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Nuclear Power Economics

At the World Nuclear Fuel Conference (WNFC) conference in Toronto this month, I will be presenting a paper “Nuclear Power Economics and Project Structuring – 2017 Edition” to introduce the most recent version of this World Nuclear Association (WNA) report.  For full disclosure, I am the chair of the WNA Economics Working Group and this is the group responsible for the report’s preparation.

The report sets out to highlight that new nuclear build is justified in many countries on the strength of today’s economic criteria, to identify the key risks associated with a nuclear power project and how these may be managed to support a business case for nuclear investment and, of major importance, to promote a better understanding of these complex topics and encourage subsequent wider discussion.

When it comes to the conclusion, little has changed since the first report was issued back in 2005.  At that time, it concluded “In most industrialized countries today new nuclear power plants offer the most economical way to generate base-load electricity – even without consideration of the geopolitical and environmental advantages that nuclear energy confers.”  The 2017 version comes to the same conclusion stating, “Nuclear power is an economic source of electricity generation, combining the advantages of security, reliability, virtually zero greenhouse gas emissions and cost competitiveness.

Of course, while some will say this is no surprise given the report is prepared by the nuclear industry; it must also be noted that it is not based on any industry funded research – but rather it is based on high-quality mostly-government reports on the economics of various energy options such as the “Projected Costs of Electricity” issued by the IEA and the NEA.

While the conclusions may not have changed in the last decade, the nuclear world certainly has. Who would have guessed back in 2005 that the Koreans would have won a bid to build the first nuclear power plants in the UAE and that the first of these units would now be nearing completion while the first EPR in Finland continues to be delayed?  There was the accident at Fukushima in Japan in 2011, major financial issues at the traditional large nuclear power companies such as Areva of France and Westinghouse of the USA; all while the companies from Russia, China and Korea have grown both domestically and with exports.  Projects in the East are being built to cost and schedule with their outcomes being predictable due to the large programs underway in places like China and Korea using largely standardized designs.  On the other hand, first of a kind projects in Europe and the USA are experiencing significant challenges.  With new build being a function of capital cost and schedule, clearly poor construction performance will have an impact on the economics. The global industry is now also contemplating a new generation of Small Modular Reactors (SMRs) intended to reduce both project cost and risk.

And what about the competition?  There has been huge global growth in renewables strongly supported with government subsidies and a dramatic drop in the price of gas in North America.  The impacts of these subsidised intermittent renewables and ‘un-carbon costed’ gas have depressed wholesale prices in deregulated electricity markets creating a number of issues in maintaining existing large scale nuclear baseload generation (as well as other baseload options).  Policymakers are finally seeing the negative impact of these issues and are just starting to address these fundamental market design problems.

Yet in spite of all of these massive changes in the market, the reality remains that:

  • Existing nuclear plants are operating very efficiently and unit operating costs are low relative to alternative generating technologies in most markets
  • The global growth in demand for electricity creates opportunity for continued nuclear growth even when ignoring environmental considerations
  • Nuclear energy competitiveness depends mainly on the capital required to build the plant. At discount rates of 5-8% nuclear is generally competitive with other generating technologies

While there are a host of issues affecting the future of nuclear power that are far from easy to address, the fundamentals remain.  Overall, new nuclear plants can generate electricity at predictable, low and stable costs for 60 years of operating life and in all likelihood even longer in the future. Investment in nuclear should therefore be an attractive option for countries which require significant baseload amounts of low cost power over the long term.

In an era where facts no longer matter, consequences still do

Over the last few years, we have written extensively about the strength of peoples’ beliefs and how difficult it is to change them.  In spite of this, I thought we were making progress with a push to more evidence-based decision making.  For something as polarizing as nuclear power, facts-based decision making is critical to increasing support.  (I understand the paradigm of fear of radiation is more emotional than fact based and I agree that we need to appeal to emotions to create the change we need – but let’s leave that to a future discussion.  In any case it certainly doesn’t hurt to have the facts on your side.)

With the populist surge in 2016 we have seen an accompanying rise in complete disregard for facts; all the way to the propagation of absolute lies (or “alternative facts”) to support peoples’ beliefs.  I don’t want to get into a political discussion nor take sides on right versus left.  What I do want to do in today’s post is to discuss something more fundamental – i.e. that although we are free to believe what we want – that beliefs have consequences – and that consequences matter.

So, let’s look at what happens when countries believe they can eliminate nuclear power from the mix and replace it with more wind and solar power.  Of course, I am talking about Germany.  Reducing carbon emissions is a reasonable goal as evidence (alternative facts notwithstanding) shows that climate change is impacting our environment and has long-term implications for our entire society.  On the other hand, removing a low-cost low-carbon source of energy like nuclear power because of safety concerns is based on a strong element of fear rather than evidence.  In fact, Germany’s nuclear plants are likely some of the safest in the world and there is no reason to suspect they will result in a catastrophic accident that means the end of Germany as we know it – yet that is what people fear.

So, what happens in a case like this?  The results are in.  Fossil fuel use is increasing in Germany, carbon emissions are going up and so is the cost of energy.  The German people are paying more money for an outcome that does more damage to the environment and hence, their health.  Frankly, it’s a high price to pay for the piece of mind that comes from eliminating the perceived risk of nuclear.  Or in other words, the extreme fear of nuclear is driving policy more than concern for either energy cost or the environment.

As shown above, closure of another nuclear plant in 2015 resulted in increased emissions in 2016 (the first full year it was out of service) even though there was a substantial substitution of gas to replace coal.

And after adding 10 percent more wind turbine capacity and 2.5 percent more solar panel capacity between 2015 and 2016, less than one percent more electricity from wind and one percent less electricity from solar was generated in 2016.  So, not only did new solar and wind not make up for the lost nuclear, the percentage of time during 2016 that solar and wind produced electricity declined dramatically.   And why was this the case?  Very simply because Germany had significantly less sunshine and wind in 2016 than 2015.

