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Addressing the Plight of Existing Nuclear Retirements, Part 2

This is the second article in a three-part series on existing nuclear in the United States. Part 1 identified and discussed major economic and policy challenges. Part 3 will look at other state, regional, and federal policy solutions.

Highlights:

  1. Although the economic struggles of the existing US nuclear fleet are clear, potential solutions to these challenges remain somewhat undefined and unanalyzed.
  2. Any solution must provide sufficient incentives to generators, reduce uncertainty, and be politically feasible.
  3. This is a clear situation where a one-size fits all approach will not work – instead, planners will likely have to consider many different policy and regulatory avenues.
  4. Short term policy fixes may be sufficient to protect the most vulnerable nuclear reactors but more systemic policy reforms are needed for the long-term sustainability of the entire nuclear power fleet.

Nuclear Retirements Under Increased Scrutiny

In the last several months, the announcement of planned retirements at 5.1 GW of nuclear capacity in Illinois and California underscored the challenges facing the U.S.’s nuclear fleet.

While there are many factors at play there are four dominant issues:

  • Restructured electricity markets structurally favor short run marginal costs and largely ignore long term considerations
  • Low natural gas prices reduce electricity prices in these markets and also challenge the cost effectiveness of nuclear plants in regulated markets
  • Continuing growth in renewable energy, especially solar, will only exacerbate these two issues in the long term
  • The nuclear fleet is aging, leading to multiple issues including the need for large additional capital expenditures

Unless market or policy design changes, a large portion of the existing nuclear fleet faces retirement in the short term, resulting in increased national carbon emissions. As renewable energy continues to grow rapidly and plants continue to age, the rest of the fleet will also face retirement risks if current market design persists.

Although policymakers are increasingly recognizing these issues, questions remain about how to address them.

Assuming that we want to maximize generation from existing nuclear units, what are the policy or regulatory mechanisms to do so?

This article profiles the design, implementation, and risks associated with three prominent and noteworthy solutions at the state government level:

  • Maintaining or reinstating cost-of-service regulation
  • Including nuclear in state renewable portfolio standards
  • New York’s recent proposal for a carbon value market adjustment

Key Considerations to Regulatory and Policy Solutions

Any solution to keep existing nuclear power plants online will have to manage several considerations:

  1. Increase nuclear revenues sufficiently to maintain profitability
  2. Reduce regulatory and market uncertainty for existing nuclear plants
  3. Be politically feasible

Of these considerations, numbers 1 and 2 deal with largely technical issues: how does the policy function and what design issues does it pose?

The third consideration, politically feasibility, may be the most challenging. The economic struggles of the U.S. nuclear fleet are occurring against the backdrop of sweeping regulatory changes in the power sector.

In large portions of the country, states have enacted regulatory restructuring during the last twenty years. This is a major cause of the economic challenges facing nuclear units but also has ramifications for regulatory solutions. In many regions, regulatory power is shifting from state legislatures and PUCs to the quasi-independent ISOs overseen by FERC.

Any solutions to nuclear’s challenges are thus constrained by the distribution of regulatory power: policymakers, industry, and nuclear advocates need to know which levers are best suited to addressing challenges at specific facilities and at what times they should employ each lever.

This part of our series specifically addresses the options available at the state level. Critically, it highlights how the recent shift of power from the states to FERC may legally constrain how state’s exercise those options.

There are several important temporal aspects to all potential solutions:

  • Some plants face short term challenges while many face long term competitiveness issues.
  • All of the existing nuclear fleet will inevitably retire when the plant’s reach their lifetimes and their licenses expires. The question is when.
  • Considering that reactors will face different retirement risks at different times, policy solutions at the state, regional, and federal levels should be sequenced.

As usual with the U.S. electricity system, many different approaches are likely to be pursued by different states and regions. One solution may not fit all circumstances – understanding the pros, cons, and feasibility of each solution is essential to develop the best solution for different parts of the electric system.

  1. Maintain or reinstate Cost of Service Regulation

Of the U.S.’s existing 99 reactors, 50 operate in states with cost-of-service regulation, reducing their retirement vulnerability in the short term.

Of the five reactors that retired in the last five years and the nine reactors plan to retire in the next ten years, only two were in regulated states. Even these two plants are outliers compared to the entire nuclear fleet:

The most pressing economic headwinds for the U.S. nuclear fleet result primarily from marginal price-based compensation in competitive wholesale electricity markets. The 50 reactors operating in regulated states still compete indirectly with natural gas but are much less likely to retire than reactors in deregulated states.

Effects of Regulated Status on Nuclear Power Plant Retirement Risk

Regulated nuclear power plants face lower retirement risks than deregulated facilities, even once controlling for single versus multi-unit reactors

Source: SparkLibrary based on data from EIA

Why the difference between deregulated and regulated nuclear reactors?

In deregulated markets, nuclear revenues are dependent solely (or primarily) on energy markets – they are highly vulnerable to even short periods of low wholesale electricity prices. Long term contracts are uncommon due to structural, market, and political reasons.

Comparably, traditional rate-regulation is based on average cost compensation. State PUCs determine what the costs are to keep individual plants open and allow plant owners to earn a specified rate of return. There is some indirect competition from natural gas and other energy sources, but any decision to close a plant would have to be approved by the commission and (most likely) proposed by the utility. As long as the owners of regulated nuclear generators receive their required rate of return, they have limited incentive to close existing plants.

Importantly, many of these rate-regulated nuclear reactors are smaller and/or are single-units – if exposed to competitive markets, these units would face much higher retirement risks.

If the status quo persists, COS regulation will protect almost half of the nuclear fleet, even relatively uneconomic smaller units. To the degree that these smaller units are vulnerable in a regulated system, economic arguments at the PUC level may be most effective at keeping plants online.

However, if ISOs continue to grow and more states deregulate, many of these currently ‘protected’ reactors could become vulnerable.

States in New England, the Mid-Atlantic, and parts of the Midwest have been deregulated

Source: EIA (as of 2010)

Importantly, a number of the reactors in regulated states are in SPP and MISO, where competitive wholesale electricity markets are operated. Despite these markets, competition remains relatively limited in these areas and cost-of-service regulation still dominates. These areas face elevated retirement risks compared to other regulated reactors; the presence of transparent, functioning wholesale markets could make it easier for a utility to retire a nuclear unit and replace its output.

