issues of nuclear security and how the industry addresses it.

With the 5th anniversary of Fukushima having just passed last month and the 30th anniversary of Chernobyl this month, we have a steady reminder of the issues that never seem to go away for the nuclear industry.  It is our nature.  In his very enjoyable talk to the Canadian Nuclear Industry Conference in February, Malcolm Grimston asks the key question of why is it that the safest source of large scale electricity generation we have ever come up with is considered so dangerous by enough people that in a number of countries there is an effort to stop using nuclear energy?  I have commented on Malcolm’s presentations before and I really enjoy his perspective.  We in the industry tend towards the problem being an irrational public – Malcolm insists the public are quite rational and that it is actually the industry that is providing much of the information that frames public views.  An example is the constant talk by the industry about safety and how safety is the most important issue.  While intended to provide comfort, it can achieve quite the opposite effect.  If safety is even more important than generating electricity reliably and efficiently the answer is quite simple – shut down the plants and safety is assured.  I won’t go into more detail but I do recommend you watch Malcom’s presentation when you have 25 minutes to spare.

Or as was so eloquently put by the CEO of Ontario Power Generation at the CNA conference when talking about the nuclear industry, “we make sure to find the black cloud around every silver lining left to our own devices.”  Yes, we in the industry often succumb to the narrative and as Malcom suggests, probably even feed the beast. (Aside:  I also urge you to watch Jeff Lyash’s presentation when you have 20 minutes to spare.  It is an excellent view of the industry going forward.)

So rather than talk about safety and nuclear waste as we tend to do over and over again; in this post I want to help increase awareness of the many benefits that nuclear technology brings to us all across a range of industries.  The paper submitted by Working Group 3 led by Dr. John Barrett, President of the CNA is a must read.  It is one of those papers that once read makes you wonder; why hasn’t this paper been written this way before?  So please read the paper – it is about 20 pages and well worth it.

But for those who may not get there quickly enough here is a summary of the benefits that nuclear technology brings to society each and every day.  As stated in the paper, “Nuclear technology is vital for more than just providing reliable, low-carbon energy. It also has life-saving medical application; improves manufacturing, mining, transport and agriculture; and help us discover more about the planet we live on and how we can sustainably live with it.

So for example, did you know that

  • nuclear technology saves lives through use of radioisotopes for screening, diagnosis and therapy of various medical conditions? According to the WNA, over 10,000 hospitals worldwide use radioisotopes. Radioisotopes are used in therapy to control and damage cancerous growths. Iodine-131 is used to treat thyroid cancer; Phosophorus-32 to treat leukemia.  Nuclear techniques are used for neonatal screening for sickle cell disease, hypothyroidism and cystic fibrosis, as well as childhood cancers.
  • radiation is used to preserve seeds and food products and breed disease-resistant plants. In plant breeding, some 1800 new crop varieties have been developed through mutation induced by ionising radiation.
  • irradiation technology is increasingly being used to preserve food – spices, grains, fruit, vegetables and meat. It avoids the use of potentially harmful chemical fumigants and insecticides
  • use of the IAEA’s Sterile Insect Technique irradiates the eggs of these insects to sterilise them before hatching. The IAEA estimates that, by suppressing insect pest populations with SIT, pesticide use worldwide has been reduced by 600,000 litres annually.
  • in industrial radiography, nuclear substances are used for the non-destructive examination and testing of new materials. Radiation from the substances passes through the material and allows defects in welds or constituency to be recorded on film or a digital imager.

This list does not do justice to the report itself which I strongly suggest you read.  It’s time to stop being on the defensive and make sure that we no longer have to write reports that start with “The public are often unaware of the extent to which aspects of their everyday life involve products and processes originated from the application of nuclear technology via the nuclear industry.”  It is time to celebrate our successes and not just talk about where we need to improve.  We are proud to be part of the nuclear industry and we are confident that we are making a difference that helps to make the world a better place.

It’s not about being “advanced”, it is ongoing innovation that will keep nuclear strong

This month in the United States, the Nuclear Energy Innovation Capabilities Act was passed to support federal research and development and stimulate private investment in advanced nuclear reactor technologies.  All this good news about investment in the future made me think about how we use the words advanced and innovation in the nuclear industry.  We first wrote about innovation in the nuclear sector two years ago.  And what we said then still applies, in fact even more so, today.

When thinking about innovation in the nuclear industry, the discussion often centres around future reactor designs.  However, this far too narrow focus tends to an argument that a so called advanced design is what is required to save the industry and implies that today’s designs are just not good enough.  When we have a technology that produces abundant economic and reliable electricity with very low carbon, all while being one of the safest on earth; what we have today is something worth celebrating.  Yet it is not unusual for some supporters of nuclear power to use the idea that new advanced designs are the magic sauce that will make nuclear great again.