This analysis was done by Environmental Progress and shows that the intermittency of these renewable sources of electricity both throughout the day and from year to year mean that even huge increases in capacity of these forms of generation will continue to require fossil backup in the absence of nuclear power making 100% renewables an unachievable goal.  Another study shows that to achieve a 100% renewable system in Germany would require a back-up system capable of providing power at a level of 89% of peak load to address the intermittency.

Comparing Germany to France, France has more than double the share of low carbon energy sources and Germany has more than twice the cost of energy as France.

So, trying to decarbonize by also removing nuclear from the mix at the same time is simply too high a mountain to climb.  The following shows that German emissions were 43% higher in 2016 without the nuclear plants that have been already shut down.  Keep in mind that they still do have operating nuclear and with more plants to shut down, the future trend is not likely to change.

It’s not just about Germany.  As Japan struggles to get its nuclear plants back on line after the 2011 Fukushima accident, its use of coal has skyrocketed.  In 2015 its use of fossil fuels for electricity generation was 82% compared to 62% in 2010 when the nuclear plants were in operation.  And now Japan plans to build 45 new coal plants (20 GW) over the next decade to meet its energy needs.

Finally, we can also look at South Australia, a nuclear free zone.  Recent blackouts due in part to lower wind availability and the inability of thermal plants to make up the shortfall are also leading to questions on ‘how much renewables is too much’.

So, we can all continue to hold our beliefs very dearly and only listen to those that support them, while vilifying those that do not.  However, please keep in mind that in a world where the farcical becomes reality, results still matter.  And for now, the results are clear, taking nuclear power out of the mix in Germany is not achieving its political-planners’ goals.  Yet these results are also not likely to change any German minds when it comes to nuclear power.  But hey, why worry about the outcome when you know you are right or as said by comedian Chico Marx in the famous Marx brothers movie Duck Soup “Who you gonna believe – me or your own eyes?”?

Want to minimize radiation from power generation – build more nuclear

Yes, you read that right.  For years, there have been efforts to demonstrate that people who live near nuclear plants or work at nuclear plants are getting sick from all that darn radiation they are receiving.  Over the years these stories have been debunked as study after study has shown that there is no impact from radiation from living near or working at a nuclear plant.

But now a study has been done that shows that of most of the options to generate electricity, nuclear actually releases the least amount of radiation.  This is documented in UNSCEAR’s, the United Nations Scientific Committee on the Effects of Atomic Radiation, most recent report to the United Nations General Assembly, on its study to consider the amount of radiation released from the life cycle of different types of electricity generation.

The Committee conducted the comparative study by investigating sources of exposure related to radiation discharges from electricity-generating technologies based on nuclear power; the combustion of coal, natural gas, oil and biofuels; and geothermal, wind and solar power. The results may surprise some, especially those that strongly believe that nuclear pollutes the earth with radiation, coal with a range of air pollutants and carbon, and that solar and wind are environmentally wonderful.

solar-panels-and-wind-turbines

Coal generation resulted in the highest collective doses to the public, both in total and per unit energy.  Coal radiation emissions result from coal mining, combustion of coal at power plants and coal ash deposits.  The study also considered occupational doses to workers.  Here is the biggest surprise.  As stated “With regard to the construction phase of the electricity-generating technologies, by far the largest collective dose to workers per unit of electricity generated was found in the solar power cycle, followed by the wind power cycle. The reason for this is that these technologies require large amounts of rare earth metals, and the mining of low-grade ore exposes workers to natural radionuclides during mining.”  It is important to note that in all cases these levels of exposure are relatively low and have little impact to public health.

This study only addresses normal discharges during the lifecycle of the station.  Possible larger releases as a result of nuclear accidents are not considered and we recognize that many will argue it is accidents and their consequences that create the largest fear of nuclear power.

So why talk about this?  The reality is that this information is not likely to change even one single mind on whether someone supports nuclear power or fears it.  We live in a world where facts no longer matter – the only truth is the one that any one person believes.  Well, we believe that scientific study remains the best way forward to establish truth and that studies such as these are part of the path forward.  No one electricity generation technology is perfect.  Coal is cost effective and technically strong, but is also a strong emitter of a range of pollutants (including radiation); renewables such as solar and wind are clean but their resource is intermittent and they have issues with both their front end (mining of rare earths) and disposal at the end of their life cycle.

Nuclear power continues to have a good story to tell, with respect to its economics, reliability, environmental attributes and the many good jobs it creates for local economies.  Concerns about nuclear relate mostly to one major issue – fear of radiation.  And fear is a strong emotion that is not easily changed.  But at least what we have here is another study to show that radiation emissions from normal operations of the nuclear fuel cycle is not something to fear – and in fact if you really want to minimize the collective dose to the public, nuclear power remains the option of choice.

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.

As a solution for climate change – nuclear power is falling behind

Recently, the 2014 edition of the International Energy Agency’s (IEA) Energy Technology Perspectives (ETP) was issued. The ETP is issued on a two year cycle; the current edition takes the World Energy Outlook 2013 forecasts and looks to the longer term out to 2050. With climate change now becoming even more pressing I thought it would be interesting to see the progress over the last two years (I wrote about the 2012 edition back in June of that year). According to the report, as an important contributor to meeting climate requirements going forward, nuclear power is falling behind.

On the positive side, the IEA sees the opportunity by which “policy and technology together become driving forces – rather than reactionary tools – in transforming the energy sector over the next 40 years.” The report looks to balance energy security, costs and energy-related environmental impacts. But in the end it concludes that “Radical action is needed to actively transform energy supply and end use. ”

Why is radical action required? Of all the technologies required to meet the 2D target (this scenario sets a target of only 2 degrees C change as compared to 6 degrees in the status quo scenario), the IEA suggests that only renewables are on track while pretty much every other clean technology is not moving fast enough. Two important technologies not meeting targets are Carbon Capture and Storage (CCS) and Nuclear Power. To no one’s surprise, CCS has yet to be proven and become a viable commercial option to de-carbonize fossil fuel emissions. As for nuclear power; after the Fukushima accident, growth has been slower than previously predicted and is expected to be 5 to 25% below the level required by the 2D scenario in 2025.