Importantly, COS regulation is not a fleet-wide policy solution due to the many nuclear units in deregulated states. It is highly unlikely that regulators will reinstate COS regulation in restructured states, if only because such a shift would move counter to the prevailing regulatory trends of the last twenty years.

Political and regulatory power in these states has already shifted from state public utility commissions to FERC and the ISOs. To re-regulate only nuclear plants in these states would invite significant opposition from many interest groups, most other generators, and likely many regulators and politicians.

  1. Making State RPS Policies into Low Carbon Standards

One of the more recent and most promising proposals to protect nuclear calls for an expanded role for state RPS policies.

RPS programs already provide a broad (if diffuse) policy platform: twenty-nine states and the District of Columbia already require that load serving entities obtain a certain level of retail sales from renewable resources. These policies generally exclude nuclear and primarily support wind and solar.

A Low-Carbon Portfolio Standard expands these existing policies to include nuclear power. Under such a proposal, existing nuclear power plants would sell nuclear energy credits (NECs) to utilities obligated by the state to purchase them. This could provide sufficient revenues to make up for insufficient revenue from the marketplace.

In most states, the process of transforming the RPS into a LCPS is relatively straightforward: state legislatures pass legislation increasing the stringency of the RPS to match existing nuclear generation in that state and adding nuclear as an eligible resource. The Breakthrough Institute estimates that such an approach would increase the amount of generation in 2030 covered by RPSs from 420 TWh to 940TWh.

There is significant merit to the proposal. Most states in PJM, ISO-NE, and NYISO have existing RPS policies, meaning that most states with deregulated nuclear plants have a RPS they could readily modify. Similarly, most states in MISO have RPS policies, potentially protecting the regulated nuclear units in that hybrid market.

RPS Policies by State

Map of states with RPS Policies (29 are mandatory, six are voluntary)

Source: Lawrence Berkeley National Laboratory

RPS policies have proven robust once passed. If well designed, a LCPS could provide critically needed certainty for struggling nuclear reactors.

However, there is a major political challenge to this proposal: getting it passed in the first place. Each state legislature would need to pass legislation to include nuclear in the state’s respective RPS policy. Unlike renewable energy, nuclear energy does not enjoy universal public support and such legislation would likely face significant public opposition.

Technical Details of a Nuclear-Inclusive RPS

Aside from political challenges, nuclear-inclusive RPS policies entail significant technical considerations. Nuclear reactors qualitatively differ from renewable energy in political, economic, and technological terms.

RPS policies function through the use of market-based renewable energy credits – eligible renewable facilities receive a price for their renewable attributes based on competition between multiple generators, minimizing the cost of the policy. Comparably, the large size of nuclear units and relatively limited number of units in any single state make determining the value of nuclear energy credits (NECs) challenging.

If NECs and RECs are treated the same, several problems arise:

  • Due to their large capacity and output, nuclear plants could exercise market power, distorting the NEC/REC price
  • If designed poorly, such a structure can create competition between nuclear and renewables in the secondary NEC/REC market, leading to conflict between policy goals.
  • There is no guarantee that a combined NEC/REC price will provide sufficient revenues to the most vulnerable nuclear generators

This last point is especially important as decreasing renewable energy costs could make financial support for renewables from RPS policies less important. REC prices may decline over time while nuclear revenue needs from NECs may need to rise due to merit order issues.

The likely solution is to treat NECs as a separate generation class under RPS policies. REC prices would still be determined by renewable competition; NEC prices would need to be administratively determined. Proper market competition for NECs is impossible when there only a handful of reactors in a state.

Administrative determinations are technically challenging and would need to be transparent. The staff of the PUC would need:

  1. To determine how much nuclear generation the policy requires
  2. Identify the NEC price needed to keep the marginal nuclear plant operational
  3. Adjust the NEC price based on variations in market revenue

Legal Issues Present Policy Design Ramifications

Each of these raises issues. However, #1 may be the most challenging due to legal limitations in state’s ability to regulate interstate commerce.

Functionally, RPS policies work by requiring covered entities to purchase RECs equivalent to a specified share of their retail load. While there are some barriers due to REC tracking systems, this design allows utilities to use out-of-state RECs to meet RPS mandates in almost all cases. RPSs are ‘supply blind.’

Interstate REC Trade is a Key Component of RPS Compliance

Five states in the mid-Atlantic get very large shares of RPS-compliant RECs from out-of-state generators

Source: National Renewable Energy Labortory

A nuclear-inclusive RPS would likely be different: the in-state nuclear generaiton would determine the amounnt of NECs required. If the state allowed out-of-state NECs to be applicable, nuclear units in neighboring states without nuclear-RPS policies would be able to sell NECs, undermining the state’s efforts to keep its own nuclear facilities open. For renewables, this is not an issue as they are growing (no incumbent generator with free RECs to interfere).

By specifically favoring in-state nuclear units, a nuclear-RPS may invite a legal challenge under the dormant commerce clause, which prevents states from favoring in-state business interests. Multiple parties are actively challenging state RPS policies on these grounds. The supply blind nature of RPS policies has (so far) kept them from being overturned.

The 10th Circuit Court of Appeals recently highlighted the issue when examining a challenge to Colorado’s RPS:

“But as far as we know, all fossil fuel producers in the area served by the grid will be hurt equally and all renewable energy producers in the area will be helped equally. If there’s any disproportionate adverse effect felt by out-of-state producers or any disproportionate advantage enjoyed by in-state producers, it hasn’t been explained to this court.”

A nuclear-RPS policy favoring in-state nuclear units clearly provides an advantage vis-à-vis all out-of-state electricity generators.

This does not mean that a nuclear-inclusive RPS policy is certain to be illegal. Rather policymakers will need to consider the legal ramifications as they design such a policy. Coordinating many states to include nuclear in their RPS policies without in-state restrictions could get around this issue (but would be more difficult).