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                    Futuristic Thorium Plant from the Norwegian series “Occupied”

I was recently at a meeting where it was noted by someone who had recently visited Havana Cuba, that without access to newer technology, cars in Cuba are stuck in the past.  The Cubans have found ways to keep these old cars running well past their original lives as they had no access to anything newer.   And while we may find these relics fun to look at, we certainly don’t expect to be driving cars of this vintage.  In fact, we know that while the cars of today basically look the same and operate in a similar manner to those of the 1950s, there is likely not one part that is the same as was made 50 years ago.  Today’s car is made up of different materials, is computer controlled, is way more efficient and much much safer.  This is all due to years and years of innovation.  The same applies to nuclear plants.  What would have happened if back in 1955 or so people only talked about and invested in what would replace cars for individual transport (i.e. “advanced” cars meaning electric vehicles or even flying cars) instead of how to make them better?  The thought of it is just ridiculous.  Yet that seems to be a common view of nuclear – that all we are doing is keeping old outdated plants (like 1950’s cars) operating until we get these shiny new plants of the future ready for deployment.  Nothing can be further from the truth.

While yes, it is important to research and develop new concepts based on specific needs, for example closing the fuel cycle or using new types of fuel such as thorium; it is not the case that this is what is required to continue to evolve safety, reliability and economics.  For that we must continue to focus our efforts on improving what we have – innovating, taking the reactor designs available today – and making them better.  Just like cars, there is abundant technology in any given nuclear plant that extends far beyond what kind of fuel we choose to burn.  Implementing changes means using a large spectrum of new technologies that are being constantly developed as is necessary in every industry that wants to keep moving forward.

A great current example is the commitment in the US through the “Delivering the Nuclear Promise: Advancing Safety, Reliability and Economic Performance” initiative as the way forward to address falling prices of alternative generation options.  As stated, this “three-year program will identify efficiency measures and adopt best practices and technology solutions to improve operations, reduce generation cost and prevent premature reactor closure.”   Now this is what drives innovation.

Extending the lives of current reactors through better understanding of how materials age, first to 60 years and next possibly to 80 years, use of remote tooling to reduce dose and shorten outages, use of new technology in controls to improve reliability; all of these things require innovation.

When it comes to new build, there is innovation in methods to reduce construction time and improve quality such as computer engineering tools, modularization and even simple things such as moving platforms to replace scaffolding and on and on and on.  This is innovation.   And let’s not forget about commercial innovation.  Innovative business models such as those used in Canada for refurbishment and in the UK for new build are critical to future industry success.  This even includes models from places like Russia where they are working with foreign customers in ways thought not possible in the past.  Will this all work?  Some things will and some things wont, but this is innovation.  It is messy, it takes time – and it continues to move the industry forward.  And most of this innovation will apply to all reactor types, todays and those of the future.

I support the development of future designs– just not at the expense of making the public think our current designs have hit their ‘best before date’.  I am concerned that the industry is risking too much on the importance of government money for advanced designs– i.e. here is a few hundred million dollars to study designs for the 2030s so shut up and focus on the future – then come back in 20 years or so when you have the next great thing.  We cannot afford a mindset that says nuclear must stop until then as the world continues to build more and more gas plants and renewables.  Every year these alternatives, wind and solar get better – and we need to do the same (and frankly we are).

The world needs abundant low carbon, economic and reliable electricity now if we are to replace coal and meet the needs of an energy hungry world.  To meet the WNA target of 1,000 GW – 1000 new, 1000 MW nuclear plants by 2050 means we need to be building lots of new plants TODAY – not waiting until the next big thing comes around in a decade or two.

So, today’s nuclear technology must continue to move forward and demonstrate it is a technology of the future and that improvements are continuing to come that make every project better than the last.  We need to better celebrate our achievements and we need to continue to invest in further innovation because there is no choice but to continue to get better.

Our strength is through our performance.  And our performance continues to get better through innovation, each and every day.

Canada makes big decisions to further strengthen its commitment to nuclear power

As Canadians, we were truly excited when this past fall, Arthur McDonald of Queens University in Canada was jointly awarded the Nobel Prize in Physics with Takaaki Kajita of Japan for discovering that neutrinos have mass. Dr. McDonald and his Canadian team captured neutrinos using a uniquely sensitive new detector 6800 feet below ground at the Sudbury Neutrino Observatory (SNO).  SNO is a collaborative effort by six Canadian universities and the group were able to borrow $300 million worth of heavy water – used in the country’s CANDU nuclear reactors- for 10 years for $1. Dr. McDonald began his career at the AECL Chalk River Nuclear Laboratory (now CNL) and is the 4th Nobel Laurate to have worked there.

