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A Nuclear Primer on the Hill

On Friday, we were talking about why the nuclear industry isn’t satisfied with the $18.5 billion in loan guarantees that the Energy Department is opening up for proposals. And that reminded me of a meeting I slipped into on Capitol Hill in mid-May that was organized by the Heritage Foundation, whose nuclear energy expert, Jack Spencer, used to work for Babcock and Wilcox, a maker of nuclear plant equipment. He had invited Michael Metzner, senior vice president and treasurer for Exelon Corporation, and Caren Byrd, executive director of Morgan Stanley's investment banking division, to speak. There were two or three dozen congressional staff members there.

"The economics have never been stronger," Metzner said about the nuclear business, "but they are not strong enough to incentivize what this country needs with respect to nuclear." He noted that a single 1,500 megawatt nuclear plant could cost anywhere from $6 billion to $8 billion and take a decade to build. For many companies, that's half their market capitalization. "No management team is going to bet the company on a single project," Metzner said.

Byrd chimed in, saying that banks are very wary about sinking money into new nuclear plants. During the last wave of nuclear plant construction, she noted, about 100 units were cancelled and she said that investors "have very long memories." Unlike Metzner, she was cautious about putting a price tag on new nuclear plants, saying she had seen numbers ranging from $3,000 a kilowatt hour to $8,000. The upper end of that range would make Metzner's model 1,500 megawatt plant a $12 billion project.

The answer to this problem? The federal government, of course. The federal loan guarantees - which the DOE noted were "backed by the full faith and credit of the United States" - would move all the financing risk from the banks and put it on the federal government. How much that will cost taxpayers depends entirely on how many of the plants end up going bankrupt. (While the loan guarantee number is huge, taxpayers would be on the hook only if projects went bankrupt or were never completed.) As Byrd noted, last time that included 100 units. Will the industry be smarter this time around?

Metzner said that the nuclear industry doesn't expect the federal government to underwrite all of the plants the industry hopes to build.

Only "the first dozen or more." Then, he said, financial markets "will step up" and start lending on their own to build new nuclear plants.
What he didn't mention was that the first dozen nuclear plants would require a minimum of about $75 billion in loan guarantees, and perhaps as much as $150 billion depending on the cost of the plants.

I wish I had a nickel for every person with a great solution to the nation’s energy needs who just needed a few billion dollars of federal support to get going.

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Comments (12)

eerkensj@missouri.edu:

Green nuclear power is the only practical long-term solution to (1) ameliorate global warming, (2) avoid dependence on foreign oil/gas, and (3) overcome oil/gas depletion. Only two prime energy sources, coal and uranium, can affordably deliver terawatts of "mother" electricity for: (A) heavy industry, i.e. manufacture of autos, ships, airplanes, etc; (B) power for vast fleets of future electric plug-in autos; and (C) production of portable synfuels (hydrogen and ammonia) and biofuels for propelling land-, sea-, and air-craft when oil is gone. However coal worsens global warming and must be preserved as raw material to make organics when oil is gone (2040/2050). This leaves uranium as the only "big-mama" green energy source, an "inconvenient truth". (Nuclear fusion-control of a miniature sun- is much more difficult than fission; its use is a century away).

Green solar and wind energy are useful for small-quantity power generation in select locations. But at terawatt levels, immense areas of land and/or sea would be needed, necessitating enormous maintenance operations, spoiling scenic land- or sea-scapes, and destroying local ecosystems. As scientifically documented in "The Nuclear Imperative" (ISBN 1-4020-4930-7), by 2050 only uranium and thorium can affordably sustain global energy needs for some 3000 years, using proven fuel reprocessing and advanced reactor technology. For the USA, 500 additional nuclear reactors are required, built on 9000 acres (@ $1.5 trillion), compared to 1,500,000 windmills with storage batteries on 6,000,000 windy acres (@ $4.5 trillion). Ten times these numbers are needed world-wide. (Costs are in 2006 dollars; all costs of nuclear, solar, wind, etc must be multiplied by the inflation factor for later years).

Contrary to false propaganda by anti-nuclear groups, the cost of tera-watts of electricity is three times less expensive with nuclear than for wind or solar. Solar and wind power generation requires expensive energy storage systems (batteries, etc) when there is no sunshine or wind. Also many miles of access roads for maintenance and repair are needed to keep blades or solar panels clean from bird droppings, dead birds, sand erosion, and storm damage, and to periodically replace electrodes on storage batteries. Should the USA limit itself to solar and wind energy, it is guaranteed to become impoverished and dependent on synfuels imported from other countries (future OPECs), who have nuclear power when oil fields are depleted.

