Listen to the nuclear advocate.

We read a lot of material produced by nuclear power supporters as well as information provided directly from the nuclear industry.

Most of it is bunk; but what is most telling is that most of it is less than candid as well–especially materials aimed at the public and policymakers. Neither the industry nor its supporters typically want to acknowledge any of nuclear’s shortcomings, or in most cases acknowledge that nuclear has any shortcomings at all. Too expensive? It’s the government’s fault, or Wall Street’s fault, or us anti-nukers make it too expensive. Safety issues? There are none. Radiation is not as harmful as portrayed. No one keels over immediately in most nuclear accidents, so we’ll pretend there are no health effects. And so what if a couple hundred thousand people lost their homes and businesses in Japan–they’re not dead so don’t complain–they can just go live in a radiation zone. Radioactive waste? Yucca Mountain. Oh, and Yucca Mountain. Don’t forget Yucca Mountain. 

So it’s somewhat refreshing to see an article from a strong nuclear supporter–Jim Hopf, a senior nuclear engineer who writes regularly for the American Nuclear Society–that candidly raises some issues for the industry. We disagree strongly with the solutions proposed in the piece, of course, but it’s important to know what nuclear advocates are really thinking and proposing among themselves, and why. And this piece is a good starting point.

For example, Hopf puzzles at length over why some existing reactors are no longer economically competitive with natural gas and wind power:

“We’ve all been taught that nuclear plants have high initial capital costs but then have very low, stable operating costs—lower operating costs than any other source, with the possible exception of hydro. Given this, it’s rather hard to understand how existing nuclear plants could ever struggle to compete, in any market, or against gas generation.

“There are ongoing discussions as to whether low natural gas prices alone are to blame, or if subsidized wind, and the periodic negative pricing that results, is an important additional factor. Exelon has been arguing that subsidized wind is a significant factor, while others, such as Federal Energy Regulatory Commission commissioner John Norris, are arguing that it is not.

“I have some difficulty with the notion that current natural gas prices are solely to blame for this, especially now that gas prices have risen back to almost $5/MBTU. In times past, such as the 1990s, natural gas prices were far lower than that (in inflation-adjusted terms), and there were few plant closures (with most of those being due to factors other than economics). Also, it was not too long ago that people were discussing whether or not NEW nuclear projects could be competitive with ~$5/MBTU gas. (There has been some inflation since then, but not that much.)

“It seems clear to me that negative pricing, even over a fraction of the time, would have a significant impact on existing nuclear plants’ financial performance. The only other reason why existing plants may be struggling now whereas they didn’t before is that operating costs are increasing. Some data that I have found…suggests that this is indeed the case. Plant operating costs jumped after Three Mile Island (almost certainly due to a major increase in regulation), and costs have also increased over the past few years (to 2.4 cents/kW-hr from something like 1.8 cents a few years ago, as I recall). Post-911 security requirements have contributed to this. In addition, post-Fukushima requirements will add to this for many plants.

“At times I find it so difficult to accept that existing plants might close due to economics (whereas new build has been discussed/assumed so recently) that I almost wonder if Exelon is bluffing when it threatens plant closures, in order to get more favorable market policies for those plants. If it does close plants (or even leave the nuclear generation business), it will feel like one more case of abandonment of (and lack of commitment to) nuclear by the main nuclear utilities—over short term economic issues. It would be reminiscent of Entergy’s decision to close Vermont Yankee, after all of the legal and political struggles the company (successfully) went through.”

A couple of thoughts on this passage: first, the American Wind Energy Association has pretty convincingly demolished the argument that the occasional negative pricing for wind power is a significant reason for nuclear’s increasing inability to compete with wind. Second, we also have to wonder if Exelon is bluffing. Certainly it’s threat to close its two Byron reactors in north central Illinois was aimed at the Illinois legislature, not anti-nukers; if Byron can’t compete then none of Exelon’s reactors can or ever will again. And for the time being at least, the ploy worked: under fierce lobbying from Exelon, the legislature last week backed off from a bill to update and improve the state’s Renewable Portfolio Standard (RPS). Instead, the issue will likely be taken up next year, when it is widely expected Exelon will launch a full-court press to include its existing reactors in the RPS–which would make the RPS meaningless.

Hopf goes on to write:

“As nuclear opponents often love to point out, both capital and operating costs for nuclear plants have been increasing over time. Estimated capital costs are almost double what initial estimates were ~10 years ago, even in inflation-adjusted terms. Now people are saying that gas needs to be $13/MBTU (vs. $5) for new nuclear to be competitive. New nuclear plants appear to be no less expensive than the (troubled) first round of plants, despite all we’ve heard about new plants being simpler, with fewer pumps and valves, etc. And, as discussed above, operating costs have also increased.

“What could cause this? Generally speaking, costs go down with time, due to technological advancements and lessons learned (barring a dramatic increase in (inflation-adjusted) raw material or labor costs, neither of which explains nuclear’s cost increases). The only thing that could really cause such increases in cost, over time, is increasing regulations, standards, and requirements.”

While lessons learned from nuclear accidents and outside events like 9/11 have–for good reason–caused some new regulations, Hopf misses the basic issue of reactor aging. As reactors age, and large components like steam generators in PWRs and condensers in BWRs need to be replaced, operating costs go up. Even more routine equipment breakdowns tend to occur more frequently as reactors age, and that drives up costs too. So Hopf’s analysis doesn’t quite bear scrutiny here–nor does his support later in the article for ” policy, regulatory, and other changes that would reduce nuclear plant operating costs.”

And, finally, Hopf unfortunately mimics most pro-nuclear writers in his conclusion that fails to recognize the massive subsidies nuclear has received over the decades, and still receives: “Given that renewables (especially wind) are well out of their infancy, there is no justification for treating non-polluting sources differently. If renewables subsidies and mandates are not eliminated or phased out, nuclear should be given some degree of support as well.” The hostility by nuclear proponents to renewable subsidies is growing and unsupportable. For example, new nuclear reactors have the exact same Production Tax Credit (PTC) that the wind industry gets–except that the nuclear PTC lasts for more than another decade while the wind PTC has to be renewed–usually after a major Congressional fight–every year or two. Add in the Price-Anderson Act, subsidies for R&D, the tens of billions of dollar shortfall in the Nuclear Waste Fund that will have to be made up by somebody (here’s looking at you, taxpayers), and nuclear has been far more subsidized than renewables, as study after study has shown. Ironically, as of yesterday, ratepayers are no longer paying in to the Nuclear Waste Fund, meaning that the existing shortfall will only grow. Will utilities now lower their rates proportionately, or will they keep collecting “waste fund” money and simply pocket it? Since the amount is so low–one tenth of one cent per kilowatt/hour of electricity used, few ratepayers would ever notice the difference.

It’s rare to see a nuclear backer provide some serious analysis about the industry’s underlying economic problems. That Hopf misses the point on some key issues, and that his proposed solutions might make things better for the nuclear industry, but worse for the rest of us, is to be expected from a strong nuclear advocate. But it’s always important to know what your adversary is thinking and why.

Michael Mariotte

May 20, 2014

Permalink:  https://www.nirs.org/2014/05/20/listen-to-the-nuclear-advocate/

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