Nobel

When we think about nuclear power around the world these days, two things come to mind – the rapid growth in Asia led by China fueling the industry forward, and the challenges facing the industry in the west with some plants closing early in the USA and new build projects in Europe being delayed and over budget. With so much going on in the global nuclear industry – it’s hard to find people talking about Canada and our home-grown CANDU reactors. In fact, in my very frequent travels, I often get asked if there is anything at all going on in the Canadian industry.

Well, we are here to tell you that nuclear power is indeed alive and well in Canada – and that 2015 was a bellwether year with hugely important decisions having been made by government that will set the stage for a strong nuclear industry for decades to come.

Canada is blessed with natural resources. When it comes to electricity, Canada has one of the lowest carbon and most economic generation anywhere. Most of the country is lucky to have large hydro resources, so much so that in Canada, we call electricity “hydro”, not electricity. We pay the “hydro” bill and worry when a storm knocks down “hydro wires”. Many of our electric companies have the word “Hydro” in their name. Yet what many people do not know is that in Ontario, Canada’s most populous province, about 60% of our electricity is generated by nuclear power. Yes, in Ontario more than half of our electricity comes from nuclear plants. And in New Brunswick, the only other province with an operating nuclear plant; the 630 MW Point Lepreau Generating Station is the workhorse of the electrical system, supplying a third of that province’s electricity.

Ontario’s nuclear electricity comes from three plants operated by two utilities. The Bruce Nuclear Power Station, again to many people’s surprise, is currently the world’s largest, generating 6,300 MW of electricity, and the Darlington Nuclear Generating Station and Pickering Nuclear Generating Station together add another 6,600 MW to the system. While these stations are generating most of Ontario’s electricity, these units are aging as are most nuclear power stations in the western world. CANDU type reactors can be refurbished to extend and effectively double their operating lives, but this requires significant investment and hence, a strong commitment to a nuclear future.

Over the past two months, decisions have been taken by the government of Ontario to refurbish both the remaining 6 units at Bruce (2 have already been refurbished) and the 4 units at Darlington. Together this represents a 15 year, $25 billion program of work that will have these nuclear units remain the backbone of the Ontario electricity system until the 2060s. Making things even more interesting, the Bruce refurbishment will be undertaken by Bruce Power, a private sector operator with private funds, through an agreement to buy electricity from the Ontario Independent Electricity System Operator (IESO) while the Darlington refurbishment will be undertaken by its public sector owner/operator, OPG on a regulated basis.  To top it off, a decision was also taken to extend the lives of the older Pickering units to 2024 before they are shut down at their end of life.

This is an exciting time for the nuclear industry in Canada. These refurbishment programs provide the industry with a stable work environment for the next 15 years, allowing it to hire and train a new generation of young engineers and trades people who can look forward to an exciting career in nuclear.

This alone would be exciting enough as Canada recommits to nuclear power for the long term, but that is not all. Canada has long been known for its excellence in nuclear research. The Chalk River Nuclear Laboratory has been an institution in nuclear research for 60 years. Today CNL has emerged from its restructuring as a government-owned, private-sector run world-class nuclear research centre.

And finally, we cannot talk about the nuclear industry in Canada without talking about uranium. Canada’s Athabasca Basin is home to the world’s highest grade uranium and is the world’s second largest producer of uranium, fueling nuclear reactors around the world, helping countries lower their carbon emissions.   This past year Cameco, the region’s major producer, placed its newest uranium mine, Cigar Lake, into production producing about 10 million lbs of U3O8 and is on track to increase this production to 16 million lbs in 2016. They also signed a deal to provide India with uranium, the first since Canada and India signed a nuclear cooperation agreement in 2013, paving the way for renewed nuclear cooperation between these two countries.

As Canadians, we were extremely proud to see Dr. McDonald’s work recognized with a Nobel prize. Canada has a great history of research and development in the nuclear industry, from fundamental nuclear physics to medical applications to power production. This is a pleasant reminder as to why we went into this challenging industry so many years ago. At that time, we had a vision – to make the world a better place through use of clean, economic, safe and abundant nuclear energy. Now here we are 35 years later – a little grayer and with a little less hair – and with the decisions made this past year, we feel confident that Canadians will continue to reap the benefits of this industry for the foreseeable future.