This leaves much of the burden on renewables to meet the need for lower carbon emissions. Surprisingly, in the hi-renewables scenario, solar becomes the dominant source of electricity reaching 40% penetration by 2050. Realistic or pipe dream? I don’t know. One thing is certain, (see chart below), with almost half of future electricity generation coming from variable renewables, compared to almost nothing today, the IEA is demonstrating the need for a huge technology transformation in how the world generates electricity.

IEAETP2014ElectricityGenerationbyTechnology

The following chart is the most telling of all. Over the past 40 years carbon intensity (the amount of carbon emitted per unit of energy supplied) has barely budged. Almost no change at all. Yet now we require the carbon intensity to be cut in half in the next 35 years (meaning less than half as much carbon produced per unit of energy supplied). This requires a complete change in how energy is delivered.

IEAETP2014CarbonIntensity

The reason is simple. Fossil fuels still represent 80% of global electricity generation and most of the energy used for transport. To disrupt the curve requires going off fossil fuels to cleaner alternatives. To achieve the 2D scenario, electrification is paramount given the option of generating electricity with clean alternatives. Fossil fuel use must then be cut in half to about 40% of electricity generation and much of the remainder makes use of CCS to reduce its carbon footprint. The report notes that gas must only be a bridging technology to support renewables in the short to medium term as gas still represents a major carbon source. So what’s left? Solar and wind to replace fossil fuels and CCS to make them cleaner.

Of course nuclear power is an obvious candidate to make a larger contribution. It is a mature technology and already is an important source of low carbon energy. Given its energy intensity it is certainly feasible to implement more nuclear power on a very large scale. And even with recent set-backs, there are now clear signs of renewal as the industry puts the Fukushima accident behind it.

For example, China continues to expand nuclear power at an ever increasing pace. Japan has reconfirmed its commitment to nuclear although restarts are slower than anticipated and the ultimate level of nuclear in post-Fukushima Japan remains unknown. Russia is increasing its commitment to nuclear and, of most interest, is becoming a major exporter offering innovative risk and financing structures that have not been seen in the market to date. Other markets are also starting to move; the latest being Hungary which has just approved a new plant for the PAKS site. However some other important nuclear markets are having challenges. Korea has cut back its long term plans and France is looking to limit the contribution of nuclear power in the future.

While nuclear power has challenges with public acceptance, this report notes the commercial issues – economics and implementation risk. As can be seen in the following chart, the IEA estimates nuclear to be the most expensive option after off-shore wind. I have not had time to delve into the details and review the numbers. However, taking this at face value, we know that some projects in the west are not doing as well as they should be. On the other hand, standardized series-build in countries like China and Russia are demonstrating a strong path to lower project costs and risks.

IEAETP2014economics

There is no hi-nuclear scenario in this edition of the report. That is quite unfortunate as a strong renewed commitment to nuclear power is a very good way to help move this plan to achieve a 2D future become a reality. By stating that nuclear power is not meeting expectations, the report lays out a clear challenge. Now it’s time to show the nuclear industry is up to it. If we really want to bend the carbon intensity curve, then more than ever, the world needs more nuclear power as an important part of a low carbon future.

Meeting the energy needs of the 21st century – is it time for a real nuclear renaissance?

As I started to read this year’s World Energy Outlook (WEO 2013) from the International Energy Agency (IEA), it was the very first line in the executive summary that caught my interest.  The report starts out with “Many of the longheld tenets of the energy sector are being rewritten.

It then goes on to explain: “Major importers are becoming exporters, while countries long-defined as major energy exporters are also becoming leading centres of global demand growth. The right combination of policies and technologies is proving that the links between economic growth, energy demand and energy-related CO2 emissions can be weakened. The rise of unconventional oil and gas and of renewables is transforming our understanding of the distribution of the world’s energy resources. Awareness of the dynamics underpinning energy markets is essential for decision makers attempting to reconcile economic, energy and environmental objectives. Those that anticipate global energy developments successfully can derive an advantage, while those that fail to do so risk making poor policy and investment decisions.”

What is clear is that energy is important!  Most of all there is change in the air – ignore it at your peril.  And with change comes opportunity.  This is where I want to focus my discussion this month.  But before I go on, I think it is useful to summarize the key points from the report to further clarify the paragraph above. The WEO 2013 is concluding the following:

  • The centre of gravity of energy demand is switching decisively to the emerging economies, particularly China, India and the Middle East, which drive global energy use one-third higher.
  • As the source of two-thirds of global greenhouse-gas emissions, the energy sector will be pivotal in determining whether or not climate change goals are achieved.
  • Large differences in regional energy prices have started a debate about the role of energy in unleashing or frustrating economic growth.
  • Energy price variations are set to affect industrial competitiveness, influencing investment decisions and company strategies.
  • Countries can reduce the impact of high prices by promoting more efficient, competitive and interconnected energy markets.
  • A renewed focus on energy efficiency is taking hold and is set to deliver benefits that extend well beyond improvements in competitiveness.
  • Enhancing energy competitiveness does not mean diminishing efforts to tackle climate change. Renewables account for nearly half of the increase in global power generation to 2035, with variable sources – wind and solar photovoltaics – making up 45% of the expansion in renewables.
  • Coal remains a cheaper option than gas for generating electricity in many regions, but policy interventions to improve efficiency, curtail local air pollution and mitigate climate change will be critical in determining its longer-term prospects.
  • Market conditions vary strikingly in different regions of the world, but the flexibility and environmental benefits of natural gas compared with other fossil fuels put it in a position to prosper over the longer term.

So there you have it.  The fastest growing economies have the fastest growing demand, high energy prices are slowing growth in some markets and giving an economic advantage to others with lower prices; and climate change is having an impact on energy decisions.

The above makes it sound as if the path to a low carbon future is built on more renewables and gas.  But is it really?  Looking at the following chart we can see that in the OECD countries where demand growth is modest and electricity supply is already robust, gas is the go-to fuel both due to cost and as a cleaner alternative to coal; and renewables are the supposed clean generation of the future.  Not surprisingly in the non-OECD countries where demand is growing much more quickly (read mostly China!), they are doing everything they can to develop all kinds of supply – including more coal, more gas, more renewables and yes, more nuclear.

