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If we are serious about carbon free electricity – there must be more nuclear power

Last month, we wrote about the ongoing push by the United Nations to combat climate change and its underwhelming support for nuclear power as an important part of the solution. To no one’s surprise, the final volume of the current IPCC report on climate change issued November 1 is no different. Yet this report is very clear in its conclusion that limiting the impact of climate change may require reducing greenhouse gases emissions to zero this century. So while the world is focused on developing a range of new technologies to meet this challenge, fossil fuel use continues to grow. In reality, the answer is right in front of our eyes. What the world needs is a massive increase in nuclear power.

While many will write about this most recent IPCC report, we want to bring some new perspective and once again discuss the role of nuclear power as an essential tool to reduce carbon emissions. There are a few new studies and announcements this past month that show the paradox of current policies.

First there was a study released in Nature that suggests that even though natural gas emits about half the carbon of coal, abundant natural gas alone will do little to slow climate change. The study’s lead author Haewon McJeon, an economist at the US Department of Energy’s Pacific Northwest National Laboratory said, “Global deployment of advanced natural gas production technology could double or triple the global natural gas production by 2050, but greenhouse gas emissions will continue to grow in the absence of climate policies that promote lower carbon energy sources.” This is in contrast to many who believe that gas is an important part of the solution. We have no issue with gas and believe it can be an important part of a diversified electricity system; but according to this study, it is not a great tool in the fight against climate change.

Of even more relevance to the discussion, a recent report issued by Hatch Ltd. in Canada,”Lifecycle Assessment Literature Review of Nuclear, Wind and Natural Gas Power Generation”, demonstrates the challenges of relying too much on wind to drive down emissions. This report notes that wind as an intermittent resource is usually backed up by gas. So if wind generally operates about 20% of the time, the gas backup would be operating the other 80% continuing to emit carbon. Therefore nuclear emits some 20 times less carbon than a wind/gas combination (see figure below). Most of us in the energy industry know this is why gas producers are often strong supporters of wind and solar. While the public believe wind is good for the environment; it’s even better for the gas industry.

Even the wind industry acknowledges these results. They note this is only one scenario and that there are more plausible scenarios where wind would be supported by demand side management, storage and other means of clean generation. This is indeed a laudable goal for the future, but the reality remains, today most renewables are backed up by gas.

HatchEmissions

All of the above would suggest that there should be more support for nuclear as a very important element for a solution to climate change. It is effective and available today and most of all can provide large amounts of clean reliable electricity.

In fact, the public is quite aware of this. A just released study in the USA is showing eighty-two percent of those surveyed agree with the statement, “We should take advantage of all low-carbon energy sources, including nuclear, hydro and renewable energy, to produce the electricity we need while limiting greenhouse gas emissions.” Further 75 percent of those polled said nuclear energy will be “very important” or “somewhat important” in meeting America’s future electricity needs. Seventy-three percent of those surveyed associate nuclear energy with clean air. Clearly a very important step in securing the support required to increase the use of nuclear energy.

On the other hand, we have also seen more negative political views. In Sweden, after reconfirming the need for more nuclear power in 2009; the outcome of the most recent election had the new government stepping back in order to gain support from the Greens.   Social Democrat leader Stefan Lofven said “Sweden has very good potential to expand renewable energy through our good access to water, wind and forests. In time, Sweden will have an energy system with 100% renewable energy.” Reality clearly has no place in politics.

And of even more concern is the recent vote by the French parliament to reduce the use of nuclear energy from 75% to no more than 50% by 2025. They must remove a plant from service when Flamanville comes into service in the next year or so as the amount of nuclear power cannot increase.  And it looks like the French president himself will take the decision on which plant to shut down. Taking safe clean reliable power out of service prior to its end of life purely as policy seems foolish at best. The Hatch study shows this strategy will most likely lead to increased use of fossil fuels and thus higher carbon emissions at least in the short to medium term. This is exactly what we have seen in Germany. Taking a large amount of nuclear out of service is requiring the construction of new coal generation even though Germany is expanding renewable generation at a very high rate.