Modern nuclear power plants are absolutely safe. Because of the negative "coefficient of reactivity", reactor fuel elements only melt (an explosion is not possible) during a maximum credible accident in which the emergency core cooling system totally fails. This was "experimentally" proven in the Three-Mile-Island (TMI) accident. A negative coefficient of reactivity means that neutron multiplication is automatically stopped when the temperature in the reactor gets too high. The Russian Chernobyl reactor which took the lives of approximately 60 people, had a positive coefficient of reactivity because it used graphite as moderator, a design for nuclear power plants which is now prohibited in all countries. Furthermore the Chernobyl reactor had no containment vessel, as was/is the law in all Western countries and now worldwide. The assertion that perhaps thousands of people could still die from the fallout around Chernobyl is nonsense. Of the 60,000 inhabitants of Pripyat who had been exposed to fallout, about 9,000 will die at an advanced age of cancer because worldwide 15% of all people ultimately die from cancer. To ascribe those 9,000 deaths to Chernobyl's fallout is equally ridiculous as claiming that such a death toll is due to drinking coffee because 15% of all people drink coffee. Security precautions and containment measures for today's nuclear power plants do reckon with the possibility that terrorists might crash a large airplane or bomb on a reactor. Even if aerial obstructions (e.g. balloons) or underground construction can not prevent penetration of the large dome-shaped containment vessel, the reactor core vessel is designed to remain mostly intact. It can further be inundated with neutron-poisoning borated water which suppresses all further uranium fission in case of an accident.

A stale anti-nuclear cry is "what about all the long-lived radioactive nuclear waste". The volume of waste amounts to one aspirin tablet per year per person using nuclear electricity, compared to tons of air pollutants and globe-warming gaseous CO2 emitted by coal or fossil-fuel combustion. Nuclear waste can be easily stored and safely transported, as the US nuclear navy has done for half a century. Contrary to allegations that uranium and plutonium in spent fuel elements pose a problem because of million-year half-lives, they are separated from fission products by reprocessing and burnt as fuel in future fast-breeder reactors; they will not be dumped. This reduces 50,000 tons from ten-year accumulation of spent fuel to 500 tons of fission products, taking centuries instead of decades to fill the Yucca Mountain repository in Nevada. The notion that long radioactive lifetimes are undesirable is also erroneous. The longer the decay lifetime, the less the radiation emitted per gram of radio-isotope. All humans are "hot" because everyone has radioactive potassium-40 (K-40; 0.012% abundance) in his body, which continuously emits beta particles with a half-life of one million years! Man successfully evolved in this environment.

Energy is man's third most important need after water and food. Those who hinder expansion of nuclear power will be viewed as irresponsible neo-luddites by future generations. Any further delay of a committed US nuclear energy program will cause impoverishment and death of many US citizens by 2050. Those responsible will and must be held accountable for this. Originally the US had planned to have 300 reactors by the year 2000, but instead there are only 104 today. After the Three-Mile-Island (TMI) reactor meltdown in 1979 in the US (with 0 casualties) and Russia's Chernobyl accident in 1986 (with 57 fatalities), public hysteria fanned by fear-mongering antinuclear activists caused cancellations and moratoria on construction of new nuclear plants. While the USA was once the leader, most US businesses with reactor manufacturing know-how closed. Instead France, Russia, Japan, South-Korea, India, and China are now the leaders. Anti-nuclear lobbyists and mal-informed federal and state governments have created the pending energy catastrophe. We are entering an energy-crisis period as serious as WW-II and Al-Qaida. Strong bipartisan Manhattan-Project-like leadership is needed!

Jeff W. Eerkens, PhD
Adjunct Research Professor,
Nuclear Science & Eng'ng Institute
University of Missouri - Columbia
eerkensj@missouri.edu

James Aach:

I can't comment directly on the financial considerations of new nuclear plants - I'm just a worker bee at a current plant. What I can tell you is that few understand how today's plants operate - not only technically, but politically. A better appeciation of that would help clue you in as to where the money goes.

Available at no cost at http://RadDecision.blogspot.com is the thriller novel I've written trying to cover this ground. Readers seems to like it, judging from the homepage comments. Anyone reporting on energy would do well to read it. (There's a paper version as well, from which I get no royalties.) Like all energy sources, nuclear has its good point and bad points - I tried to cover both.

Brian:

i think more funds should be secured for nuclear fusion , yes the science of it is still theorical , but so was the manhattan project and to that extension nuclear fission. why are countries on hand screaming to high heavens about big oil and when scientist and engineers point a way they are dimissed as dreamers and not seening the real picture. if the polictical will isn't there to help America and by extension the world we can look forward to Enerons happening all the world, i just hope the world can buy another atmosphere, with its oil profits

G.R.L. Cowan, H2 energy fan 'til ~1996:

The alternative is natural gas.