 

Abundant and economic – Nuclear power delivers

The past few weeks have seen lots of excitement as the world reached agreement to tackle climate change in Paris. What is key to the Paris deal is a requirement that every nation (all 195 of them) take part. Ahead of the talks, governments of 186 nations put forth public plans detailing how they would cut carbon emissions over the next 10 to 15 years. However, these plans alone, should they come to fruition, will cut emissions by only half the levels required to meet the targets set out in the agreement. The plans vary significantly from country to country with some like China depending upon nuclear power as part of their plan – and others not. With no concrete plan to achieve the goals in the agreement, one thing is clear; that if there is any chance of meeting these ambitious goals, there will have to be a larger role for nuclear power.

Critics of nuclear power generally focus on two main issues: safety, mostly concern that the consequences of a possible nuclear accident are not worth the risk; and cost, with many noting that nuclear is a high cost option that just diverts funds from the real environmental options for future generation, wind and solar. This month we will talk about cost and how to ensure that nuclear is seen for what it is, a capital intensive yet highly economic option for reliable 24/7 generation. If nuclear is to play the role that it can, and must play in the future generation mix, it can only get there by being the economic option of choice.

In our last post we noted the updated version of “Project Costs of Electricity” has recently been published. This is an important report that is now in its 8th edition from the IEA and NEA looking at the costs of various forms of electricity generation.

The results of this study are very clear. It shows that nuclear is a very competitive option on a Levelized Cost of Electricity (LCOE) basis.

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renewable costs 2015 dec

In fact, at low discount rates (3%), it is the clear winner among both traditional fossil technologies and the cost of renewables. While the report acknowledges the huge gains made by renewables in reducing their costs, it also notes the belief that nuclear costs continue to rise is false.

What is of interest is how the results are presented. The main comparisons in the executive summary are provided varying only one parameter, discount rates, that range from 3% to 10%. This represents a three-fold increase in the discount rate over the range. It is therefore not surprising that the technologies that are capital intensive, i.e. nuclear and renewables show the greatest sensitivity to this one parameter. This is one way to look at the comparative economics. On the other hand, generating stations powered by fuels like coal and gas are much more sensitive to fuel price. This sensitivity is only shown later on in the report in a sensitivity section.

                                       Figure 7.12: LCOE as a function of fuel cost

Fuel Sensitivity

So for example, while gas plants (CCGT) vary little with discount rates due to their relatively low capital costs and higher fuel costs, their LCOE is very sensitive to fuel prices. In the chart above, the sensitivity only varies fuel prices by up to 50%; rather small in comparison to the three-fold change in discount rates in the earlier chart. Yet we all know that today’s very low gas prices in North America are easily less than half as much as they were only a few years ago. Doubling gas prices or more would have a huge impact on electricity costs.

As would be expected, the economics also vary by region. It is no accident that China is building the most nuclear plants in the world. Even though they are also building many more coal plants to meet their ever increasing hunger for energy, nuclear plants provide clean reliable energy at about half the cost of coal in China making it an easy decision to move forward with new nuclear plants as quickly as they can. On the other hand, this past month we have once again heard about nuclear plants in the United States that are likely going to close prematurely due to poor economics. This results mostly from very low gas prices that impact the economics in those parts of the country that have open competitive markets. The units that are most impacted are the older smaller single unit stations that are requiring capital investment at this stage of their life cycle. Without any acknowledgement of the low carbon characteristics of nuclear, or the reliability of fuel supply (gas plants generally are fed by pipelines that are at risk in cold winter months), these units are struggling. Yet the industry in the USA is not standing still. As reported in the December 10 Nucleonics Week, the US industry is targeting to reduce its costs for the existing fleet by 30%. Once achieved, this will ensure that once again nuclear will be the lowest cost generation on the system.

However, this is only the first step. Being a low carbon generator is only sufficient to ensure that nuclear remains an option. The key to long term success is the ability to reduce the capital costs of constructing the plant; producing low cost energy is what will really drive a strong new build program. This can be seen in countries such as China and Korea, where capital costs are relatively low, making nuclear by far the most economic option available. Lessons learned in these markets must be shared and implemented globally to bring down capital costs in other markets as well. China and Korea are showing the way. If the rest of the world follows, abundant nuclear power will play a large role in tackling climate change as the electrical grid workhorse of reliable low-carbon and mostly, economic generation, for decades to come.