So what does this all mean? As we have said many times before, removing and / or reducing nuclear strictly for policy reasons, especially in the case of successfully operating units means only one thing – that there remains an overriding societal belief that nuclear is not safe – and therefore less is always better than more. While some environmentalists now realize this is not the case; this truth has not yet caught up with the public at large and hence is not always supported by their politicians.

The IPCC report is clear that the world must take action to combat climate change. Nuclear power is the only large scale source of clean abundant reliable electricity generation available and that should make it an essential part of the solution. Trying to generate all electricity with zero carbon emissions without making extensive use of nuclear power is simply making what is already very difficult, pretty much impossible.

Attention to climate change is on the rise… nuclear power is an essential part of the solution

September 2014 was a most interesting month in the fight against climate change. As world leaders prepared to meet at the United Nations Climate Summit on September 23, there was a large global march in New York on September 21 to bring public concern for climate change to their attention. As stated by the UN meeting chair, “The purpose of the 2014 Climate Summit was to raise political momentum for a meaningful universal climate agreement in Paris in 2015 and to galvanize transformative action in all countries to reduce emissions and build resilience to the adverse impacts of climate change.”

climatechange march2014

The New York march had some 300,000 participants, well above the 100,000 people expected. Has the tide turned and is climate change finally getting the international attention it deserves? Is public concern finally pushing governments to act? The climate summit had a large attendance, including 100 Heads of State and Government and more than 800 business and other leaders.

The summit did appear to make progress. A summary of the outcome can be read here. Of importance,

  • World leaders agreed that climate change is a defining issue of our time and that bold action is needed today to reduce emissions and build resilience and that they would lead this effort.
  • Leaders committed to limit global temperature rise to less than 2 degrees Celsius from pre-industrial levels.
  • Leaders committed to finalize a meaningful, universal new agreement under the United Nations Framework Convention on Climate Change (UNFCCC) at COP-21, in Paris in 2015, and to arrive at the first draft of such an agreement at COP-20 in Lima, in December 2014.

Another important gesture of the new global commitment to reducing carbon was the fact that the Rockefeller Brothers Fund, which has $860 million in assets and was founded in 1940 by the sons of oil tycoon John D. Rockefeller, decided to divest its fossil fuel holdings in response to climate change and announced this just prior to the UN meeting.  While this fund is not huge in size, the statement is important given the Rockefellers made their fortune in oil. This announcement makes their fund join the approximately 800 other global investors representing $50 billion in assets who have decided to move away from fossil fuels to support a solution to climate change.

So what about the role of nuclear power in this fight to reduce carbon emissions? The Economist published a very interesting figure demonstrating that, when it comes to energy production, the worldwide use of nuclear power is second only to hydro (and not by much) in having reduced global emissions to date. And while renewables are a growing source of emissions-free energy, all other efforts to reduce emissions have been one or two orders of magnitude less effective in reducing global carbon so far.

Economist climate change 2014

Nuclear power’s critical role in the fight against climate change has been confirmed by US Energy Secretary Montiz who has said “that nuclear energy, as an important low carbon energy source, must play a major part in meeting the most pressing challenge of climate change.”

Yet there continues to be a disconnect. Looking deeper into the outcome of the UN Climate Summit, their statement on energy says “A shift toward renewable sources of energy such as solar, wind and geothermal — along with greater energy efficiency in appliances, buildings, lighting and vehicles — is essential to use the world’s resources sustainably, diversify economies and successfully address the challenge of climate changes. Sustainable Energy for All, an initiative led by the United Nations and World Bank, has set 2030 as a goal for doubling the global rate of energy efficiency improvement, doubling renewable energy’s share in the global energy mix, and ensuring universal access to modern energy services.”

The same goes for the Rockefeller Brothers Fund. Stephen Heintz, president of the fund, said in their statement, “We are quite convinced that if he were alive today (John D. Rockefeller), as an astute businessman looking out to the future, he would be moving out of fossil fuels and investing in clean, renewable energy.”