IEAWEONov2013a

So what does this mean for nuclear power? According to the IEA, “Nuclear power generation increases by two-thirds in the New Policies Scenario, reaching 4,300 terawatt-hours (TWh) in 2035. Demand is driven heavily by expansion in just a few countries: China accounts for around half of the global increase; Korea experiences the next largest increase over the projection period (the only OECD country to see appreciable growth), followed by India and Russia. Overall, non-OECD economies see their share of global demand for nuclear power jump from less than 20% to nearly 45% in 2035. While prospects for nuclear power at the global level are now less uncertain than they were two years ago, there are still key issues that remain unclear. These include the possibility of further changes in government policy, implications of the ongoing safety upgrades for plant economics and public confidence, and the impact of increased competition from shale gas.”

It should not be a surprise that those countries with the largest demand growth see a large benefit from increasing the use of nuclear power.  They need clean reliable baseload and nuclear meets this need.  In the more advanced OECD countries, many of these already have significant nuclear fleets (80% of current nuclear capacity is in OECD countries), have lower baseload growth and can (or at least they think they can) look at other alternatives.  Gas is replacing coal as a cleaner fossil option so long as it remains competitive and the challenges of new nuclear coupled with low demand growth put it more on the back burner.

IEAWEONov2013b

But is this the right path?  As I said last year when I reported on the WEO 2012, it is important to remember the WEO is not a forecast per se; rather it is a projection of how existing and potential government policies would look once implemented.  And what we still see one year later is a world investing heavily in fossil fuels to protect the status quo while also investing in renewables as a token path to the future.  Of more importance, the WEO shows a path to meet climate change goals that is based on efficiency to lower demand, movement from coal to gas and CCS technology to clean up some of the coal and then more renewables.

What goes unsaid is how this is fantasy.  Not that the world will continue down the path of burning fossil fuels for our electricity, but rather that we can do so and meet climate goals. The 2013 WEO New Policy scenario “leaves the world on a trajectory consistent with a long term average temperature increase of 3.6C, far above the internationally agreed 2C target”.   In their 450 scenario where the target is 2 degrees, there is more renewables, more conservation, more technology to clean fossil fuels and yes, a little more nuclear.

Given the need to decarbonize the electricity sector and the limits to using wind and solar (about half the renewable additions), it should be obvious that nuclear be a stronger option.  Yes, currently in North America low gas prices are challenging its competitiveness while in Europe, green ideology has a larger impact.  There is a onetime carbon improvement as coal is replaced by gas; but then gas becomes the largest carbon producer on the system – so where do we go from there?  And renewables will remain intermittent and likely costly for some time to come.  Nuclear power is clean, reliable and in most cases, economic; but of most importance – abundant.  Yes, in a resource constrained world, the amount of electricity we can potentially generate with nuclear power is almost limitless.  So why don’t we see more of it in the developed world?

The answer is that we still don’t have the political will.  And that comes from lack of public support.  Just this week the World Bank reiterated its policy that they don’t support nuclear power – even though they support all other forms of electricity generation.  Continued negative press about the status of Fukushima keep the public on edge.  For example this past month TEPCO started to remove the used fuel from the Unit 4 spent fuel bay.  This should have been a good news story yet most stories made it seem like a horrifically dangerous undertaking (and of course it is not).

The WEO makes the case that government support is what drives nuclear.  “The rate of expansion of nuclear power continues to be mainly policy driven. It expands in markets where there is a supportive policy framework, which in some cases actively targets a larger role for nuclear in the mix in order to achieve energy security aims. But policy frameworks can also hinder or eliminate nuclear power, often as a result of public opposition: even where there is no explicit ban, long permitting processes, such as in the United States, can significantly hinder development by increasing uncertainty about project completion and increasing costs.”

I was listening to a radio interview this past week with climate change scientist Richard Peltier.  [Interview starts at about 31:40 in the link].  He makes a strong case for getting the message out about scientific consensus.  While he notes that between 95 and 98% of scientists agree on the science of climate change, the press reports make it seem there is much more disagreement than there really is with the result that the public is confused.  The answer is to get out and speak at the grass roots level. Governments will not strongly support policies that battle climate change until the public believes it is necessary.  The same is true for nuclear power.  Governments will not strongly support increasing its use until the public are in agreement that it is safe and necessary.

We are seeing some progress.  In Pandora’s Promise, five environmentalists are now convinced of the advantages of nuclear power and they are actively advocating its use.  This past month four other environmentalists have released an open letter calling on world leaders to support development of safer nuclear power systems. In their letter they state, “As climate and energy scientists concerned with global climate change, we are writing to urge you to advocate the development and deployment of safer nuclear energy systems. We appreciate your organization’s concern about global warming, and your advocacy of renewable energy. But continued opposition to nuclear power threatens humanity’s ability to avoid dangerous climate change.”

Some governments are also taking on the challenge.  In the UK there is pretty much political unanimity that new nuclear is required to meet their climate goals.  The result is strong political support for nuclear new build.  A recent quote by Hergen Haye, Head of New Nuclear & Strategy, Department of Energy and Climate Change (DECC), UK government “To replace Hinkley alone, we have to build 6000 wind turbines. Nuclear will help us to cut costs and to face the other environmental challenges. We cannot do without nuclear because renewables will not do things alone without making electricity bills rise.” (21 November 2013 in Brussels).

In France, after pandering to the greens and committing to close Fessenheim, the French government is finally saying that there will not be more closures. We see strong political support where nuclear is needed most in China, Russia and India although Korea is wrestling with their future plan due to recent scandals.

I come back to the first line of the WEO 2013, “Many of the longheld tenets of the energy sector are being rewritten.  This is a time of great opportunity.  So let’s make sure nuclear power is playing its increasingly important role by providing clean reliable generation to support economic growth and a brighter more secure future for us all.

The changing face of global energy – Is nuclear power being left behind?

I have just done my first pass of the Word Energy Outlook 2012 issued by the IEA this November.  Many of you will have seen some of the headlines – one of the most intriguing is that the US is expected to become the world’s largest oil producer by 2017 exceeding the output of Saudi Arabia.  With headlines like that how can you not want to read this report?