Dreaming of a future with abundant clean reliable energy – then dream about nuclear

When we look to the future, people the world over are hopeful for an era of abundant reliable electricity supplying all of our energy needs; all at a reasonable cost and with little to no impact to the environment. Unfortunately, in many western countries the politics of electricity planning has become largely a case of exploring the depths of our imagination with no real path to achieving this essential goal.

As stated by Malcolm Grimston at the World Nuclear Association (WNA) Annual Symposium last month in his brilliant talk “Sclerosis at the heart of energy policy” (in advance of a book he has coming out), we have become so accustomed to reliable and cost effective electricity supply that we can no longer ever consider a scenario where this can be at risk. He noted we even use the less than frightening phrase “keeping the lights on” when talking about reliability which greatly understates the importance of reliable electricity supply to our modern society. (As he said, he turns out his lights every night without concern – certainly a large scale disruption to our energy supplies would be much worse than having the lights go off.)

Given we can’t imagine electricity reliability to be at risk; and given we have relatively slow growth in most western advanced economies there is a major reluctance to take decisions to protect and invest in our infrastructure for the future even while we want to work towards decarbonizing the system. Yes electricity demand growth is modest, but our lives depend more on reliable electricity supplies than ever before. Without electricity society quickly becomes paralyzed with no ability to communicate, travel, maintain our food supply, sanitation, deliver health care and so on…in fact it is very difficult for us in all of our modern comfort to imagine how severe the consequences would be. Therefore in our great complacency we continue to do nothing because we all expect that the next great technological breakthrough is just around the corner. All we need to do is wait and advanced renewables will be available so we can have clean limitless energy forever. And so goes the narrative.

Ben Heard in his excellent WNA presentation “World without Nuclear” quotes Naomi Klein as she spoke to the media against the nuclear option in South Australia – “What’s exciting about this renewables revolution spreading around the world, is that it shows us that we can power our economies without the enormous risk that we have come to accept”. She said the latest research showed renewables could power 100 per cent of the world’s economies. “We can do it without those huge risks and costs associated with nuclear so why wouldn’t we?” she said.

But of course if it sounds too good to be true, it probably is. Ben’s presentation goes on to review 20 studies that suggest that a world powered by 100% renewables can be a reality. However, in his review he rates most of these studies as poor. Overall he concludes that there is actually scant evidence for 100 % renewable feasibility while the literature affirms large dispatchable, i.e. guaranteed 24/7 supply is indispensable. His final conclusion is that global decarbonization requires a much faster-growing nuclear sector.

Fast Decarbonization

Reproduced from Agneta Rising Presentation at the WNA Annual Symposium 2015

But how can we have more nuclear when it has this perception of huge risks? We have written extensively on the issues associated with the perception of nuclear as a dangerous technology when in reality it has the best safety record of all technologies out there so we won’t talk about that again now. In his presentation Malcolm Grimston places much of the responsibility for this public perception squarely on the nuclear industry noting that the industry “spends half of its time implying that it is the new priesthood, with superhuman powers to guarantee safety; and the other half of its time behaving as if radiation is much much more dangerous than it actually is.” While it is hard to know what comes first, the fear or the industry reaction to it, we certainly agree that Malcolm makes a good point.

Then there are those that say nuclear power is way too expensive to be part of our future electricity system even though there is no doubt that wind and solar power are clearly the more expensive options. The most recent edition of “Project Costs of Electricity”; an important report that is now in its 8th edition from the IEA and NEA looking at the costs of various forms of electricity generation has just been published. (This report is a must for anyone seriously looking at trends and costs of electricity generation around the globe.) While the report acknowledges the huge gains made by renewables in reducing their costs, it also demonstrates that nuclear power is one of the lowest cost options available depending upon the scenario. Of more importance, the report notes that the belief that nuclear costs continue to rise is false stating that, in general, baseload technologies are not increasing in costs and specifically “this is particularly notable in the case of nuclear technologies, which have costs that are roughly on a par with those reported in the prior study, thus undermining the growing narrative that nuclear costs continue to increase globally”.

We will have more to say about this report in upcoming posts. But for now, let’s all do more than dream about a future of abundant, reliable, clean and yes, economic electricity; let’s make this dream a reality by making sure that the electricity system of the future includes highly reliable 24/7 nuclear power.

Optimism is the way forward – Nuclear Power delivers

We had an important piece of good news this month as Sendai Unit 1 was restarted in Japan, ending a long period of no nuclear generation in that country after the Fukushima accident in 2011. Sendai Unit 2 is following close behind and Japan will continue to restart many of its nuclear plants as it moves to put the accident behind it and reap the benefits of nuclear generation once again. Recent experience without nuclear has led the country to import vast quantities of fossil fuels, increase its carbon emissions and damage its balance of trade. While difficult for many, the Japanese understand the benefits of continuing with nuclear power are essential to the well-being of their society.