As I see it, there has to be a more explicit understanding by the UN and others that nuclear power has and continues to be a leading source of low- carbon energy. The implication of their words seems to be the future belongs to renewables (solar, wind and geothermal). Nuclear is not explicitly mentioned yet, as illustrated by the Economist, it is a very clean technology playing an essential role in reducing carbon emissions. In fact, the word nuclear seems to be purposely avoided. Why is this? As an industry, we have allowed these beliefs to be perpetrated. Somehow we have tolerated nuclear power being seen as yesterday’s technology while solar and wind are tomorrow’s. Or is the issue that we have allowed the fear of nuclear to persist and continue to outweigh the potential benefits to many?

This is a major concern and a disservice to the fight against climate change. As one of the outcomes of the UN Climate Summit is a commitment to increase the amount of funds available to support clean energy technologies, it is essential that nuclear power be specifically included. Yet in their statement on financing, we see “the goal of reaching a “Clean Trillion” in annual energy investments has been a widely cited target, with a minimum of 5% of a portfolio invested in renewables and clean technology as a benchmark for investors.” It’s time for nuclear to be included as the clean energy technology leader that it is.

The time to act is now. There is work to do to ensure that, as climate change concerns continue to build, government policies around the world recognize an essential part of the solution is a significant new nuclear build program using both technology already available today as well as continuing to invest in the more fuel efficient nuclear technologies of future. And that means funds being allocated to a cleaner tomorrow be directed to new nuclear as well as all the other initiatives to reduce the global carbon footprint.

The importance of innovation to the nuclear industry

A comment caught my attention at a recent nuclear industry event.  The comment was that a hi-profile agency with a mandate to do research in advanced technology across industries had no interest in attending any events to learn more about nuclear power – primarily because “nuclear is not innovative”.  In reality, there are numerous examples of how the nuclear industry has and continues to improve through innovation. 

In exploring this comment, what we found was a belief (likely more prevalent than we would like) that renewables like wind and solar as well as various storage technologies are moving forward, innovating to become the energy source of the future, while old technologies like nuclear are past their prime heading into old age.

The discussion then moved to future reactor designs as proof of innovation in the nuclear industry.  Look at fast reactors, thorium reactors or even SMRs.  Although these are all interesting, it was pointed out that these represent “novelty”, not innovation.  And to argue that a novel design is what is required to save the industry (although they will come) gives the message that today’s designs are just not good enough – and that is absolutely not true.

The public looks at nuclear power and sees a staid industry, some think in decline, that is building technology that has been around for 50 years.  Granted some nuclear projects continue to be built above budget and over schedule, while other “newer” technologies continue to improve and reduce cost and schedule – as would be expected when developing technologies of the future.

However, there are numerous examples of innovations across the nuclear industry.  For example, China has made improvements to the Daya Bay CPR1000 design at Lingao.  They increased the output by about 100 MW through an improved turbine, and made great advancements to the control systems by adding distributed control.  At Nuclear Power Asia in Vietnam this past month, a presentation by Mitsubishi showed how they improved their construction schedule from 77 months to 50.5 months from the Ohi 1 project to Ohi 3.   Westinghouse is learning lessons from its experience in China and is applying them to their AP1000 projects in the US using advanced modular construction technology. And here at home in Canada where Bruce Power, whose tag line is “Innovation at work”, has found ways to increase the life of its reactors well beyond what was thought possible only a few years ago.

The analogy can be made to cars.  The cars we drive today are very similar to those we drove 30, 40 and even 50 years ago.  Four wheels, combustion engine, rubber tires.  But are they really?  In fact almost nothing is the same.  Our cars today are full of electronics controlling the engine; the bodies no longer rust away in a few short years, safety has been greatly improved through air bags and other enhancements; and tires rarely go flat so that many models no longer carry spares.  In fact technology has advanced in leaps and bounds in the cars we drive every day.  And even though we are now looking at next generation technology such as electric and hydrogen powered cars, these are still novelties.  These types of advancements are not required to innovate our vehicles.  In fact the opposite is true.  It is the innovation in the everyday systems in our cars that continue to make them better.  And the magnitude of these improvements is staggering.

