What Are the Economic Challenges of Nuclear Power and LED Street Lighting?

[aquitaine]

So based on this Florida estimates that to build nuclear power stations it will cost $20 billion, but I can't find how many they are planning to build. But it raises an interesting question about the economics of nuclear power in general, in particular what are the major factors behind its costs? How can these costs be lowered without compromising plant integrity and safety? And if the long term cost of building a modern generation III cost is competitive with fossil fuels why aren't we building more nuclear power plants?

 

[QuantumPion]

Where in that article does it say it will cost $20 billion to build a new plant? All I see is a critic of FPL criticizing increasing electric rates to pay for maintenance and future projects across the grid. I don't understand how increasing rates to pay for maintenance, upgrades, and expansion is somehow a evil capitalist interest free loan. The article is highly political and one-sided.

 

[QuantumPion]

The most significant impediments to new nuclear plants right now are (in reverse order):

3) less electric demand due to poor economy

2) new discoveries of ginormous reserves of natural gas and the technology to extract them

1) the NRC. In the last 10 years the NRC has become a major bottleneck to not only new nuclear plants, but any new nuclear technology or ability to modify/upgrade existing plants. Their bureaucratic nature is just too crippling.

 

[aquitaine]

Can you elaborate on point number 1?

 

[QuantumPion]

Can you elaborate on point number 1?

http://blogs.reuters.com/environmen...ecession-reshaped-u-s-electricity-production/

 

[russ_watters]

I don't understand how increasing rates to pay for maintenance, upgrades, and expansion is somehow a evil capitalist interest free loan. The article is highly political and one-sided.

Moreover, many states already require power companies to collect money to subsidize third party energy conservation retrofits and power generation.

Npr is giving a voice and lending credibility to a crackpot here.

 

[aquitaine]

http://blogs.reuters.com/environmen...ecession-reshaped-u-s-electricity-production/

I was referring to the other point number one, the one about the NRC. How does it raise construction costs unnecessarily and discourage the construction of new nuclear plants?

Also what effect does public anti nuclear hysteria have on it?

 

[QuantumPion]

I was referring to the other point number one, the one about the NRC. How does it raise construction costs unnecessarily and discourage the construction of new nuclear plants?

Also what effect does public anti nuclear hysteria have on it?

The NRC, like other government regulatory agencies, is highly risk averse. The consequences of something bad happening that they could have prevented are highly visible. However, the consequences for over-regulating the industry into oblivion are hidden. Therefore, they have an incentive to make it as a difficult as possible to get anything done. There is a similar analogue with the FDA. If the FDA were to allow a harmful drug on to the market, this would be highly visible and extremely damaging to them. However, when the FDA blocks potentially good drugs from being available due to the extreme process required for getting new drugs approved, this effect is hidden. No one knows about drugs that could have been available to them but never made it due to the process. Therefore, they have an inventive to over-regulate even though it most likely does more harm than good.

 

[mheslep]

The most significant impediments to new nuclear plants right now are (in reverse order):

3) less electric demand due to poor economy

2) new discoveries of ginormous reserves of natural gas and the technology to extract them

1) the NRC. In the last 10 years the NRC has become a major bottleneck to not only new nuclear plants, but any new nuclear technology or ability to modify/upgrade existing plants. Their bureaucratic nature is just too crippling.

Agreed, especially on 1). Given the low demand conditions brought on by 3)&2), the nuclear industry needs to pivot quickly to small modular to come up with smaller and affordable reactors. The NRC however is not designed to pivot ever, certainly not quickly.

 

[gmax137]

The most significant impediments to new nuclear plants right now are (in reverse order):

3) less electric demand due to poor economy

2) new discoveries of ginormous reserves of natural gas and the technology to extract them

1) the NRC. In the last 10 years the NRC has become a major bottleneck to not only new nuclear plants, but any new nuclear technology or ability to modify/upgrade existing plants. Their bureaucratic nature is just too crippling.

Can you elaborate on point number 1?

The NRC, like other government regulatory agencies, is highly risk averse. The consequences of something bad happening that they could have prevented are highly visible. However, the consequences for over-regulating the industry into oblivion are hidden. Therefore, they have an incentive to make it as a difficult as possible to get anything done. There is a similar analogue with the FDA. If the FDA were to allow a harmful drug on to the market, this would be highly visible and extremely damaging to them. However, when the FDA blocks potentially good drugs from being available due to the extreme process required for getting new drugs approved, this effect is hidden. No one knows about drugs that could have been available to them but never made it due to the process. Therefore, they have an inventive to over-regulate even though it most likely does more harm than good.