The trouble with trying to read and write about this report is that, as was the case with the Energy Technology Perspectives (which I talked about earlier this year), there is just so much in it to make you think that, agree or disagree, the report is full of interesting information that is worth discussing.

I have been a bit stuck on what perspective to take in this post.  Ultimately I decided to focus on some general points this month (of course with the outlook on nuclear as the key talking point) and then I will undoubtedly use the report for future discussions on more focused topics.

Reading the Executive Summary the report starts off with “The global energy map is changing, with potentially far-reaching consequences for energy markets and trade. It is being redrawn by the resurgence in oil and gas production in the United States and could be further reshaped by a retreat from nuclear power in some countries, continued rapid growth in the use of wind and solar technologies and by the global spread of unconventional gas production.”

When it comes to global energy production, this short phrase pretty much sums it up.  Strong North American oil production, more coal, less nuclear, more renewables and much more gas.  And not surprisingly, this  translates into more difficulty meeting climate change objectives.  It continues, “Taking all new developments and policies into account, the world is still failing to put the global energy system onto a more sustainable pathSuccessive editions of this report have shown that the climate goal of limiting warming to 2 °C is becoming more difficult and more costly with each year that passes. Our 450 Scenario examines the actions necessary to achieve this goal and finds that almost four-fifths of the CO2 emissions allowable by 2035 are already locked-in by existing power plants, factories, buildings, etc. If action to reduce CO2 emissions is not taken before 2017, all the allowable CO2 emissions would be locked-in by energy infrastructure existing at that time.”  Another testament to the continuing lack of progress on meeting the world’s climate change challenges.

And finally when it comes to the future of nuclear power it recognizes the changes in some countries to cut back while others continue to move forward.

“The anticipated role of nuclear power has been scaled back as countries have reviewed policies in the wake of the 2011 accident at the Fukushima Daiichi nuclear power station. Japan and France have recently joined the countries with intentions to reduce their use of nuclear power, while its competitiveness in the United States and Canada is being challenged by relatively cheap natural gas. Our projections for growth in installed nuclear capacity are lower than in last year’s Outlook and, while nuclear output still grows in absolute terms (driven by expanded generation in China, Korea, India and Russia), its share in the global electricity mix falls slightly over time.

I am showing all of the above quotes because in a few words from the Executive Summary, the report says so much.  The figure below shows the key changes in projected energy use from the 2011 WEO.  In summary, as I read this report we can conclude that:

  • Fossil fuel use is thriving.  Clearly North American policies to increase both oil and gas production are very effective.  Coal use is up again globally from the last WEO even with a larger increase in (mostly unconventional) gas use.  Fossil fuel subsidies continue to be the largest of any energy source estimated at $523 billion, more than 6 times that for renewables and a 30% increase from 2010.
  • Renewables use continues to grow without any real demonstration that increasing renewables to that extent is feasible.  Subsidies are at $88 billion and rise to $240 billion in 2035
  • Nuclear is being left behind as the 6% reduction in nuclear compared to 2011 is the largest single change in the new WEO New Policies Scenario.

And this path is taking us down the road to being unable to meet the 2 degree climate change scenario.  After trying everything else in past reports, this year they try to demonstrate that increased efficiency is a potential path to delaying the inevitable and make time for more policy change to support the environment.  This has the potential to extend the 2017 date for lock-in to 2022.  However we can also ask, without a real and substantive global commitment to reducing carbon emissions, what will these extra few years actually achieve?  Most likely – nothing!

So let’s look at the nuclear case in a bit more detail.  Compared to the 2011 scenario, nuclear use is decreasing in those countries with the most to lose, Japan, Germany, Switzerland and even France, while being economically challenged in North America; and rising in the more rapidly growing economies of the east led by China.  This leads to an important question.  Is nuclear power becoming a transient technology that helps countries develop and then once there, can be phased out over time by a policy shift to renewables?  This seems to be a possible theme going forward but in practice nothing can be further from the truth.  It is interesting to note that this past week was the 70th anniversary of the first sustained criticality at CP-1 by Enrico Fermi.  And here we are today with the countries named above all having substantial nuclear programs providing a large and important part of their electricity generation (Japan 30%, Germany 30%, Switzerland 40% and France 75%).  Clearly, with this much nuclear, replacing it is not trivial and will have significant impacts.   Even the WEO acknowledges that “shifting away from nuclear power can have significant implications for a country’s spending on imports of fossil fuels, for electricity prices and for the level of effort needed to meet climate targets.”

And that is what we are seeing today as Germany and Japan wrestle with these impacts as they try to reduce the use of nuclear very quickly.  Based on hysteria following the Fukushima accident, the politicians in these countries (even France) seem to have forgotten what they have achieved since that famous date 70 years ago and why they built such large nuclear fleets in the first place.  Building a successful nuclear program is a major undertaking requiring investment in regulation, infrastructure and industry.  Germany, Japan and France have all benefited from this investment as they developed significant technology, know-how and industrial capability with the result being, in all cases, a very large portion of their electricity generation being economical, clean and reliable.  Reducing its use as a result of a misguided view on nuclear safety will result in a large negative impact to industry and their economies.  In Germany, utilities are suffering financially and in Japan, there is the risk of losing capability and business to the new nuclear powers of Korea and China while having staggering increases in imported fossil fuels and a devastating impact to the local economy.

In fact, looking at the following figure from the WEO shows the bigger story.  Just compare the capacity bar with the energy bar in each case and one thing is clear.  Nuclear power is a key workhorse of the global energy system.  It is by far the most efficient investment as every GW of capacity produces more GWh of energy than every other type of electricity generation.  As I stated in my earlier post on the ETP, one of the reasons for the enormous investment in renewables is that you have to build about three times as much capacity as nuclear to get anywhere near the same energy output – and of course even then this energy is not dispatchable.  But even looking at the use of more tradition fossil fuels, because nuclear fuel costs are very small, they are dispatched before more expensive coal and gas plants and, as the figure shows, 3 times as much coal capacity and almost 4 times as much gas is projected to each only generate twice the energy as nuclear.