Today, at 45 percent efficiency, the natural gas-fired production of a gigawatt-year of electricity entails $0.90 billion in mined fuel cost. That may include about $0.1 billion in royalties.

If, however, government lets a nuclear plant get built, and start working, the mined fuel bill there, at 33 percent heat-to-electricity conversion efficiency, is $0.038 billion per electrical gigawatt-year. So its entry into service represents a future loss to government of several billion dollars; about a billion dollars per decade of operation.

But what if the investors' several billion dollars is largely covered by government loan guarantees? If it derails the nuclear project, it has to pay them back.

Now, it loses pretty much the same money either way. This takes much of the fun out of regulatory footdragging.

Of course, only one of the ways the government can lose this money actually represents wasted human effort. If it lets the plant go ahead, the money it loses stays in the citizens' pockets, and it may get another chance at it.

The upshot: in a country where a dollar's worth of uranium cancels $20 or more in fossil fuel business, federal loan guarantees to nuclear developers are a very good deal for everyone.

Robert Bostick:

In his April 30 column, “Start Drilling,” Mr. Samuelson states, “On environmental grounds, the alternatives to more drilling are usually worse.” He then only refers to ethanol and imported crude oil. Are wind, solar, ocean kinetics and other renewable, clean sources included in the alternatives he deems to be worse than drilling for more oil?

If they are, he may then wish to add the following as an alternative to more drilling and massive crude oil imports. In 1995, the National Institute of Standards and Technology's Office of Technology Innovation recommended that the Department of Energy consider supporting the Gorlov Helical Turbine (GHT). Prof. Gorlov, an American, Professor Emeritus and Northeastern University in Boston, Mass, won the 1992 Edison Prize for the invention of the Helical Turbine. The U.S. government rejected the recommendation, but the South Koreans didn’t. Today, the Gorlov Helical Turbines generate enough energy to power over 80,000 homes on the Jindo Island, in the Uldolmok Straits.

South Korea will invest $100s of millions to deploy these turbines along both coasts of the South Korean Peninsula. This project will cost infinitely less than the now abandoned plan to build four nuclear facilities at approximately $10 billion each.

All of the numbers aren’t in yet but the Government of S. Korea is betting on saving billions in crude oil import and nuclear plant construction costs while delivering energy at a price far below current levels for nuclear power, and much cleaner than coal.

How clever those S. Koreans, responding to a crisis with a strategy designed to deal with a crisis. Unlike the current Administration and its supporters and apologists caught in the web of oil and fossil fuels, cynically wringing their hands and smiling all the way to the bank.

There are now more than 15 major crude oil importing countries testing, deploying and tying into their grids, ocean kinetic technologies.

Why don’t we COPY these countries and especially the S. Koreans? Or, should I say, use an American patent right here at home? Or, are we so desperate to fill the coffers of big oil that we don’t have to alleviate some of our crude oil import dependency nor force the oil industry to drill on land they already lease but refuse to enter into production? Sounds like a self imposed constraint on supply to drive up prices.

Prof. Gorlov calculates that approximately 700, GHT’s placed in a cluster in the Gulf Stream off the coast of Florida would generate all the electrical power needed in the U.S.

We don’t need more drilling when more immediately available renewable technologies for the mass production and distribution of energy are at hand. Mr. Samuleson may want to read, “The Economics of Global Warming:” Fred Krupp and Miriam Horn's "Earth: The Sequel".

Robert Bostick
Arlington, Va

Robbrian:

In his April 30 column, “Start Drilling,” Mr. Samuelson states, “On environmental grounds, the alternatives to more drilling are usually worse.” He then only refers to ethanol and imported crude oil. Are wind, solar, ocean kinetics and other renewable, clean sources included in the alternatives he deems to be worse than drilling for more oil?

If they are, he may then wish to add the following as an alternative to more drilling and massive crude oil imports. In 1995, the National Institute of Standards and Technology's Office of Technology Innovation recommended that the Department of Energy consider supporting the Gorlov Helical Turbine (GHT). Prof. Gorlov, an American, Professor Emeritus and Northeastern University in Boston, Mass, won the 1992 Edison Prize for the invention of the Helical Turbine. The U.S. government rejected the recommendation, but the South Koreans didn’t. Today, the Gorlov Helical Turbines generate enough energy to power over 80,000 homes on the Jindo Island, in the Uldolmok Straits.