You still haven't given a concrete example or instance of obstruction by the NRC. If regulatory antics are the 'number one problem' it seems examples would be well known and numerous.

 

[QuantumPion]

You still haven't given a concrete example or instance of obstruction by the NRC. If regulatory antics are the 'number one problem' it seems examples would be well known and numerous.

The recent issue I am concerned about is license amendment processing. The NRC has recently cut its budget and reduced the amount of license amendments it can handle. Even though the process is 100% funded by the industries doing the amendments, they are cutting back on the ability of plant owners to apply for license amendments. This means only absolutely necessary applications are considered, and even those can have a backlog of 5 years or more. This affects things such as design changes (to improve plant performance & safety), new computer codes, methods, etc.

 

[mheslep]

Some NRC holdups:

Byron. License refused in 1984 after 9 years of construction. License eventually granted; the delay no doubt cost a fortune.
http://en.wikipedia.org/wiki/Byron_Nuclear_Generating_Station

Vogtle 3,4. Still no combined operating license. Southern started the regulatory process in 2004.
http://www.southerncompany.com/nuclearenergy/milestones.aspx

Licensing cost $50-$100 million per site.
http://online.wsj.com/article_email/SB10001424052970204409904574350342705855178-lMyQjAxMDA5MDAwODEwNDgyWj.html

Six-seven year review of small-modular designs alone, not including sites.
http://www.nrc.gov/reading-rm/doc-collections/commission/slides/2011/20110329/staff-20110329.pdf slide 21

 

[Astronuc]

I believe the Vogtle 3,4 COL has been waiting for the design certification of the AP1000, which was just granted.
http://www.nrc.gov/reading-rm/doc-collections/cfr/part052/part052-appd.html
http://www.federalregister.gov/articles/2011/02/24/2011-3989/ap1000-design-certification-amendment
(Final rule was scheduled for Sept 2011)

Plants like Byron and Braidwood were affected by TMI-2 event in 1979, and the screwups at places like Zimmer, Midland, Shoreham, South Texas Project and a few others.

The regulatory cost for new plants is a small part of the overall cost. Capital costs, and really cost of steel, concrete and other commodities have appreciated over the last decade.


Anyone should find the recent statements by John Rowe, CEO of Exelon, who will retire at the end of the year. One of the biggest stumbling blocks for new plants is the lack of a resolution of the used/spent fuel. Another factor is the abundant supply and low price of natural gas - for now.

 

[mheslep]

In the case of Byron we are not talking here about hysterical law suits or protests after TMI, we are talking about the delay of the license issued by the NRC.

The regulatory fees for new small modular plants will not be a small part of the overall cost. More generally, one of the major costs for plants is due to the time involved, so that no return can be earned from operation until 10-15 years after money was first spent on development. The NRC is a part of that drawn out extended timeline.

 

[NUCENG]

You still haven't given a concrete example or instance of obstruction by the NRC. If regulatory antics are the 'number one problem' it seems examples would be well known and numerous.

Two words - "Yucca Mountain" NRC is in violation of an act of Congress.

 

[Mr Boom]

With the exception of Yucca, I don't see regulation being the major sticking point. Obviously, they are cautious with new designs, which makes me wonder whey companies aren't just applying with legacy designs, but in general I think the regulation issue is more of a hassle than a financial hurdle. It's more of a perceived roadblock than a real one.

Naturally, I separated Yucca in the argument. I think the uncertainty regarding fuel storage definitely scares people away from building new plants. Why accept the liability of spent fuel sitting around on your property for years? I think if there was a clear plan to take this fuel out of their hands, I bet we'd get more utilities investing in nuclear. I would only make sense to diversify your company. What if you operated all coal and gas plants and then carbon-capping hits?

Anyway, I've only ever worked with defense reactors, so I'm probably not qualified to speak on what goes on in the minds of the CEOs.

 

[QuantumPion]

With the exception of Yucca, I don't see regulation being the major sticking point. Obviously, they are cautious with new designs, which makes me wonder whey companies aren't just applying with legacy designs, but in general I think the regulation issue is more of a hassle than a financial hurdle. It's more of a perceived roadblock than a real one.