Sendai Nuclear Japan

                                                   Sendai Nuclear Power Plant

Unfortunately as we have learned from this accident so far, it is fear of radiation that is having the largest impact on peoples’ health rather than the radiation itself. To date no one has died from radiation at Fukushima and no one is likely to die from radiation in the future, yet fear is what is consuming these people and their lives – and the policy decisions being taken by government.

Of course, we must always think about those that were directly impacted by the accident. Many remain out of their homes and those that are permitted to return are often afraid. We must continue to understand their plight and work together to help them get their lives back and of most importance, once again have hope for their future.

A couple of weeks ago I was watching Fareed Zakaria on CNN interview President Obama about the Iran nuclear deal. I don’t want to talk about that here but I do want to share Fareed’s thoughts on President Obama’s optimism. He suggested that Obama is an optimist and noted that “history suggests that it’s the optimists who have tended to be right”. He went on to say that “today we are awash in pessimism, with people who see the world as a dark and dangerous place, where threats are growing and enemies are gaining strength.”

It made me think of our own world of nuclear power, where we are awash in pessimism; And it is easy to be pessimistic when articles such as the one by Michael Ignatieff, (who has previously run for Prime Minister of Canada) concludes after his visit to the Fukushima area with a message that seems to be the prevailing view of nuclear power to many. “For the rest of us, outside Japan, we have moved on, more dubious about nuclear power than before, but still locked into the energy and economic system that requires it. Fukushima is now classed with Three Mile Island and Chernobyl in a trio of warning disasters, but so far none of these has persuaded the world, at least so far, to exit nuclear.” Clearly the message is – we need it for now, but when are we going to realize that the risk is just not worth the benefits?

It is easy to be pessimistic when there are documentaries that reach similar conclusions. In “Uranium – Twisting the Dragon’s Tail” by Dr. Derek Muller, a physicist by training, the two part series focused on the bomb in Episode 1 and on the accidents at Chernobyl and Fukushima in Episode 2. Watching one can see that positive facts are presented such as radiation is not as dangerous as people think but the series is not about the benefits of nuclear power – rather it focuses on fueling the fear.

And there is no doubt the biggest issue is fear of radiation. As stated in Mr. Ignatieff’s article, “Today, Tokyo shoppers still won’t buy rice, soya, or miso produced in the region and nobody will touch the catch from the local fishermen, even though the fish have been pronounced safe.” On his visit to the region he says “In the enclosed valleys, as our bus climbed up the winding roads towards the coast—still many miles from the nuclear plant—radiation rose to double the levels in Tokyo. We’re told it’s safe to travel to Namie but it’s still not clear what safe means.” After this accident trust is in short supply and lack of trust definitely increases the fear.

What is also clear is that setting policy based on fear does not result in good policy. In Germany, they prematurely shut down safe, effective and economic plants much earlier than needed. Even while building a huge amount of renewable generation, the Germans had to also build new coal plants both increasing electricity costs and emissions. It doesn’t take much to realize that even with a strategic goal of eliminating nuclear power, taking the time to build clean replacements and shutting the existing plants down more slowly would have worked just fine – but setting policy driven by short-term fear of radiation doesn’t allow for sensible decisions. With over 200 nuclear plants throughout Europe, nuclear power has been a safe and essential element of electricity generation for decades without a single incident of harm.

Going back to what was said by Fareed Zakaria, “history suggests that it’s the optimists who have tended to be right”, we definitely choose to be optimistic and here is why.

The world needs clean and abundant energy for a better future for us all. For those with limited or no access to a reliable source of electricity, providing this resource makes a huge positive impact in their standard of living. And while we all agree that in richer countries there is opportunity to become more energy efficient, just look how dramatically our lives are impacted if there is an outage for any sustained period of time. Nuclear energy meets that need. It provides clean, abundant, economic and reliable electricity. Its energy density is matched by none so it can provide huge quantities of electricity from very small quantities of fuel, clearly what will be needed as the world population approaches 9 billion in the years to come.

The rapidly growing economies in the world like China and India are very aware of the benefits that come with robust nuclear programs as they embrace nuclear power to support their rapid growth in energy demand. Other energy-poor countries are also eager to move forward. The 67 units under construction around the world represents the largest new build program in decades and while many (25) are being built in China, the rest are distributed in 12 different countries.