  1. New York’s Carbon-Value Based Price Floor

Two weeks ago the staff of the New York Public Service Commission (NY PSC) released a proposal to provide revenues to New York’s upstate nuclear power plants under the developing New York Clean Energy Standard. Critically, the policy is not actually the nuclear equivalent of a RPS. Although this policy is unique to New York, it may provide a model for future programs.

New York’s proposal (available here) specifically targets four reactors in upstate New York with a combined capacity of 3.2 GW: Nine Mile Point 1+2, Ginna, and James A. Fitzpatrick. Fitzpatrick is currently scheduled to retire but Exelon plans to purchase the plant and keep it operational if the proposal is approved.

The proposal excludes the remaining two nuclear reactors in New York at the 2.1 GW Indian Point power plant on the basis that it receives much higher revenues from downstate electricity markets. In the staff’s view, the plant is not at risk of closure due to economic reasons. This is a key difference between New York’s proposal and a nuclear-inclusive RPS: a RPS would not discriminate between in-state plants like this.

Based on historic generation, the four eligible reactors contract to sell zero carbon electricity credits (ZECs) to NYSERDA for two year periods during the next twelve years. Load-serving entities would then be required to purchase ZECs from NYSERDA to reflect their load-share in the state.

How ZEC Price is Calculated

Due to market power issues, the ZEC price is administratively determined based on the following formula (from the proposal):

ZEC price is determined by the social cost of carbon minus RGGI (converted to MWh) minus combined energy and capacity price of $39/MWh

Effectively, this formula creates a price floor for the covered nuclear facilities.

If forecasted energy and capacity prices are at or below $39/MWh plus the social cost of carbon (SCC) converted to a $/MWh value (modified by the ‘priced-in’ value of RGGI credits), the ZEC price makes up the difference. If market revenues stay at the $39/MWh level or below, the ZEC price will be between $17.48-$29.15/MWh, depending on the year and RGGI.

Based on the output from the reactors, these prices would translate into total costs of up to $482 to $805 million annually.

Importantly, the ZEC is not a true price floor:

  • The ZEC maxes out at the SCC-RGGI value. If combined energy and capacity prices fall below $39/MWh, the ZEC remains capped at SCC-RGGI-$39/MWh.
  • The actual maximum price of a ZEC is a bit higher than $17.48-$29.15/MWh used above; if RGGI prices approached $0/ton, the maximum ZEC would be ~10-20% higher.

While there is a maximum price to the ZEC, the ZEC can also decline as market revenues rise above $39/MWh.:

  • If market revenues exceed $39/MWh plus the SCC-RGGI, the ZEC would be $0/MWh. To put it another way, the ZEC price would be $0/MWh when energy and capacity prices exceed ~$55-$70/MWh (depending on the year).
  • Similarly, if RGGI prices rise, the ZEC would be reduced in value correspondingly; if RGGI was higher than the SCC, the ZEC price would be $0/MWh.

By guaranteeing that the covered nuclear facilities will receive a specific revenue amount, the proposal provides economic certainty in a way that market revenues alone cannot. Barring severe maintenance or safety issues these plants will remain open for the 12 years of the program (which ends in 2029 when Ginna and Nine Mile Point 1’s NRC licenses expire).

Technical Design May Have Unexpected Consequences

There are some drawbacks and potential questions about NY PSC’s methodology though.

Importantly, it is value-based not cost-based. Initial estimates from the staff of the NY PSC indicated that keeping the vulnerable upstate nuclear reactors would only cost $8 to 94 million annually. Even if this were a low estimate, it is <20% of the cost of the new program. If we are looking to keep nuclear reactors open at the least cost, this proposal may not be the best solution.

Relatedly, the $39/MWh combined energy and capacity price used to calculate the ZEC is arbitrary. It is determined based on forecasted average energy prices between April 2017 and March 2019 and based on a capacity price forecast for April 2017 to March 2018. Both power and capacity prices are very volatile – there is no solid justification to use limited 1 or 2 forecasts as the basis for a 12-year subsidy.

Similarly, the ZEC price for any specific two-year period is determined based on a two-year forecast for power prices and a one-year forecast for capacity prices made the year before:

For each ZEC tranche, credit prices are based on energy and capacity price forecasts

As power prices are dependent on natural gas prices, they can be exceptionally volatile. In this case, the power prices forecasts occur before a gas-market resetting winter and span two natural gas storage cycles. A lot can happen to power prices over the course of two years. While less volatile, capacity prices can also vary year to year.

Predicating the ZEC based on forecasted prices instead of realized prices could lead to the financial effects of the program diverging from their intended purpose:

  • If forecasted power prices are high and exceed SCC-RGGI-$39/MWh, the ZEC price would be $0/MWh and the nuclear reactor would be taking market-only prices. If power prices subsequently fall, the nuclear reactor would lose money again.
  • Conversely, if forecasted power prices are $39/MWh or less, the ZEC price would be at its highest. If power prices subsequently rise, the nuclear reactor would receive the ZEC benefit even if power prices alone were sufficient to keep the plant operating.

Legal challenges could be more stark than a nuclear-inclusive RPS

Despite these considerations, New York’s proposal is one of the most concrete policy solutions to date that could prevent nuclear retirements. The NY Public Service Commission still needs to approve it and aspects of it may change significantly.

There are notable legal risks. A similar dormant commerce clause challenge to the in-state nuclear-RPS issue discussed earlier may also occur here. As the ZECs are being sold to NYSERDA directly, this may be less of an issue for New York.

However, there is a potential legal challenge to tying the ZEC price to wholesale market prices due to the Supreme Court’s recent ruling in Hughes v. Talen. In that case, the Supreme Court ruled that Maryland cannot directly modify the capacity price received by new generators from PJM’s wholesale market.

Importantly there are major differences between Maryland’s case and New York’s proposal:

  • The ZEC is a separate product than energy or capacity. Maryland’s case invovled specifically modifying the price for a product regulated by FERC (capacity).
  • While modified based on the wholesale price, the ability to receive a ZEC is not directly tied to participation in the wholesale markets.
  • Maryland’s intent was to specifically modify revenue from an existing capacity market. While New York’s proposal may functionally do so, the intent is to prevent carbon emissions.

These issues require further investigation. If litigation delays the implementation of the policy, Exelon may decide not to purchase the Fitzpatrick plant reactor from Entergy, leading to it retiring in 2017.