What do you mean "cautious with new designs?" They flat out refuse to put the resources into anything that isn't a standard LWR. The problem is companies ARE just applying legacy designs. The types of new reactors that may be built in the future are limited to the APWR and US-APWR, which are just simple improvements over current PWR's. And by the time these designs are finally licensed and built, probably 10 years from now, they will already be out of date. There is no chance for a pebble bed, traveling-wave, integral fast breeder, etc to be built while the NRC is in its current mode of regulation-to-death.

 

[Mr Boom]

What do you mean "cautious with new designs?" They flat out refuse to put the resources into anything that isn't a standard LWR. The problem is companies ARE just applying legacy designs. The types of new reactors that may be built in the future are limited to the APWR and US-APWR, which are just simple improvements over current PWR's. And by the time these designs are finally licensed and built, probably 10 years from now, they will already be out of date. There is no chance for a pebble bed, traveling-wave, integral fast breeder, etc to be built while the NRC is in its current mode of regulation-to-death.

Let me clarify. I look at nuclear power as an emissions free alternative that adds diversity to the nation's energy portfolio. As a result, I don't have a problem with "out of date" PWR technology being continued if it's cost effective. I don't think the NRC's resistance to new technology with no benchmarking is what keeps new plants from going up. That would imply that next gen reactor technology is far more economical than LWR technology, which I haven't heard a convincing case for (arguments welcome of course). I think the hesitance to build more plants must come down to fuel storage and liability, not push back on new reactors. Perhaps if there is a utility exec that posts on here than we could find out what goes on in their heads.

Something worth mentioning I guess is that the arguments here tend to sound either pro-regs or anti-regs, but there is little discussion of smart regulation. For example, there was a lot of push back from the PRA community when the "hot short" guidelines came out, but nobody really seems to be providing a formula for how things should be done. Despite all the hurdles the NRC creates, it seems to me that they have always been open to new ideas. Perhaps we should discuss, here or in another thread, ways in which new reactor technology could be licensed while appeasing risk-based fears that spawn from the lack of operation time/history.

 

[mheslep]

With the exception of Yucca, I don't see regulation being the major sticking point. Obviously, they are cautious with new designs, which makes me wonder whey companies aren't just applying with legacy designs, but in general I think the regulation issue is more of a hassle than a financial hurdle.

No, because time is money. A period of 10-15 years, planning to Watts, is a lot of money.

There's more to this than just fuel storage and liability fears:

The Levy County Nuclear Power Plant ... Costs of the two nuclear units are estimated at $14 billion, plus $3 billion for necessary transmission upgrades. ...Installed capacity 2,210 MW

http://en.wikipedia.org/wiki/Levy_County_Nuclear_Power_Plant

 

[law&theorem]

So based on this Florida estimates that to build nuclear power stations it will cost $20 billion, but I can't find how many they are planning to build. But it raises an interesting question about the economics of nuclear power in general, in particular what are the major factors behind its costs? How can these costs be lowered without compromising plant integrity and safety? And if the long term cost of building a modern generation III cost is competitive with fossil fuels why aren't we building more nuclear power plants?

Only stupid china government paid for AP1000 and other russian reactors.

 

[NUCENG]

No, because time is money. A period of 10-15 years, planning to Watts, is a lot of money.

There's more to this than just fuel storage and liability fears:

http://en.wikipedia.org/wiki/Levy_County_Nuclear_Power_Plant

At an average price of $122.16 per MWhr(Residential average price per Energy Information Agency) at 90% capacity for 60 years minus a total cost per MW hr of $30 and assuming the $20 Billion construction investment gives a net return of $96 Billion. Since the company will actually recoup the cost of construction through depreciation and rates, the econocs are positive. Add the unquantified benefits of employment, economic impact, tax revenue, and production of energy without greenhouse gasses, and the picture is pretty clear. One final consideration is the current trend of "Not In My Backyard (NIMBY)" It is going to be tough to get permission to build any large baseload plant, even if it isn't nuclear.

 

[mheslep]

At an average price of $122.16 per MWhr(Residential average price per Energy Information Agency) at 90% capacity for 60 years minus a total cost per MW hr of $30 and assuming the $20 Billion construction investment gives a net return of $96 Billion. Since the company will actually recoup the cost of construction through depreciation and rates, the econocs are positive...