It is important to remember that the WEO is not a forecast per se; rather it is a projection of how government policies would look once implemented.  And what we see is a world investing heavily in fossil fuels to protect the status quo while also investing in renewables as a token path to the future.  The fall in nuclear power use in developed countries is an important testament to the ongoing impact of the Fukushima accident on government policies in the west.

While the 2012 projection is less than 2011, nuclear power does continue to grow and in 2035 it is projected to supply 12% of world electricity (13% in 2011 projection).  Yes, it is being left behind relatively but, as I see it, this report clearly demonstrates the importance of nuclear power as a clean, efficient and reliable source of non carbon electricity going forward.  Implementing policies that reduce its use is folly as it definitely will result in expanded fossil use, higher costs, trade imbalances  and higher carbon emissions; all leading us down an unsustainable path.

Therefore the policy answer is not to limit and reduce the use of nuclear energy, but to expand its use because even a small expansion in capacity results in a relatively large increase in energy generated.  And that means that we need to work harder to address the issues resulting from the Fukushima accident in the developed world and remind those governments who are reacting to short term pressures why they went nuclear in the first place; and of the consequences of reducing its use to their societies so they can rethink potential policies that may move them away from this very important part of our global energy mix.

The obvious answer to a low carbon electricity system – More Nuclear Power

I started writing this while sitting on the very long plane ride on my way to China.  The Rio+20 conference had just started, the largest ever UN conference and yet it was receiving relatively little press.  I remember the first Rio conference 20 years ago when there was so much hope for the environment and the conference was seen as an important beginning in addressing climate change.  Now 20 years later, expectations were low and interest even lower.  I guess it’s not surprising.  With economic crisis ongoing in Europe, a weak recovery in the US and a slowdown in China, environmental issues have fallen way down on many people’s list of priorities.

In advance of this conference, the IEA recently issued its Energy Technology Perspectives Study (ETP 2012), where they make a passionate case in support of the environment and the need to develop a low carbon energy system.  Love it or hate it, this study is a gold mine of interesting and useful information in its almost 700 pages.  This study takes the 450 ppm scenario in the World Energy Outlook 2011 and extends it out to 2050, now calling it the 2 degree scenario (2DS).  This is then compared to the status quo (6 degree scenario) with a 4 degree scenario in between.  It then goes a step further to see if a zero emissions energy system is possible by 2075.  It is just not possible to discuss the entire study in one short (actually not so short) blog post, so I will focus on a few key issues and will likely continue to use it as a valuable source of data in future postings.

The study makes the case that environment and energy development must go hand in hand.  Here are some of the findings:

  • A sustainable energy system is still within reach and can bring broad benefits
    • Technologies can and must play an integral role in transforming the energy system.
    • Investing in clean energy makes economic sense – every additional dollar invested can generate three dollars in future fuel savings by 2050.
    • Energy security and climate change mitigation are allies.
  • Despite technology’s potential, progress in clean energy is too slow
    • Nine out of ten technologies that hold potential for energy and CO2 emissions savings are failing to meet the deployment objectives needed to achieve the necessary transition to a low-carbon future. Some of the technologies with the largest potential are showing the least progress.
    • The share of energy-related investment in public research, development and demonstration (RD&D) has fallen by two-thirds since the 1980s.
    • Fossil fuels remain dominant and demand continues to grow, locking in high-carbon infrastructure.

It then goes on to focus on how energy policy must address the key issues and the role of government in making it all happen, finally concluding with recommendations to energy ministers (assuming these recommendations were to be considered at Rio+20).

When considering “technologies” the focus is on renewable technologies such as wind and solar, energy efficiency technologies to reduce demand and carbon capture technologies to clean up the ever-expanding fossil infrastructure.  Nuclear is also shown to be important although it role is somewhat less than the other technologies.  It is these same technologies, primarily renewable and Carbon Capture and Sequestration (CCS) they are talking about when they say “progress in clean energy is too slow”

Focusing on a few key issues, consider the following two figures.  The first illustrates the change in electricity generation mix for each of the three scenarios.  Improved energy efficiencies is the most important source of clean generation.  The figure shows that in the 6DS there is almost 50,000 TWh of generation required dropping to about 40,000 TWh in the 2 DS.  It can be seen that there is huge growth in renewable generation (wind, solar, hydro and biomass) and an increase in nuclear capacity.  Most of the remaining fossil generation is assumed to have CCS installed.

The next figure is somewhat more telling.   It shows the needed capacity and illustrates that due to the variability and low capacity factors of renewables such as wind and solar, capacity must still increase even though total generation decreases by 20% (50,000 to 40,000 TWh Fig 1.10).  This demonstrates the importance of nuclear as it has high efficiency relative to other forms of generation.  With less than 5% of the generating capacity (about 550 GW), it produces close to 20% of the electricity!  i.e. nuclear is an essential technology in a low carbon electricity system.

The main tool in achieving CO2 reduction targets for the 2DS is CO2 price, increasing from USD 40/tCO2 in 2020 to USD 150/tCO2 in 2050.  This greatly increases the electricity generation costs of CO2-emitting technologies and thereby improves the relative cost-competitiveness of low-carbon power technologies.  The following figure is a bit busy but important as it clearly shows how CO2 pricing is implemented to achieve this result.


The cost increase to effect change is one of the key points made in Jeff Rubin’s new book “The end of Growth”.  In an excerpt published in the Globe and Mail on May 5,  Jeff talks about the electricity and transport systems in Denmark.   The Danes have achieved a heroic drop in carbon emissions of 13% over the past twenty years while those of us in North America have seen an increase in emissions of 30% in the same time period.  Often praised for its commitment to renewable energy, now producing 20% of its electricity from wind power, what often goes unsaid is that the remaining 80% of its electricity is generated by coal.

So how is Denmark achieving this great carbon reduction?  Simple – price.  At $0.30/KWh, the price of electricity in Denmark is 2 to 3 times higher than in most jurisdictions in North America.  And at this relatively high price has a significant impact on behaviour and usage drops dramatically.