Read More

  1. The Breakthrough Institute’s report on including nuclear in state RPS policies.
  2. State policy to protect nuclear plants need to be legally sound – this guide describes how minimize constitutional risk.
  3. Solid numbers regarding the economics of the nuclear fleet.
  4. Good article covering the discussion on the future role of nuclear.

The post Addressing the Plight of Existing Nuclear Retirements, Part 2 appeared first on SparkLibrary.

Alex Gilbert's picture

Thank Alex for the Post!

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Discussions

Nathan Wilson's picture
Nathan Wilson on Jul 27, 2016 3:27 am GMT

The deregulated electricity market system (wherein all producers are paid based on the fuel cost of the last bid accepted) was a great fit when our goal was to find the cheapest mix of fossil fuels. It is a terrible fit for a system which uses little or no fuel.

The wind industry has grown to supply 5% of US electricity, not by dispatching on the short-term market, but mostly using long term power purchase agreement. This wind deployment has successfully coexisted with the market, in part because of the low penetration, and also because wind farms only last 25 years or so.

As we expand sustainable energy using longer lasting sources, such as solar, hydro, and nuclear, society can save a lot of money in the long term by switching back to ownership of these assets by regulated public utilities. The cheapest source of energy on any grid is always hydro from a plant that is already paid for; but not if the hydro is privately owned, in that case it costs the same as the “marginal” producers (i.e. fossil gas). Old sustainable power plants produce cheap power, and only regulated utilities can pass that low cost on to consumers.

The techniques suggested in the article to save the existing nuclear fleet sounds really complicated, and subject to manipulation for political purposes (i.e. easily reversed). The public utility model can fix the nuclear problem, and also be the solution renewables will need when their penetration is higher and subsidies go away.

Bob Meinetz's picture
Bob Meinetz on Jul 27, 2016 5:25 am GMT

Mark, in essence you are saying that inclusion of nuclear in RPSs and state subsidies are great ideas, but because of interstate commerce restrictions they won’t work. But:

It is highly unlikely that regulators will reinstate COS regulation in restructured states, if only because such a shift would move counter to the prevailing regulatory trends of the last twenty years. Political and regulatory power in these states has already shifted from state public utility commissions to FERC and the ISOs. To re-regulate only nuclear plants in these states would invite significant opposition from many interest groups, most other generators, and likely many regulators and politicians.

The prevailing de-regulatory trends of the last twenty years have been disastrous for consumers, for the environment, and for reliability. And the idea any ISOs are “free markets” is a joke, with hundreds of $millions in campaign contributions flowing from energy holding companies to state campaign coffers. So If the federal government pleads helplessness in the face of “significant opposition”, to the whims of “prevailing regulatory trends”, to “significant opposition from many interest groups”, we’ve already lost.

The only viable answer is re-regulation and annual SEC review of utility holding company books, like we had pre-2005. Or do we need to go through a Great Depression every century to learn that lesson again, and again?

Bob Meinetz's picture
Bob Meinetz on Jul 27, 2016 5:50 am GMT

Excellent point about complication, Nathan, which has co-analogues in energy and law.

In energy, complication is best avoided due to issues of expense and unreliability. In law, complication is best avoided due to issues of manipulation, and the unavailability of “common sense” in judicial review.

For example: the 58-page New Deal legislation which defined our regulated-utility model spoke in general terms, and thus relied on common-sense rulings by judges to work. In 2005, it was replaced by 559-page legislation which attempted to remove common sense from the picture by “spelling it all out”. Which do you think served the public better?

Darius Bentvels's picture
Darius Bentvels on Jul 27, 2016 7:45 am GMT

The prevailing de-regulatory trends of the last twenty years have been disastrous for consumers, for the environment, and for reliability.

Remarkable… In NW-EU similar, even stronger, deregulation occurred since ~1990. It resulted in sharp competition and lower prices for consumers and increased reliability (which is now far higher than in USA).

Nowadays consumers can choose between many utilities. Some deliver 100% nuclear electricity, others 100% wind, or 100% renewable, or cheapest, or cheapest with fix price long term (=3yrs) contract, or wind from local farmers who founded cooperation’s, etc.

It also results in consumer pressure on utilities to adapt to what consumers want. Each year Dutch consumer union organizes an auction for members who come forward (~100k houses). Last year only quotes with 100% renewable were considered. IMO, it contributes to the change the major German utilities make towards renewable as they own big utilities in Netherlands too.

Bob Meinetz's picture
Bob Meinetz on Jul 27, 2016 1:22 pm GMT

That’s funny, Bas. you say “only quotes with 100% renewable were considered”, why is the Netherlands filling the sky with 4.5 billion watts worth of coal smoke every day? Is that how they “make towards renewable”? Sounds more like they’re making towards emission and ocean acidification. And they’re making towards money.

Darius Bentvels's picture
Darius Bentvels on Jul 27, 2016 2:49 pm GMT

Renewable subsidies (PTC’s, etc) are a temporal help which will decrease to zero, as renewable (wind+solar+batteries+P2G) are widely expected to become extremely cheap in next years with technical progress and volume increases.

But similar nuclear subsidies (ZEC, etc) fail that rosy picture. Worse:
As the operating costs of NPP’s increase the older nukes become, those subsidies have to be increased in next years. Without any end, as new nuclear clearly cannot compete in the coming market with whole sale prices of ~3cent/KWh!

Joe Deely's picture
Joe Deely on Jul 27, 2016 8:42 pm GMT

Alex – great article, high quality and thanks for all the reference links.

Nathan Wilson's picture
Nathan Wilson on Jul 28, 2016 1:34 am GMT

In the US, there is no reason to believe the renewables industries can survive without the subsidies. Instead of getting smaller, the wind industry subsidy has gotten more valuable as part of the 2013 & 2015 extensions (the wind subsidy was formerly a PTC only, requiring farms to produce electricity for 8 years to get the full value; now they can opt to get the ITC all up front; unitl the expiration, US renewables also get 1 year bonus depreciation, further boosting the subsidy). The 5 year accelerated depreciation (worth about 30% of the project cost) never expires.