Positive for who? Not so positive for the rate payer. And that calculation neglects the time value of money. The net $1.6B per year over 60 years is not worth $96B today. Try it with a net present value calculation at 6%, the rate at which FPL borrows money. Assuming development and NRC compliance and construction spending at, naively, $1.5B/yr for 13 years followed by net income of $1.6B/yr after, then the NPV for the proposed Levy county plant is a loss even if the plant runs for 100 years.

 

[NUCENG]

Positive for who? Not so positive for the rate payer. And that calculation neglects the time value of money. The net $1.6B per year over 60 years is not worth $96B today. Try it with a net present value calculation at 6%, the rate at which FPL borrows money. Assuming development and NRC compliance and construction spending at, naively, $1.5B/yr for 13 years followed by net income of $1.6B/yr after, then the NPV for the proposnoed Levy county plant is a loss even if the plant runs for 100 years.

Apparently policy makers, utilities and according to polls, ratepayers and the general public, disagree. Perhaps they are considering the benefits of low emissions, stable baseload operation, high capacity factor, and future availability of fuel as contributing to the case for nuclear power. If not nuclear what should they build? Fossil Fuel? Renewables but Unreliables? We have 104 active nuclear plants in the US providing baseload production. How long will you run those plants and what will you replace it with? Be prepared to justify the workability and economics of your answer.

 

[mheslep]

Apparently policy makers, utilities and according to polls, ratepayers and the general public, disagree.

The subject at the moment is the math of the finances. I hope there is not disagreement there.

... Perhaps they are considering the benefits of low emissions, stable baseload operation, high capacity factor, and future availability of fuel as contributing to the case for nuclear power.

Perhaps.

...If not nuclear what should they build? Fossil Fuel?

Yes, natural gas given the US is again the largest producer in the world, and production is increasing. Historically NG plant capital cost has been frequently less than a $1/Watt.

Renewables but Unreliables?

There's also load efficiency. Twenty billion dollars would buy a lot of LEDs and high efficiency heat pumps, and those don't require 10-15 years to build, a blessing by the NRC, or evacuation plans. BTW natural gas reserves would go a long, long way if they were only used to back up renewables like solar.

We have 104 active nuclear plants in the US providing baseload production. How long will you run those plants and what will you replace it with?

As it happens I support nuclear power in the US, but only grudgingly do I support new plants unless and until costs decline. As discussed above I believe these costs are largely imposed by the NRC. As evidence of this I point to the upgrades of the existing US nuclear plants. The US nuclear fleet has quietly increased output some 15GW since the last new plant was built, and which has been done for little cost with minimal cost imposed by the NRC as far as I can tell.

...Be prepared to justify the workability and economics of your answer.

Back at you. I've not seen an economic justification here for nuclear, at least not at the Levy county FPL cost and timeline.

 

[NUCENG]

The subject at the moment is the math of the finances. I hope there is not disagreement there.

Perhaps.
Yes, natural gas given the US is again the largest producer in the world, and production is increasing. Historically NG plant capital cost has been frequently less than a $1/Watt.

There's also load efficiency. Twenty billion dollars would buy a lot of LEDs and high efficiency heat pumps, and those don't require 10-15 years to build, a blessing by the NRC, or evacuation plans. BTW natural gas reserves would go a long, long way if they were only used to back up renewables like solar. As it happens I support nuclear power in the US, but only grudgingly do I support new plants unless and until costs decline. As discussed above I believe these costs are largely imposed by the NRC. As evidence of this I point to the upgrades of the existing US nuclear plants. The US nuclear fleet has quietly increased output some 15GW since the last new plant was built, and which has been done for little cost with minimal cost imposed by the NRC as far as I can tell.

Back at you. I've not seen an economic justification here for nuclear, at least not at the Levy county FPL cost and timeline.

OK, point made. I am glad you appreciate that this is not a simple case of "good power" vs "bad power." I do know that utilities are not charities and would not be proposing plant construction that will lose money. Clearly my numbers did not inclde time value of money. So there has to be something in either the total construction costs, schedule for captal depreciation, or rate of return that made the case for nuclear production instead of natural gas for the utilities that have applied for COL licenses.

