Italy: A Nuclear Restart Only Could Avoid Economic Decline and Blackouts

Posted on October 14, 2003

Posted By: Paolo Fornaciari

Many are convinced that Italy is loosing in competition but few can explain the reasons. Some retain that the main cause is due to the poor flexibility in the labour market, others believe that the reason is the welfare system and the high pensions cost or the excessive tax burden on industries and families. The economic crisis in Italy is neither temporary nor equal to that of European Nations because we, and only we, are excessive hydrocarbons dependant in electricity generation. After the Kippur war (1973) in fact all European Nations have substituted the fuel oil consumption in their power plants with nuclear or coal. France has reduced its oil consumption in electricity generation from 45% down to 2%, Germany from 23% to 1.5%, Sweden from 19% to 3% and Belgium from 78% to 15%. Italy, on the other hand, has grown, with oil and gas, from 64% to 70%.

No one almost thinks that the real motivation could be the high electricity cost. Electric energy indeed is a very important and driving force for the economic development of the industrial nations. A widely diffused belief in Italy is that the free market and economic competition in the liberalized energy sector could lead to a reduction of the energy bills for natural gas and electricity. This is not true. Being the public monopolist – unfairly considered inefficient and obsolete – or the private industry to own and manage the power plants, there will be no difference at all, because 80% of the generation cost is related to the fuels used (hydrocarbons), that are under “blind trust” and not under “free market and competition”. In addition, oil and gas prices have tripled in the last three years and a new oil crisis is envisaged in the coming future. Beside the electricity cost, Italy is facing problems for lack of power to match the increased demand, in summer season and suffered an electric blackout on June 26th, the first time after 55 years. However, in 1948 the main cause was the consequences of World War II with heavy damages on power plants and electric network.

The proposal to solve both problems, cost and blackout, that is presently under government debate, is to build new gas combined cycle plants (GCC) on the nuclear sites, where we have five nuclear power plants under decommissioning.

This foolish idea is wrong for at least three reasons:

First: the time frame to build and put in operation new electric power plants, of whatsoever type, will require, with the necessary agreement of the local communities, 5 or 6 years time at a minimum and we might suffer further blackouts for several years to come.

Second: the more efficient GCC power plants, because the increased gas price, are not competitive any more with nuclear and coal at 35 US mills/kWh, their production cost (66 US mills/kWh) are 40% higher (at least) than the actual average generation cost (47 US mills/kWh) of the national electric system.

Third: the nuclear sites, wearisomely authorized, will be maintained as such in case of a possible future restart of nuclear power in Italy as recently has been envisaged.

One choice only could solve the three problems: restart immediately the nuclear power plants presently under “fast” decommissioning (Caorso and Trino Vercellese), whose power, 1100 MWe, would have been sufficient to avoid the 26th June blackout, due to a power lack of 800 MWe. This restart would require 15/20 months and not 5 or 6 years, the cost would be 5% only as compared with the “accelerated decommissioning” solution and the electricity could be generated at 35 and not at 66 US mills/kWh.

Wouldn’t this be a better solution?

Authored By:

Paolo Fornaciari

Fornaciari, born in Parma, (Italy) on June 20th 1932, graduated in electrical engineering at the Bologna University (1955), specialized in nuclear applied Physics at Polytechnic of Milan (1956) and in nuclear science and engineering at the Argonne National Laboratory (1957/58). He has been responsible for nuclear design with Agip Nucleare for the first Italian power plant at Latina, then with Enel for the others Italian NPP’s. He retired on July

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Comments

October, 14 2003

James Hopf says

Not to mention the fact that the nuclear plants will emit no air pollutants, and no CO2 emissions. This will help Italy meet its Kyoto obligations; something that would otherwise be very difficult for a country with a (hopefully) growing economy that is entirely dependent on fossil fuel generation.

Continuing to operate, and/or extending the life of existing plants, as well as finishing mostly built nuclear plants, is a no-brainer, from both an economic and environmental perspective.

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October, 21 2003

Steve McGrew says

Most energy today comes from fossil fuels, but the amount generated by the past generation's nuclear fleet is significant and lies at the crux of the level of reliability that we do have today. The problem is that the required financial certainty and market structure that was characteristic of that generation no longer defines the industry in much of Europe as the U.S.

Evidence of this is the fact that the type of investor providing capital to the industry has changed dramatically - gone are the days when the maxim of the stable dividend paying utility was a given. It is rediculous to assume that you can have stable prices, stable business structures and stable markets, with required investment in capital intensive assets in a deregulated market-based environment. It will not happen and is not happening. This type of structure will always support investment in capital-lite assets that put reliability at the mercy of volatile markets.

The new age of Nukes will never be anything more than a pipe dream without a return to the regulated environment that provided security for the required capital outlays that these assets require, in either Europe or the U.S.

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