The US wind subsidy is extended through this year, but that really means developers will have until 2018 or so to get the subsidized farms on line and get the full ITC, with a slow decline in value in subsequent years.

For US solar developer, the subsidies extend through 2019 project starts (with more years allowed for project completion).

What we can realistically expect is that by the time these subsidies expire, our grid will have all the renewables it can tolerate (about 25% wind in the windy states, maybe 10% nationwide; perhaps 5% solar nationwide). Then we’ll need new subsidies for energy storage and more transmission, more extensions to allow more renewables, and more subsidies for efficiency improvements at our fossil fuel power plants which we’ll still need to back up the renewables. Meanwhile, the subsidies will have become so expensive that the public may refuse to accept them, and voila, fossil fuel lock-in.

Helmut Frik's picture
Helmut Frik on Jul 28, 2016 7:58 am GMT

Please proof your wild guesses finally.
Your claims remind me of the german utilities. Thy printed in the early 1990’s that it will never ever be pssible to have more than 5% hydro+wind +solar in the grid nationwide. (www outdoorseiten net/fotos/uploads/5640/nie_mehr_als_5_.jpg)
This was published continuously in all newspapers and magazins for one or two years.
As you might know we have had 33% of power consumed nationwide from such sources in 2015, and this is by far not the upper limit. While the existing storages as well as the peakers are ideling. Research sais storage might be needed above 60-80% of renewables in the national grid.
Previous in discussion (to another article) it was found that a nationwide US Grid would handle 78% renewables. But grid connects also to canada and Mexico, even today, and the grid connections will be extended. So reality including these areas would be >78%.
Subsidies for new renewables – even if it is needed – is much lower than for new nuclear capacity, based on kWh prices, see Hinkley point strike price. And in the US nuclear even needs subsidies to keep the existing plants running. As it looks like in the US – and also from the darta of the french Cour the comptes, keeping old nuclear running or building new renewable capacity costs the same per kWh in the first years while investment of renerwables is written off. Once einvestment for renewables is written off, they are significant cheaper than old nuclear.
If you find out that you’re riding a dead horse, it’s time to get off the horse.

Helmut Frik's picture
Helmut Frik on Jul 28, 2016 9:13 am GMT

And do the US come along with 83 GW generated from coal? This would be the numbers of the netherlands recalculated by headcount on the size of the US.

Rick Engebretson's picture
Rick Engebretson on Jul 28, 2016 10:07 am GMT

I can’t follow all this policy economics guessing game. What I do know is cars don’t always roll downhill. And when you need power to go uphill we can’t all wait at the bottom of the hill for the sun to shine or wind to blow.

Baseload on demand power is essential for efficient work. It’s called a dot product. And nuclear fueled steam turbine driven electric power generation has been a great component of all advanced industrial economies in the modern world for a reason. So called clean or renewable energy has zero such record.

The questions to ask are; do we know how to improve existing nuclear infrastructure?, and do we have skills to implement them?, or can we simply sustain existing performance of nuclear infrastructure? These are questions actual nuclear energy scientists must answer. Those few scientists I’ve met believe the science is possible. But I suspect our decayed culture is a vulnerability. We are in an era when anything can happen to anybody, anywhere, and security is a new issue.

Well, almost daybreak. Time for bug spray and sweat. I really don’t know how many current leaders think food, shelter, energy, technology happens since they have NEVER worked a day in their lives.

Helmut Frik's picture
Helmut Frik on Jul 28, 2016 12:34 pm GMT

And in your model, with a internal combustion machine, you’d have to wait till a truck of gasoline comes by and lends you a pipe to feed the fuel directly in to the motor, since storages for vehiles (Tank, battery) are outside consideration.
Baseload is the opposit of a dot product, because it is produced weather someone needs it or not. It relies on the fact that there is always someone else needing power, so the statistical effects which smooth out demand. Same statistical effect smooth out variability of intermitend renewable production, narrowing the output towards a constant output during the day (Wind) (-> baseload) or towards a day peak, getting wider the further the grid extends in east-west direction (Solar)
So as you don’t need to call in the power station so they swithch power generation higher if before you switch on something in a reasonable big grid, same happens for production in a significant bigger bit still reasonable grid.
Mayor difference – with the smoothing of demand everybody knows that it works, and nobody worries about it. With the smoothing of renewable production people have to learn over the years that it works.

Rick Engebretson's picture
Rick Engebretson on Jul 28, 2016 2:13 pm GMT

No, my model is very different than what I see discussed. My challenge is to figure out how to properly use 5 years worth of stored bio-energy before I have 10 years worth of stored bio-energy. Having used firewood for 30 years I like it less than most. But I’m losing the battle.

If you think a little, a good share of that high density, Carbon rich coal and oil volume is being enlarged as low density, carbon dilute carbohydrate. Basically, that CO2 isn’t staying in the air, its getting dumped in my yard, with associated hazards. I just don’t have much time for this drama.

greg pedrick's picture
greg pedrick on Jul 28, 2016 2:38 pm GMT

Great article. From looking at the map of states with deregulated structures, that use ISO format, the current fleet of light-water nuclear technology is definitely jeopardized to continue operation, especially when you factor in plant age and type of reactor. Would this situation however lend itself to promoting a retrofit demonstration for a company like Transatomic, in Cambridge, MA. I know their work is still early stage but I would love to see an opportunity for them to demonstrate how their molten-salt, high temperature, heavy-water reactor could play a part in getting us away from the scenario in the 1960’s of when we promoted and followed “the wrong type of nuclear”.

Engineer- Poet's picture
Engineer- Poet on Jul 28, 2016 11:15 pm GMT

Thought about giving it away?  When I had a surfeit of split maple after a storm brought a bunch of things down, I just gave away my surplus and made some folks happy.  The splitting was good exercise for me, so it all worked out.

Engineer- Poet's picture
Engineer- Poet on Jul 29, 2016 1:11 am GMT

As you might know we have had 33% of power consumed nationwide from such sources in 2015, and this is by far not the upper limit. While the existing storages as well as the peakers are ideling. Research sais storage might be needed above 60-80% of renewables in the national grid.

It was reported some time ago that the rigged power market in Germany was putting the existing pumped-hydro storage units out of business.  The difference is now being made up by dumping power outside the country, and buying Norwegian hydro through the Danish interconnections.