But most of all what makes us optimistic about the future are the large numbers of energetic, bright and talented young people entering the industry. This month I had the opportunity to lecture at the World Nuclear University Summer Institute in Uppsala, Sweden. The current generation of young engineers and scientists have grown up in an era where they are strongly supportive of technology and believe that anything is possible if they put their mind to it. It did not take long to see that the future of the industry is in good hands.

The time has come to get off our hind foot and stand up proudly and proclaim what we know to be true – that nuclear power has an important place in the world and will continue to expand its role as we need reliable economic and abundant energy for society. It is an essential energy option of choice, not of last resort, that we shouldn’t wish we could do without.

Reliability means being connected – we need a strong integrated electricity system with nuclear generation as its workhorse

It was with great fanfare that Tesla launched its home battery recently.   Headlines like “Tesla launches Powerwall home battery with aim to revolutionize energy consumption” were the norm as the public read about this revolutionary jump forward in energy storage. A recent article on where famed author Margaret Atwood is investing says it all …. “if [Tesla CEO] Elon Musk was putting his Powerwall on the market, I would certainly buy a piece of that. My feeling is that, once that becomes affordable, everyone is going to do that. I think that’s definitely the wave of the future.”

After all, this is the dream isn’t it? We can all generate our own electricity with clean energy efficient solar panels and store enough on our home batteries to keep us going when the sun goes down. What can be better for our common future?

Well, in fact, just about everything.

It must be my age and my years in the energy industry that remind me of what are the real essential attributes of electricity supply. Reliability and Economics. Yes, that’s right. For anyone who works in a modern electricity utility, that is what they focus on; delivering cost effective reliable electricity to users. And in today’s energy intensive world where we need electricity for every aspect of our hyper active and energy intensive lives, this is even more critical. We have all experienced temporary blackouts and know well the negative impact it has. The problem then with renewable energy generated at home is that, at least for now, it is neither reliable nor economic. Since the announcement from Tesla there have been a number of articles that explain this in detail, but of course supporters will just say that in time all problems will be solved. And frankly they may be right.

solaratnightv1

So let’s step back and ask ourselves a more important question – are we trying to solve the right problem? Most people have no idea what it takes to generate and deliver the electricity (the so-called “grid”) we take for granted in the modern world. In fact, many just think electricity is something that comes out of the wall outlet. What we all want is that when we turn on the switch, or plug in our phones, it just works. We are not in any way prepared for a world in which we say – oh, it’s cloudy so we better not charge our iPhone today! I love the recent TV ads where BMW is explaining how they build their new I3 electric car in wind powered factories. Yet, do any of us really think that on days when it is not windy, these factories sit idle? No, of course not.

In most advanced economies around the globe we have achieved a high level of reliability in electricity supply. In fact this is one of the measures that makes an economy ‘advanced’. The problem is that much of our electricity is generated with fossil fuels; primarily coal. (Coal continues to be the largest source of Germany’s electricity where BMW has its factories, at nearly 50% of total supply). And along with this comes both pollution and a high level of carbon emissions. Therefore, the only way to address these environmental issues is to reduce the use of fossil fuels, not to eliminate an integrated grid.

Just like being connected to the internet improves our lives, so does being connected to a reliable electricity grid. Do we really want to live a life where if it is cloudy for a few days and our batteries run dry we do without? Of course not. Just imagine how much excess battery capacity we would each need to avoid this possibility. Even Elon Musk notes that his battery is currently for emergency backup – not for daily use – and yes it would be great to have some amount of reasonably economic backup for when we experience an outage. But as is starting to be seen in California where there are numerous discussions of the “duck curve”, people want it all – they want to generate their own electricity when they can believing this is the best approach, but they also want the system to be there just in case they need it; and at a moment’s notice. The result – higher costs all around. The less the grid system is used, the more it costs to keep the infrastructure in place to make up the shortfall when needed.

The answer is simple, let’s take what works and make it even better.  That is a large interconnected grid that includes large scale reliable economic generation based on nuclear power, and hydro where available, supplemented by wind and solar depending upon the local availability of these resources. To be reliable and cost effective, a system needs generation that can run all the time, not just when the wind is blowing or the sun is shining. As storage technology improves, it can then contribute to both help manage the intermittency of renewable generation as well as flattening the demand curve to enable an even larger share of nuclear generation.

Remember, our economy, and in fact our very way of life, is completely dependent upon the availability of reliable, clean and economic electricity. So while we may dream of not needing the grid as we each generate our own electricity, what we really need is a strong well interconnected grid made up of reliable economic nuclear power as its work horse, with wind, solar and other forms of generation contributing when they can; all coupled with new forms of large scale storage to both even out demand and supply. Now this is more likely to be the system of the future.