Somehow this message is not getting through with our nuclear plants.  It may be because we operate in a very rigorous regulatory environment that forces nuclear utilities to be extremely conservative as change creates risk.  Add to that the magnitude of the capital investment in a nuclear plant and the conservatism increases further as the risk of an advancement is always taken into consideration when looking to the future.

That being said, the operators of today’s fleet of nuclear plants have made incredible improvements to the operating fleet.  This is why capacity factors (percent of maximum possible production) today can be 90% +.  Back in the 1980s, a capacity factor in the mid 80% range was considered excellent.  But no more.  Today we expect better performance from our plants and we get it-through everyday innovation!

US-Nuclear-Capacity-Factor0011

Source: www.nei.org

When it comes to operations, the improvements are easy to show through improved performance of the operating fleet.  The issue we have had in the west is an insufficient number of new build projects to show the innovation that is happening every day in this industry when it comes to new projects.  New build in western countries have had a rocky start after decades of not building.  But as we move forward, this too will improve.

For new projects, we need to not only be building to budget and schedule, but also showing that costs and schedules are reducing with time.  The Koreans, Chinese and Japanese have clearly demonstrated the benefits of standardized fleets to reduce costs and schedules as they build more and more plants.  We see them innovating as they learn from each project and move on to the next one.  We are already seeing improvement in the US as the Summer plant is taking advantage of lessons learned from the Vogtle plant; and both are benefiting from the experience in China.

We must be able to demonstrate that today’s nuclear technology is a technology of the future and that advancements are indeed coming that make every project better than the last.  If an agency looking to the future of energy thinks there is no innovation in nuclear, then we need to be more vocal about our achievements.  We need to celebrate our innovation.  And we need to continue to invest in further innovation because there is always room to get better.

Our strength is through our performance.  And our performance continues to get better through innovation, each and every day.  For those of you who have good examples of where innovation has benefited the industry, please post them as a comment.

The British are coming – new nuclear committed in the UK

After many years of effort, this month it finally happened. The UK government and EDF Energy, the French-owned UK integrated energy company, agreed to a strike price making the first new nuclear build in the UK in a generation, at Hinkley Point C, a reality.

It was a long hard road.  New nuclear first came up about a decade ago when it became clear that Britain’s nuclear fleet was aging and would soon need to be retired.  At that time British Energy was advocating to replace the existing fleet with a new fleet over the coming two decades.  Unfortunately the timing was not right.  Late in 2002 British Energy got into severe financial trouble requiring a significant restructuring to keep it solvent and early in 2003 the British government declared war in Iraq.  Both of these events made it difficult for the then Labour government to take on the issue of new build nuclear.  So in 2003 the Energy White Paper issued by government focused on reducing carbon emissions primarily with renewables and nuclear was but a footnote as government declared its intention to “keep the nuclear option open”.

What a difference a decade makes.  Over the ensuing years as it became clear that renewables on their own would not be able to carry the load if carbon targets were to be met and concerns about security of supply as the UK became a net importer of energy (primarily Russian gas); once again government turned to nuclear energy.  The history of events over this decade it too long to describe here although I think it would make an excellent business or public policy school case study.

Slowly the issues were tackled one by one through aggressive policies that resulted in among other things:  EDF Energy buying British Energy, the creation of a generic design approval process by the regulator, changes to the electricity market to support non carbon producing projects to be built; and most of all – continuing effort to support positive public opinion even after the Fukushima accident in Japan.

And this is all in the context of the UK slowly and deliberately dismantling its domestic nuclear industry.  The UK was an early leader in the development of nuclear power in the 1950s.  Over the next 40 years it developed a large domestic infrastructure culminating with the transition to PWR technology at Sizewell B to the extent that in the 1990s BNFL actually bought the Westinghouse nuclear business – Britain was back in the nuclear business as a vendor.