Previous in discussion (to another article) it was found that a nationwide US Grid would handle 78% renewables.

Nobody “found” this; it is a claim we know to be false, a pure lie.  California is already facing rolling blackouts this summer due to the Porter Ranch gas loss, and California is only generating about 2/3 of its own power and just 30% of THAT (20% of the total) from all renewables combined.  If California, with its ample sun, cannot even manage 30% renewables, no one but a lunatic or a professional liar would claim 78%.

There are a lot of professional liars out there.  The fossil-fuel interests trying to kill their only serious competition have a lot of money to pay them with.  Then they have a bunch of people who can’t do arithmetic who slavishly attach to an ideology and make it part of their personal identity.  The question is, which are you?

Rick Engebretson's picture
Rick Engebretson on Jul 29, 2016 1:54 am GMT

I have been giving it away for decades. I rarely cut standing trees unless they threaten our living area. I gave a car a year ago to a young man who promised to cut, split, and stack a pile. He got the car before starting work, pulverized my chain saw, never did finish even cutting, but I was grateful for needed help.

Of course I have many stories like that. A good one for newbies on TEC is when I first came out here from the University the neighbor farmer had a maple syrup shack in the woods and wanted me to keep cooking all night. Like an idiot I went out with my Solid State Physics textbook to be uppity. I didn’t realize that’s when the bears wake up hungry. I had to buy a new textbook and I made maple candy instead of syrup, and the farmer was mad.

I had some nice visitors including an old scientist and his wife from Calcutta, India this month who find it an interesting dilemma.

Engineer- Poet's picture
Engineer- Poet on Jul 29, 2016 2:12 am GMT

I had some nice visitors including an old scientist and his wife from Calcutta, India this month who find it an interesting dilemma.

I believe there’s a hashtag for that:

#FirstWorldProblems

Nathan Wilson's picture
Nathan Wilson on Jul 29, 2016 4:38 am GMT

Not wild guesses, observations based on studies by NREL and NOAA. I’ve posted this graph several times, from the NOAA super-grid study. It still says that in a fossil gas producing country like the US, since the cost of fuel will never go above $7/mmBtu, the variable renewable fraction will never go above 35% without large subsidies. In coal dominated countries like China and India, the cost of fuel will never go above $3/mmBtu, so variable renewables can not go above 8% without subsidies. (The black and blue bands on the graph are nuclear and hydro, the perennial workhorses of low emission energy).

Will you explain to us again why you think the NOAA is wrong? Didn’t you say that the unified US national grid they considered was much too small, only a global super grid would work?

I did not understand your explaination to why you believed Germany would agree to be part of a super grid, but has consistently refused to import cheaper and more reliable solar energy from the Middle East and North Africa (i.e. Desertek). How will you explain to Americans why they should allow cheap Mexican power onto their grid, killing their jobs? Must the resource poor Japanese import all of their energy from China? We already have a global oil market, and the public hates that.

And given that you claim this super grid will smooth out the fluctuations from variable renewables, why are you so insistent that baseload plants have no place in such a grid, surely the super grid won’t need flexible generation? (NOAA says the renewables on a hypothetical US national grid would need almost full fossil fuel backup).

Regarding old nukes versus old renewables, what old renewables? Nukes last 80 years or more, wind farms must be demolished not long after they are paid off. Batteries don’t last a decade.

Nathan Wilson's picture
Nathan Wilson on Jul 29, 2016 4:45 am GMT

here’s the NOAA US super grid study:

Nathan Wilson's picture
Nathan Wilson on Jul 29, 2016 4:54 am GMT

I’m sure Gen IV nuclear will be great when it’s available. But let’s not forget that our energy/environment priority must be to eliminate all coal use, then all gas use from the grid. Existing nuclear is extremely safe compared to fossil fuel, and affordable too; our 40 year old light water nukes are only in the middle of their 80+ year useful lives.

Rick Engebretson's picture
Rick Engebretson on Jul 29, 2016 8:37 am GMT

Is that where a Detroit, Michigan has been with free time stays informed?

Bob Meinetz's picture
Bob Meinetz on Jul 29, 2016 1:38 pm GMT

fusion_answer, calling fission “the wrong type of nuclear” is akin to calling the 1960s-era Boeing 747 the “wrong type of airplane” because some of them crashed.

The other ~1,500 are still in service, taking a quarter of a million people where they want to go every day of the year.

Shall we pull the rest of them from the air, in hopes of an airplane which is guaranteed not to crash? Seems kind of silly, especially when every 747 has had countless upgrades to make it safer since “the scenario in the 1960’s” when its forbears, and manned spaceflight, and LEDs, and pacemakers, and lasers were born. Significant upgrades, not spurious ones like using apostrophes to help pluralize proper nouns (“1960’s”).

I think humans learned to walk upright then too, but that might have been the 1950s.

Bob Meinetz's picture
Bob Meinetz on Jul 29, 2016 1:50 pm GMT

Helmut, the US come along with making toward speaking English. And hopefully, when Americans post on Dutch energy forums, they come along making towards http://translate.google.com to translate their comments into intelligible Dutch.

Dat is een goed idee, vind je niet?

Engineer- Poet's picture
Engineer- Poet on Jul 29, 2016 2:59 pm GMT

Whatever you’ve been drinking, it’s time to go sleep it off.

Sean OM's picture
Sean OM on Jul 29, 2016 9:06 pm GMT

It was a well written article. There are two major issues with it. The first is if you are attacking “global warming” then you aren’t just talking about CO2, you are also talking about the heat generated, and removing those sources as well. Nuclear is a huge source of heat. It is how it works. It doesn’t create the CO2 but it does emit a lot of heat energy which is contributing to the warming.

Second, there is a huge cost for taking the nuclear facilities down. It ends up to be a huge public liability that potentially could end up costing taxpayers a LOT of money. Safe disposal of materials exposed to radiation isn’t cheap. I don’t know what the cost estimates are but I would guess trillions for our nuclear fleet.

It is just better to shut them down when they are no longer profitable, rather then to string it out by propping them up with a complicated formula of public assistance. If you =are= wanting to assist the energy sector, then the renewable energy actually doesn’t have the same long term liabilities.