I have been personally involved in three nuclear plant uprates as an engineer. The economic case for that expansion of power was a fraction of the cost of adding new construction of any other fuel or energy source. Similarly license renewal for nuclear plants has been accomplished at a fraction of the cost of building new plants. But we are facing the same kind of situation in power generation as in much of our infrastructure. It is aging and we need to get started on plans for replacement.

So why would FPL be trying to lose money? By your calculation how much will they have to charge customers for power to brek even? Sounds to me like we have a valuable topic for discussion here. Are there any details that would help us understand that $20 Billion estimate? Where did you get the 13 year construction schedule? Best performers in the nuclear industry produce at costs lower than $30 per MW-hr. Are new plant designs capable of better cost control?

 

[mheslep]

I have been personally involved in three nuclear plant uprates as an engineer. The economic case for that expansion of power was a fraction of the cost of adding new construction of any other fuel or energy source. Similarly license renewal for nuclear plants has been accomplished at a fraction of the cost of building new plants.

Yes, that's as I have heard and read elsewhere.

But we are facing the same kind of situation in power generation as in much of our infrastructure. It is aging and we need to get started on plans for replacement.

So why would FPL be trying to lose money? By your calculation how much will they have to charge customers for power to brek even? Sounds to me like we have a valuable topic for discussion here.

I should have said Progress above, not FPL, though both have new nuclear plans:

The state Public Service Commission finished hearing arguments Wednesday about Progress Energy Florida’s request to pass along about $140 million in costs to customers next year for nuclear projects.

http://westorlandonews.com/2011/08/18/progress-energy-fpl-could-slap-consumers-with-higher-rates/

Are there any details that would help us understand that $20 Billion estimate?

I believe some ~$3B of the total is transmission.

Where did you get the 13 year construction schedule?

Last I looked best to worst new plant development time was 10-15 years, so that's from memory.

Best performers in the nuclear industry produce at costs lower than $30 per MW-hr. Are new plant designs capable of better cost control?

I don't think the operational costs are the problem. The upfront capital costs are the problem.Edit: a concern I have with the motivations of nuclear plant owners is based on your point about the large revenue stream from a 90% cap. factor plant, about which I entirely agree. IF the operators/owners are somehow allowed to divorce themselves from the development costs (e.g. FPL acquisition of Seabrook), then a nuclear plant is a giant cash cow that runs for decades without impact by fluctuation fossil fuel prices.

 

[gmax137]

... IF the operators/owners are somehow allowed to divorce themselves from the development costs (e.g. FPL acquisition of Seabrook), then a nuclear plant is a giant cash cow that runs for decades without impact by fluctuation fossil fuel prices.

I understand your point, but the Seabrook story isn't the only way the plant owner's can divorce themselves -- another (more palatable?) path is through depreciation tax credits, where the original owner's payback time is shortened by reduced taxes. This is the path most (?) businesses follow, not just the power companies.

 

[mheslep]

I understand your point, but the Seabrook story isn't the only way the plant owner's can divorce themselves -- another (more palatable?) path is through depreciation tax credits, where the original owner's payback time is shortened by reduced taxes. This is the path most (?) businesses follow, not just the power companies.

I'm not sure. Tax depreciations on business equipment is usually (at least in my case) a deduction against taxable income, not a credit. One of the problems with big (2GW) nuclear is that the capital costs typically dwarf the revenue of the utility so that, in addition to the large, business killing risk incurred, there is only so much taxable income to write off.

 

[Caniche]

I'm not sure. Tax depreciations on business equipment is usually (at least in my case) a deduction against taxable income, not a credit. One of the problems with big (2GW) nuclear is that the capital costs typically dwarf the revenue of the utility so that, in addition to the large, business killing risk incurred, there is only so much taxable income to write off.

Take a gander at the economic case for Dounreay and Caithness and if you think that looks bad gen up on the dodo Mox plant at Windscale ,sorry Sellafield

 

[mheslep]

Take a gander at the economic case for Dounreay and Caithness

1950's technology for weapons reactors, right?

and if you think that looks bad gen up on the dodo Mox plant at Windscale ,sorry Sellafield

Same time frame, graphite core air cooled, weapons and reprocessing. There's some safety lessons to be learned here, but I don't see the application to modern commercial reactor economics.