Tuesday, January 3, 2017

Guest Column: The Future of Nuclear Power

I have wanted to comment about how the removal of shackles on nuclear power under the incoming Trump Administration would have even more of a positive effect in energy prices, adding to more drilling of natural gas and oil, and truly push the USA toward energy independence -- and the political benefits of that.

Unfortunately, nuclear energy and regulation is beyond my ken, so I asked Ed Fenstermacher, who has written a few guest columns before, who is a friend and classmate of mine from the M.I.T. Class of 1973, about 45 years back, to write this column.  Ed is a former Air Force officer, but more importantly nuclear energy is his business, as he is currently a nuclear engineering consultant (and a husband, and proud father of three.)  Ed can be reached at efenster@alum.mit.edu.

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There are several main factors that will determine the viability of nuclear power in the near future, the same factors that affect all its competitors for generating electricity: coal, oil, natural gas, hydroelectric, wind, solar and other “renewable” power sources.  These are the cost of generating power, the availability of the energy source, the environmental impact including waste disposal, and safety.  All of these are also shaped by government regulatory conditions, both at the national level and local level.  All of these fold back into the cost.

As far as availability is concerned, nuclear fuel is widely available.  We are reaching the point where it can be economically extracted from seawater, making it effectively a renewable resource, like hydroelectric power, wind and solar.  Unlike hydroelectric, it is widely available (nearly all possible hydroelectric sources in the US are already in use.)  Unlike solar, it is available at all times of the day; and unlike wind, it is available in all weather conditions.   Nuclear fuel is far more comparable in availability to fossil fuels, such as coal (about 400 years’ worth at present consumption levels).  Fracking has greatly increased the availability and decreased the price of both oil and natural gas, and consequently decreased the price of these fuels as well.

Regulation of nuclear power is done at the federal level for safety and environmental reasons.  Nuclear plants need to comply with a plethora of Federal Regulations issued by the Nuclear Regulatory Commission (NRC), the EPA, and others.  Fortunately, the NRC and Congress realized some time ago that their regulations had to be more rationally applied, or they would not have an industry to regulate.  Thus, NRC regulations now make it easier to build a nuclear plant than it was 40 years ago.   

At that time you had to get a Construction Permit to build a plant, and a separate Operating Permit to run it.  If rules changed in the years it took to build the plant, though, well, tough!  You would then either have to do costly modifications after the plant was built, or never get to operate it at all.   

This is what happened to the Shoreham Plant on Long Island, which operated at low power just long enough to test and to ensure that the equipment was radioactive, and then shut down before producing a megawatt hour of commercial electricity.  The licensing process is now a single step:  if a utility gets a permit to build the plant, and builds it as planned (meeting all of the quality standards needed), it will be allowed to operate it.

At the state and local level, the regulation is largely economic, and there are rules which require that any new facility be used and usable in order to be included in the rate base.  Unlike Apple, which can use the profits from the iPhone 6 to finance development of the iPhone 7, a public utility has the profit from Nuclear Plant 2 regulated to keep its profits from being excessive, and can’t use them to finance Nuclear Plant 3.  

These rules nominally apply equally to all forms of power, but end up having an impact proportional to how long it takes to build a plant, because interest is accruing during that period that can only be paid off after the plant is operational.  Nuclear power plants take about six years to build under good conditions, while gas-fired plants take only about a year.  Thus, the used and usable provisions hurt nuclear more than other types.

Another type of regulation requires utilities to buy back excessive solar power from rooftop residential generators.  Similarly, they may have wind generation facilities that generate power unsteadily.  Unfortunately, this power may be available when it is not needed.  If the remaining power is nuclear, the excess power is wasted, because nuclear plants cannot change their power quickly.   If that power is gas generated, the plant generation can be easily adjusted to accommodate these changes. 

Despite the Chernobyl and Fukushima accidents, any new plants in the United States will be safe.  The Chernobyl design would never have been licensed here, while the Fukushima plant had not had upgrades that are required in the USA.  The designs of new nuclear plants being built now have passive cooling systems that avoid meltdowns under any conditions, short of a nuclear war. With Fukushima, there were no radiation-related deaths or injuries, but considerable and costly environmental damage.  This will not happen with the new designs, because the nuclear industry has an unequaled record of learning from its own safety issues.

Another environmental issue, of course, is disposal of nuclear waste.  The Obama Administration and Harry Reid colluded to kill the Yucca Mountain Waste Repository, with Obama appointing Gregory Jaczko, formerly of Reid’s staff, to chair the NRC.  Jaszko was eventually replaced, after the NRC’s Inspector General found he had been withholding information from the other commissioners, in order to stop Yucca Mountain from being licensed.   

This led all the other commissioners, including the Democrats, to complain about him to Congress.  He was replaced, but that damage had been done.  This is one thing the Trump Administration could, and needs to, reverse.  Objectively, the repository should have been licensed.  Bringing it back would improve the outlook for nuclear power.

What doesn’t help, however, is that the nuclear supply chain has been shut down for decades.  Just as we can no longer build a Saturn V rocket, we have lost the capability to make a lot of the parts required for plants, and we have to tool up to do that.  The parts need to be of the highest quality.  This has become an issue particularly in recent weeks with supply problems with Toshiba’s Westinghouse subsidiary -- causing a precipitous drop in Toshiba's valuation -- and with the discovery of quality problems being covered up by the French nuclear supplier Areva.  These supply line issues raise the possibility that schedules cannot be met, costs will increase, and plants may be abandoned partially completed.

The net result of all of these factors is that right now, the short-term costs of natural gas make new nuclear plants, and even some existing plants, non-competitive.  I would love to see people start thinking about the long-term impacts of their decisions, but the decisions of utilities are driven by the interests of their stockholders and by the Public Utility Commissions that regulate their prices.   

The chances that either group will have a planning horizon of several decades or more is about the same as of the AARP worrying about the viability of Social Security several decades hence.  As much as I would like to believe otherwise, I don’t see a lot of new nuclear construction in the near future, even if Trump adopts policies more friendly to it -- Ed Fenstermacher.


Copyright 2017 by Robert Sutton
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