Nuclear and Coal are pretty similar. They don’t cycle well, they have nasty waste, and high end of life costs. The existing fleets are getting old. The replacement costs are getting higher. They use a lot of labor which increases their costs over the lifetime of the facility. They were designed for the 1930s style grid. It just doesn’t fit our needs in this century. The whole concept of a baseload energy supply is just becoming archaic.

Engineer- Poet's picture
Engineer- Poet on Jul 30, 2016 12:59 am GMT

There are two major issues with it.

Neither of which is an actual issue, but both of which are common Green astroturf talking points.

The first is if you are attacking “global warming” then you aren’t just talking about CO2, you are also talking about the heat generated, and removing those sources as well. Nuclear is a huge source of heat.

Waste heat from nuclear plants is no different from any other thermal plant, and the effect is local.  It elevates the local temperature slightly and radiates off to space in a very short distance.  Urban heat islands with their low albedos are bigger influences.

The added greenhouse effect from fossil fuel combustion is orders of magnitude greater than its direct heat emissions, and lasts thousands of years.

Second, there is a huge cost for taking the nuclear facilities down. It ends up to be a huge public liability

Nuclear plants set aside reserves for decommissioning; this is all paid for during the life of the plant.  If anti-nuclear politics forces a plant to close prematurely there may be issues, but the solution to that is to not allow anti-nuclear politics to dictate our energy choices.  These people are variously superstitious, on a spectrum from delusion to paranoia, or working for fossil-fuel interests.  The first two need psychological counseling and the last deserve jail.

Bob Meinetz's picture
Bob Meinetz on Jul 30, 2016 1:12 am GMT

Sean, the Earth receives the equivalent of 83 million nuclear plants in energy from the Sun every day. The Earth doesn’t burn up, because all but about .05% of it is radiated back out to space.

Nuclear plants, coal plants, cars, trains, planes – all the energy used by humans combined is a drop in the bucket. The problem is the atmospheric carbon that traps the .05% inside.

Nuclear and coal aren’t remotely similar because one generates no carbon, the other, a lot.

There’s an extremely simple answer to avoiding the cost of taking nuclear plants down – don’t do it.

The cost for storing the nation’s nuclear waste is estimated at $290 million/year, or about 7,000 times less than you thought. There’s an extremely simple way to avoid making guesses which prove to be wildly wrong – don’t do it.

Engineer- Poet's picture
Engineer- Poet on Jul 30, 2016 2:54 am GMT

I find the $290 million/yr figure interesting.  How much is spent on the isolation of the toxic substances in the billion tons per year, more or less, of coal ash… and how much damage do we sustain from our failures to manage it?

Bob Meinetz's picture
Bob Meinetz on Jul 30, 2016 5:40 am GMT

No idea, EP, but I know the US is spitting 50 tons of mercury into the air every year from coal plants, despite mitigation efforts.

I found a rigorous analysis of the effects of urban electricity outages on mortality, in which a 28% increase in non-accidental deaths was attributed to the NYC blackout of 2003. Southern California is expecting up to 14 days of power outages this summer, thanks to merit-order displacement of dispatchable generation by renewables. Should the same percentage apply, there will be up to 9,000 lives lost – not because of renewable energy, but because of the stupid people who think it’s effective.

Helmut Frik's picture
Helmut Frik on Jul 30, 2016 10:35 am GMT

So prove your claims about norwegian storage with some date. You will found out that this kind of balancing is planned for the future, but not done now in relevant amount. Pumped storage in germany is 7-8GW, power lines to danmark have a capacity of only 2 GW today. Upgrades are under construction, but are not there. most of the time when there is surpus Wind in Schlwswig -Holstein, there is also a lot of wind 100-200km north in Danmark. Which results in more subsea cable connection germany to scandinavia aore under way, too.
Pumped storage used by germany for about a century now in neighboring countries are in swizerland and austria, and they complain about under utilisation as much as german pumped storage operators do. swis and austria have a storage capasity of about 20TWh.

And you get insulting again, seems you run out of arguments.
discussion was about renewables, you talk about solar only, discussian was yabout whole US and bigger, you talk about california. California als had roling blackouts some years ago – do you also blame them on solar power generation?

Helmut Frik's picture
Helmut Frik on Jul 30, 2016 11:26 am GMT

I do not tel the study is wrong it just does not tell what you claim it tells. again, it tells how much existing Gas power plants will be pressed out of the market by new renewable capacity based on fuel price (Gas power station) versus LCOP costs of renewables, until 2030. (since most gas power stations are almost new now few will leave the market till the due to old age) .
The study says nothing about the maximum share of renewables in the US grid. It just tells that at e.g. 7$/MMBTU Renewables will press about half of gas market share out of the market, so including a lot of brand new gas plants, It says also nothig how the replacement of conventional power goes on when gas power stations become old and would have to be replaced by new capacity, renewable or conventional.
Why do you think wind power must demolished after they are payed off? Is there a law for this in the US? There is no technical reason for this. And show me a nuke which is running for 80 years profitable. they already leave the market at a age of 40 years because repairing them is more expensive than new renewable capacity, which is the topic of several contributions here.

Engineer- Poet's picture
Engineer- Poet on Jul 30, 2016 11:33 am GMT

So prove your claims about norwegian storage with some date. You will found out that this kind of balancing is planned for the future, but not done now in relevant amount.

http://energinet.dk/Flash/Forside/UK/index.html shows about 1.4 GW out of about 3.1 GW total Danish demand coming from Norway.  As I write this it shows about another 540 MW coming through the German interconnects, and about 1.1 GW exported to Sweden.

Pumped storage in germany is 7-8GW, power lines to danmark have a capacity of only 2 GW today.

Claim without evidence.

You chronically omit references for your claims (for example, you still haven’t provided anything definite regarding German air conditioners) yet you hypocritically demand evidence from others.  You should be ashamed of yourself, but a lack of shame is one of the traits of the sociopath.

And you get insulting again, seems you run out of arguments.

You behave badly, but expect not to pay the price.  This suggests narcissism, another one of the “cluster B” personality disorders.

discussion was about renewables, you talk about solar only, discussian was yabout whole US and bigger, you talk about california.