This is absolutely consistent with the IEA report as it suggests the only way to achieve a low carbon world is to price carbon aggressively to force behavioural change; first by reducing demand and second through the implementation of higher cost low carbon technologies.

Now while this may work in Denmark and in other countries where there is no choice but to implement higher prices to manage the transition such as in Japan and Germany (due to their need to replace idled nuclear), any politician who takes the position of significant increases in energy costs in North America will not keep his or her job for very long.  In North America the population believes that cheap and abundant energy is a right and anyone who tries to say we need to do otherwise won’t make it very far at voting time.

So what are we to do?  I do believe that the IEA’s ETP report has this answer as well.  And for us in the nuclear industry it has always been quite clear.  More nuclear power.

I have talked about the IEA’s nuclear roadmap before.  In effect, they prepared a number of “roadmap” reports for various technologies and this ETP report is where they bring them all together in a cohesive model of a clean energy system for the future.  When it comes to nuclear the IEA continues to be positive and sees an increase in nuclear generation from about 14% of electricity supply to almost 20% in 2050.  While the increase in nuclear capacity may appear to be modest, as stated earlier this modest capacity provides a significant portion of the needed electricity generation!

It should be noted that this target represents a decrease from their original target of 24% in their nuclear roadmap due to the impact of the Fukushima accident on public acceptance which has become the limiting issue.  This is based on a 2011 post Fukushima survey in which support for nuclear power drops due to an increased concern about nuclear safety with more people now supporting nuclear shutdown due to its inherent dangers.

Of importance, the study continues to include a “high nuclear” sensitivity case for the 2DS scenario.  In the 2DS-hiNuc case, nuclear generation is increased to 34% in 2050. Compared with the base 2DS, nuclear replaces fossil power plants with CCS and renewables, whose share in 2050 falls: in the case of CCS from 15% to 7%, and in the case of renewables from 57% to 49%. This scenario reflects a world with greater public acceptance of nuclear power. On the technical side, the average construction rate for nuclear power plants in the period 2011 to 2050 rises from 27 GW/yr in the base 2DS to 50 GW/yr. The cumulative investment costs of this case are only USD 0.2 trillion higher than in the base 2DS and are more than offset by costs savings for fossil fuels in the order of USD 2 trillion (10 to 1).

Going back to the cost figure above, this is not surprising because nuclear is competitive with other forms of generation and can be built now without the need for high carbon costs to incentivise it.  (I know in North America current low gas prices are challenging new nuclear and this was my topic last time – but keep in mind this study is looking at the bigger picture over a longer timeframe).

A system with about one third of the generation provided by nuclear seems very sensible and achievable so long as the industry can overcome the major issue of public acceptance.  Therefore the challenge is clear.   The industry should focus on the high nuclear scenario as our base case and work hard to regain public trust – no small task that will certainly require a long term sustained effort.

In the end, our world will become more electrified and we need to move forward with a cleaner, sustainable electricity system for our future.   So what is harder for the public to accept – very high carbon costs and a very large increase in variable renewable generation or a bigger role from a relatively modest increase in the number of nuclear power plants??

What a difference a year makes! With New Build taking hold in the west in 2012 now is the time to sell the benefits of nuclear power to overcome the Fukushima effect.

The good news is that as 2011 comes to a close, Fukushima has achieved cold shutdown and the recovery is moving to the next stage.  The emphasis is now on decontamination and getting the dislocated people back into their homes as soon as possible.  Does this mean that nuclear will overcome the effects of Fukushima starting in 2012?

It was only a year ago that the International Energy Agency (“IEA”) issued its Nuclear Roadmap 2010.  This report clearly demonstrates the important role that nuclear power can play in meeting climate change targets.  With a 50% CO2 reduction targeted by 2050 in the so-called IEA Blue Map scenario, nuclear capacity triples and its share of electricity generation rises from 14% today to 24%, the largest of any generation technology.  Under a postulated High Nuclear scenario, the nuclear share would reach as much as 38%!

IEA Nuclear Roadmap 2010 share of nuclear

But that was then and this is now.  On March 11, as we all know, a devastating earthquake and tsunami struck Japan with horrific consequences – killing more than 20,000 and causing a nuclear accident at the Fukushima Daiichi Nuclear Plant.    There was significant fuel melting in three units resulting in radioactive releases to the environment.  Even though there have been no fatalities due to radiation and there is little risk of any future radiation health impacts, the global impact of this event to the nuclear industry was overwhelming.  While many countries re-confirmed their commitment to nuclear power after reviewing plant safety and implementing lessons learned, some countries in Europe led by Germany have taken the decision to scale back or even move away from nuclear power.

In the IEA’s World Energy Outlook 2011 released in early November they added a new scenario – Low Nuclear – to account for a possible post-Fukushima shift away from nuclear power in addition to the New Policies (reference) and Current Policies scenarios.  In the reference case, global nuclear power is expected to rise 70% by 2035 with China, Korea and India leading the growth.  This case is only slightly less than the projection last year.  In the new Low Nuclear Case, the total amount of nuclear capacity actually falls from 393 GW at the end of 2010 to 335 GW in 2035.   According to the IEA, this scenario has severe implications for energy security, diversity of the fuel mix, spending on energy imports and energy-related CO2 emissions.

In this low nuclear scenario, by 2035, coal demand increases to over twice the level of Australia’s current steam coal exports. The increase in gas demand is equal to two-thirds of Russia’s natural gas exports in 2010.  The increase in renewables-based generation is equal to almost five-times the current generation from renewables in Germany.  Energy-related CO2 emissions also rise with increased use of fossil fuels in the power sector.  This clearly has significant implications for global energy supply making it extraordinarily difficult to meet carbon targets.  As stated in the IEA’s WEO report “Following this trajectory would depend on heroic achievements in the deployment of emerging low-carbon technologies, which have yet to be proven. Countries that rely heavily on nuclear power would find it particularly challenging and significantly more costly to meet their targeted levels of emissions.”