It’s time to put nuclear on the offensive – and make it the low carbon energy generation option of choice

Have you ever seen something that just amazed you? We were wowed by a recent YouTube video showing what the Chinese have achieved in turning conventional high-rise construction on its head. A 57 story building was built in 19 days – yes – 19 days! Who would ever believe this could be possible? I live in Toronto, a city that has been undergoing a huge hi-rise building boom over the last few years and the time it takes to build these tall towers can be measured in months and years, not days. This just shows what can be achieved when the imagination is let loose and innovation results in outcomes never before thought possible.

We first wrote about the importance of innovation in the nuclear sector last year. In its history nuclear power has shown incredible innovation, leading the way in a range of technologies especially with respect to delivering a level of safety and security not seen in any other industry. More recently there have been dramatic improvements in operations as the global fleet has reached a level of performance never even dreamed of in the early days of the industry. Current new build projects are using the most up to date methodology in modularization and other advanced construction techniques.

And yet when the IEA issued the 2015 version of its Energy Technology Perspectives (ETP 2105) report focusing on the need for energy technology innovation if the world is to address climate change; it doesn’t mention this innovation, nor does it include discussion of potential future innovation with respect to the nuclear option.

As stated, “Energy technology innovation is central to meeting climate mitigation goals while also supporting economic and energy security objectives. Ultimately, deploying proven, cost-effective technologies is what will make the energy system transformation possible. Continued dependence on fossil fuels and recent trends such as unexpected energy market fluctuations reinforce the role of governments, individually and collectively, to stimulate targeted action to ensure that resources are optimally aligned to accelerate progress. Establishing policy and market frameworks that support innovation and build investor confidence over the long term is a first-order task to deliver.”

The report is clear when it says that “Innovation support is crucial across the low-carbon technology spectrum”. The discussion focuses on renewable technologies in the short term due their relative readiness and lack of a need for long term investment in development; and carbon capture (CCS) in the medium to longer term even though it requires substantive investment in development as it remains essential to address the large number of fossil plants being built and still in operation by 2050 that will require decarbonizing.

As usual, the same issues that have plagued nuclear for the last 30 years; primarily public acceptance issues, mute a positive discussion for the nuclear option. While recognizing its importance in achieving increased energy security, diversity of fuel supply and lower emissions, the report goes on to state “this awareness has yet to be translated into policy support for long-term operation of the existing fleet and construction of new plants” … “to recognize the vital contribution that nuclear energy can make.”

Yet the actual IEA scenarios have changed little from last year. As shown below, when considering technologies individually (rather than grouping into “renewables”), nuclear actually plays the largest role of any single technology in meeting carbon reduction targets showing that, even as it is stands today, the nuclear option is absolutely essential to moving to the IEA 2 Degree Scenario (2DS).

ETP2015

This can only be the case if nuclear is currently meeting its responsibility to be economic and reliable while being an essential large scale low carbon option. Given that we know the largest challenges in building new nuclear plants is related to their relatively high capital costs and long project schedules relative to other options; consider the role nuclear can play if improvements similar to those demonstrated in the Chinese YouTube video were implemented. Not marginal improvements, but mind blowing changes in approach that shake current thoughts about the costs and schedules of nuclear projects to their very core. This is the way forward. While discussion of next generation plants and SMRs is of interest, we need continued innovation that takes what we know now and improves it beyond what anyone can imagine.

The report shows that government investment in nuclear R&D has been dropping and in renewables has been increasing. This investment must be refocused on project improvement and innovation rather than the traditional areas of research such as safety and waste management where it has been spent for decades. While important for the nuclear industry, too much of this spending is focused in these areas just to pander to the ongoing public beliefs that safety and waste issues remain unresolved. Rather, emphasis should be on continuing to improve new build project performance. Let’s think about new build nuclear in the same way we think about renewable technologies; that more investment and research will lead to shorter construction schedules and lower costs. It is time to let the innovation genie out of the bottle, stop being on the defensive and move forward with great things. With changes like this, the nuclear share will grow well beyond current expectations bringing a real solution to climate change while keeping electricity bills low and system reliability high.

So remember, nuclear power is essential in achieving increased energy security, diversity of fuel supply and lower emissions; and is already expected to have the largest impact on meeting climate goals of any other single technology. Today’s plants are economically competitive and provide safe and reliable electricity. Talking about investing in energy innovation without a discussion of investing in nuclear, when it’s currently the best option available, is absurd. Governments need to recognize the incredible innovation already achieved by the nuclear option, and unleash even greater potential by investing in this well proven technology.