Sorry that I don’t have time to debunk every claim you make in your Gish gallops.

California als had roling blackouts some years ago – do you also blame them on solar power generation?

When the remaining generation in California is unable to handle the slope of the “duck curve” and rolling blackouts are a regular feature of late spring evenings, solar will definitely be to blame.  The pols and Greens are not proposing anything which can actually prevent this, so it’s almost certain to happen.

One of the claims made for electric market “deregulation” (actually, gross misregulation) in California was that it would open access to more renewables.  That was mostly wind at the time, but the Greens were the front for that too.  I can blame Enron for taking advantage, and Greens for using irresponsible and false claims to help make it all possible.

Helmut Frik's picture
Helmut Frik on Jul 30, 2016 11:36 am GMT

No that would be a stupid idea. ESpecially siny you do not even care in which country people speak which language.

Bob Meinetz's picture
Bob Meinetz on Jul 30, 2016 2:49 pm GMT

EP, two groups which are tirelessly working to correct the obscene fraud that anti-nuclearism is “green”, below. It’s beginning to show results.

Californians for Green Nuclear Power
http://www.cgnp.org

Environmental Progress
http://www.environmentalprogress.org

Bob Meinetz's picture
Bob Meinetz on Jul 30, 2016 3:05 pm GMT

Helmut, what would be stupid would be to think you can convince anybody of anything by:

1) Typing as fast as you can because you’re angry;
2) Considering punctuation, spelling, grammar, and accurate references unimportant to informed discussion;
3) Addressing people you don’t know in the context of an insulting stereotype.

Unfortunately, translate.google.com has no capability for parsing “Grammatically-Deficient Misspelled Pidjin English”, so when I try to translate your gibberish into English, I get an error:
“Writer is Attempting to Sound More Intelligent Than He Is”.
Any suggestions?

Helmut Frik's picture
Helmut Frik on Aug 1, 2016 8:03 am GMT

So with danmark importing from Norway and germany and exporting to sweden, this does not look at all like germany using norwegian hydropower storage.
But since you seem to have problems to use Google, lets google this for you and give you one of the links here: http://www.windkraft-journal.de/2015/04/10/tennet-und-energinet-dk-wolle...
Remember, it woas your claim, not mine. So your task to proof it.
You keep insulting, and you keep not proofing your claims.
Please proof that the blackouts in california in earlier times were caused by wind power. I am quite sure you will again not be able to do so.
And again you will blame this accompanied with insults on me.

Engineer- Poet's picture
Engineer- Poet on Aug 3, 2016 4:51 am GMT

So with danmark importing from Norway and germany and exporting to sweden, this does not look at all like germany using norwegian hydropower storage.

Looks like Germany was using Swedish hydropower as storage that day.  Right now, exports to Sweden roughly equal imports from Norway and net imports from Germany are about 1/4 of Danish consumption (note, it’s roughly dawn there).  What matters are the averages, not the minute-by-minute flows.

But since you seem to have problems to use Google, lets google this for you

German papers seldom come up in English language searches, and I wouldn’t know the correct German terms.  Supporting your argument is YOUR job anyway.  The Google translation comes out this way:

By Equipped line transmission capacity between Germany and Denmark to 2,500 megawatts (MW) will rise. Currently up to 1,500 MW in the north and up to 1,780 MW can be transmitted in a southerly direction.

You claimed 2 GW capacity, it’s considerably less than that now.  When the project is finished, it will only be about 25% more.

You keep insulting, and you keep not proofing your claims.

Speaking of proof, WHERE is your cite for the efficiency superiority of “monobloc” air conditioners over window units?  I gave you evidence that they started out 10% inferior and had extra losses on top.  YOU have dropped the issue like a hot potato.

Please proof that the blackouts in california in earlier times were caused by wind power.

I never said that (I explicitly blamed the market design, designers and market players like Enron), and if you think that’s what my words mean what it really means is that you cannot read English well enough to carry on a logical argument.

And again you will blame this accompanied with insults on me.

Calling you insufficiently capable in English to argue logically is simply a fact.

Helmut Frik's picture
Helmut Frik on Aug 3, 2016 7:52 am GMT

With imports from Norway much higher than from germany, it would be Norway uusing swedish hydropower as storage. If you look at cost structures, both does not make much sense – seems Swden just needed a GW of power, Danmark too, and Norway and germany could deliver.
The missing 300MW between the 2 GW I told you and the bit lower numbers in the article is a 110kV line along the other coast. For this a second project exists to build a additional 400kV-Line there, too.
Along with 2 1,4GW subsea cables from germany to norway, a 1,4 GW cable from germany to sweden (later a second one), and a Connection between offshore windparks connecting germany with the east of danmark.
This and other porject you can find in “Netzentwicklungsplan 2025″ (https://www.google.de/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&cad=rja&u...)
Or at entsoe, keyword TYNDP

I did not claim that the mobile monoblock units are more efficient than window units. Please read what I write. I wrote that those monoblock units are the equivalent of window units. And I told that nobody here uses such a power guzzling system, and did proof this by the referenc to amazons most sold porducts in this area. And I did show you that people here use water based systems, with a link, and that those water based systems are with higher efficiency, remember the link to a typical panasonic unit above? Those wich use soil as source for heat often use passive cooling for airconditioning, which just needs a pump and in some cases a heat exchanger for cooling, making this again much more efficient than active cooling. It could be that the contribution with the two links is not yet public due to the links in it.

About california: you said this ” That was mostly wind at the time, but the Greens were the front for that too.” to my question if you also blame the earlier roling blackouts in california to solar power.

Darius Bentvels's picture
Darius Bentvels on Aug 3, 2016 2:05 pm GMT

I read two ‘facts’:
– German grid stays exceptional reliable with 33% renewable, and can handle far more renewable (>50%);
– California grid (already far less reliable) cannot even manage 30% renewable.

This creates the impression that California’s policy makers, engineers and managers are incapable and their grid is in a backwards state, or …???

Seems to me that the Californian’s should spend a long training visit to the grid companies that manage German grid (Dutch Tennet, etc), the German oversight authority (Dena) and may be the Energiewende authorities.
So they learn how to make their grid more reliable and up-to-date.

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