Yet over the past decade, Westinghouse was sold to Toshiba, British Energy was sold to EDF and British Nuclear fuels Limited (BNFL) was completely dismantled (all at great profit to government).  The new UK nuclear industry is comprised of a domestic manufacturing and services sector using foreign technology with plants being built by new nuclear operators also owned by foreign companies.

After all the hard work, the agreement reached this week is of tremendous importance to the global nuclear industry for a number of reasons.

The UK is forging ahead with a strong nuclear program while others in Europe are going in the opposite direction. Germany is abandoning its nuclear industry and even France is looking to reduce its reliance on nuclear over time.  The lesson learned here is that need trumps all else.  The UK is strongly committed to reducing carbon emissions; recognize they can’t do it with renewables alone and are not prepared to become overly dependent upon fossil fuel imports.

The project is being built in a liberalized (deregulated) market.  Although there is much discussion about subsidy being provided by government, this project will demonstrate that a new nuclear plant can be built with outside investment in a western open market.  The CFD (contract for difference) model is necessary to provide the stability needed to invest the huge sum of money required (estimated at £14 billion) with a very long payback period.  In Canada this model has been used successfully to refurbish the Bruce Units 1&2 reactors but this will be the first time it is used for a longer duration and higher cost new build project.

While some are critical of the price (€92.50 /MWh) it should be clearly noted that this price is below all other forms of carbon free electricity even if it is higher than imported gas at the moment.  Just imagine trying to set a rate today for a project coming into service in 2023 and then lasting for 35 years.  And most of all, it has been reported that EDF Energy is expecting about a 10% return on its investment – very reasonable given the expected risk profile of a large nuclear project, especially with the experience so far in Finland and in France with new build.

So why can EDF Energy take such a risk?  Primarily because this will be the 5th and 6th EPR built and the third project in Europe after Finland and France.  At this point, the design is well developed, the supply chain is in place and the costs are well understood.  What is new is that it is to be done in the UK and there will be new local suppliers likely taking on a significant scope.

The UK government has accepted a significant Chinese investment in the project.  CGNPC, the Chinese operator of a number of nuclear plants and the constructors of the two EPRs at Taishan and its Chinese partners will bring about 30 to 40% of the money needed for this project.  This is huge!  First of all it is a clear acceptance of the size and strength of the Chinese nuclear program – CGNPC has the most active nuclear construction program anywhere.  And it opens up the potential to ensure the expertise from the Taishan project, arguably the most successful EPR to date, will be available to support Hinkley Point C.

The public is supportive of this projectPublic support for new nuclear in the UK has become somewhat more positive in recent years, with similar proportions of people now supporting (32%) and opposing (29%) the use of nuclear power, compared to 26% (supporting) and 37% (opposing) in 2005.  And of more interest, a similar number of people want to continue nuclear at current levels or with expansion (43% in 2005, 46% in 2010 and 44% in 2013), while fewer people now want to see nuclear power phased out or shut down (50% in 2005, 47% in 2010 and 40% in 2013).  This is a result of a number of factors. First, there is a need for energy and nothing drives support more than worrying if the lights will go out.  Second, the environmental sector is behind nuclear.  The British are very serious about their commitment to reducing carbon emissions.  George Monbiot came out in favour of nuclear energy within a month of the Fukushima accident.  Mark Lynas has become a strong supporter and has been profiled in the recent documentary “Pandora’s Promise”.

So what can we all learn from this process?  First of all developing new nuclear takes time.  With a decade of effort behind this agreement, the time it took to reach agreement is just as long as the anticipated time to build the plant.  A decade to get ready and now a decade to get the project into service (scheduled for 2023). Amazing isn’t it?

So to all of our friends in the UK, you have reached a critical milestone on your journey.  Keep up the good work and we wish you all the best as you move to the next phase of your new build programme.