WEO New Policies (Reference) and Low Nuclear Scenarios nuclear capacities

And now, Europe has issued its Energy Roadmap 2050 with the overall emphasis on renewables and energy efficiency; a policy document that has been clearly impacted by the post Fukushima shift in thinking in Europe.   As illustrated in the chart below, even with five different scenarios, the one thing they all have in common is a large increase in renewable energy generation.  No other form of generation increases anywhere near to that of renewables; and in fact most other forms decline over the plan period with only the size of the decline depending upon the specific scenario.  But even with this emphasis on renewables, the report does make important positive points on the role of nuclear power noting that nuclear energy is an important contributor to meeting the roadmap objectives.

In fact the report notes that today nuclear energy is the decarbonisation option providing most of the low-carbon electricity consumed in the EU.   It then goes on to note the post Fukushima reality.  “Some Member States consider the risks related to nuclear energy as unacceptable. Since the accident in Fukushima, public policy on nuclear energy has changed in some Member States while others continue to see nuclear energy as a secure, reliable and affordable source of low-carbon electricity generation.”

When it comes to cost, the impact is clear.  Consistent with the IEA Nuclear Roadmap, this report states “the scenario analysis shows that nuclear energy contributes to lower system costs and electricity prices. As a large scale low-carbon option, nuclear energy will remain in the EU power generation mix.”

This is critical since the average capital costs of the energy system will increase significantly due to investments in power plants and grids, industrial energy equipment, heating and cooling systems, smart meters, insulation material, more efficient and low carbon vehicles, devices for exploiting local renewable energy sources (solar heat and photovoltaic), durable energy consuming goods etc.  And the reality is that renewables are expensive with the highest electricity costs in the “near 100% RES power” scenario which the RES power generation capacity in 2050 would be more than twice as high as today’s total power generation capacity from all sources (I am assuming primarily due to the low capacity factors of renewable generation).  Other scenarios such as the High Energy Efficiency scenario and the Diversified Supply Technology scenario have the lowest electricity prices due to somewhat lower renewable penetration (60 to 65%) taking advantage of the lower costs of efficiency, gas and nuclear.   The report notes that many renewable technologies need further development to bring down costs.

So as we enter 2012, where does this leave us?  One lesson from Fukushima is that many in the world are still very afraid of nuclear power because of the huge fear of radiation.  There was an interesting piece on this in a CNN Health article this past week which argues that public trust in nuclear energy should be built on the existing acceptance of medical radiation dose levels.  The public welcome moderate medical radiation levels from both internal and external sources, for medical imaging (CT, PET, SPECT scans) yet fear the much smaller levels from nuclear plants. And as I stated in my last blog entry, as an industry our work is cut out for us in changing this thinking.  Reducing the public fear of radiation is no small task and will take time and a carefully coordinated approach from us all.  Professor Wade Allison argues that the ALARA principle has hurt us and increases this fear of radiation and suggests that this policy should be replaced with “As High As Relatively Safe (AHARS)”, mindful of other dangers, local and global.  An interesting approach indeed.

One thing is clear from the above IEA studies and the European Roadmap 2050.  Reading between the lines nuclear power is essential to meeting long term carbon reduction goals.  Relying too much on renewables is far too risky an approach and is more of a wishful thinking scenario than a realistic one.  To achieve global carbon reduction objectives, it makes no sense to not take advantage of the one true large scale low carbon technology – nuclear power.  It is here today – it is safe and in most jurisdictions it is economic.

So what about 2012?  So far it looks like it can be a good year for nuclear power.  Important progress in new build is being made in the UK; the US will see its first COLs enabling the first new builds to start construction in a generation; Canada may make a decision on its new build; and, of course China and others in Asia will continue to expand their programs.

Work in Japan will continue and will not be easy as the government works to decontaminate the area around Fukushima and hopefully many will get to return to their homes.  Of importance we can expect to see many of the idled plants in Japan get approvals to restart easing the electricity shortage caused by these units not running.  Again a recent Japanese study shows that nuclear remains the low cost option to 2030.

But of most importance, this is not time for industry complacency.  This has to be the year where the industry marshals its forces to get the message out – in a thoughtful, clear, unambiguous way.   The future is up to us so let’s get on with it and tell our story.  Even though truth may be on our side, the path is going to be long and the work hard……..but in the end it is worth it for us all………

We offer a proven large scale clean, economic and, of utmost importance, safe option for electricity generation.  As the only proven large scale low carbon option that can meet the world’s energy needs, nuclear power must continue to be an important part of the electricity generation mix now and into the future.

 

Is there a future for base load generation? Please respond to the poll?

System operators have recently seen something rather new  – SBG – or “Surplus Baseload Generation”.  This is due to falling demand related to the current economic situation and a newer phenomenon; the displacement of base load by variable load renewable generation.

With governments everywhere and the public strongly supporting new renewable generation, primarily wind and solar; these forms of variable generation are displacing base load by being must run when the resource is available.   So the question is “Is there a future for base load generation?”.  Please respond to the poll at the bottom of this blog entry

This issue was addressed at last week’s Association of Power Producers of Ontario (APPrO) annual conference where a session was dedicated to this new phenomenon.  The following shows the amount of time Ontario experienced SBG over the past 18 months.  Excess generation of well over 1,000 MW was experienced!  This resulted in shutting down low marginal cost nuclear plant as well as spilling water at hydro plants.  The 18-month forecast by the IESO in Ontario expects SBG to continue to be an issue going forward.

Surplus Base load Generation

IESO Presentation to APPrO 2009

IESO Presentation to APPrO 2009

The variability of the wind is shown in the following chart illustrating how two days in a row the wind at the same time varied from 989 MW to 7 MW on the following day.

Wind Capacity on Consecutive Days

IESO Presentation to APPrO 2009

IESO Presentation to APPrO 2009

So what does this all mean?  In the smart systems of the future is the concept of large scale base load generation doomed?  Do you have to be able to manoeuvre to survive?  Or will policies change to ensure that low cost base load generation is not displaced for higher cost alternatives?

This is just the beginning of the discussion for this subject.  Please answer the following simple poll.  I would like to get your views.  More work is needed on this issue as we plan the systems of the future.