South Korea will invest $100s of millions to deploy these turbines along both coasts of the South Korean Peninsula. This project will cost infinitely less than the now abandoned plan to build four nuclear facilities at approximately $10 billion each.

All of the numbers aren’t in yet but the Government of S. Korea is betting on saving billions in crude oil import and nuclear plant construction costs while delivering energy at a price far below current levels for nuclear power, and much cleaner than coal.

How clever those S. Koreans, responding to a crisis with a strategy designed to deal with a crisis. Unlike the current Administration and particularly,its supporters and apologists blinded by subsidies for nuclear planning and construction, oil leases and fossil fuel land giveaways, who cynically wring their hands over the energy crisis while smiling all the way to the bank.

There are now more than 15 major crude oil importing countries testing, deploying and tying into their grids, ocean kinetic technologies.

Why don’t we COPY these countries and especially the S. Koreans? Or, should I say, use this American patent right here at home? Or, are we so desperate to fill the coffers of big oil that we don’t have to alleviate some of our crude oil import dependency nor force the oil industry to drill on land they already lease but refuse to enter into production?

Prof. Gorlov calculates that approximately 700, GHT’s placed in a cluster in the Gulf Stream off the coast of Florida would generate all the electrical power needed in the U.S.

We don’t need more drilling or nuclear waste when more immediately available renewable technologies for the mass production and distribution of energy are at hand. Mr. Samuleson and others may want to read, “The Economics of Global Warming:” Fred Krupp and Miriam Horn "Earth: The Sequel".

Robert Bostick
Arlington, Va

faithfulservant3:

After many years on the other side of the fence, I now believe that nuclear power can be built and maintained safely and is one of the answers to cheap sustainable energy. Europe and Japan are doing fine with it. But for this positive side, I do not believe God would have willed its evil twin, nuclear bombs.

However, I am against gigantic corporate giveaways, and the "run government like a corporation" mantra lost its luster after Enron etc. If the US government is in for $75 billion plus then they should be running the whole show not just guaranteeing loans. Laws should be changed to limit the effects of the endless lawsuits of the 1970's.

The same should be done in the area of oil refineries. The government should just build some. More refineries means more supply which means cheaper gas. Of course, these measures cannot be seen in a vacuum; other alternative and renewable energy sources should be heavily subsidized to combat global warming.

Having said all that, the last group of people that I would trust with such a program would be the Bush-Cheney crowd.

Dimitry:

==Dimitry, the problems with a net energy analysis are two fold. First, how deep do you go? Do you include the fuel used in the project's delivery trucks? Do you include the power expended on the offices of the project's attorneys and accountants? If you go deep enough, then everything has a negative net energy, because society consumes energy.==

Well, we can take a rational approach and make the cutoff at some reasonable place - I would use the fuel in the delivery trucks - that's part of construction. As long as the same standard is used for all assessments, the results comparing nuclear to coal, to wind, to solar should be reasonably informative.

==Second, how broadly do you make the comparison? A fair comparison of electricity resources would look at the net energy ratios of every alternative analyzed to the same depth. This is extremely difficult to do and depends on some fairly arbitrary assumptions.==

I know it is difficult. But I think we should start doing it BEFORE we start spending billions for nuclear infrastructure. I suspect that nuclear plants net energy ratios are generally pretty poor. I would hate to spend the only big chunk of change for alternative energy that we are likely to have on an inefficient system. You wouldn't by a house furnace without considering its energy efficiency - why would we buy one for the country without even more diligent study?


==Finally, Anson is correct that waste disposal is not a significant financial barrier; it's a political barrier. ==

I am not so sure. History is rife with examples of somewhat careless treatment of pollutants that really backfired, often with devastating financial AND political effects.

Jamjama:

Dimitry has a point- net energy analysis is not just an irrelevant jump down a rabbit hole of vaguely related energy consumption.

It's a lot less green than it's made out to be, which isn't particularly surprising, considering that most of the contractors of nuclear facilities in the US, like Bechtel or Phillips Petrolium, are also heavily invested in fossil fuels. It makes the demand for government subsidies especially sour, since it's the same corporations vying to get federal support for maintaining their monopoly on the energy market by masquerading as alternative energy and therefore worth the investment.

But anyway, returning to net energy analysis: nuclear is hardly a knight in shining armor riding up to rescue the US from foreign energy dependency or impending climate change. While nuclear energy itself may not produce CO2 emissions, we hardly need to go as "deep" into outside costs as lighting accountants' offices like Hewitt suggested.

Because of that pesky "radioactivity" issue, nuclear facilities require an enormous amount of CO2 producing energy in order to construct and, 40 years later, decommission and detox. It is not outlandish but necessary to factor in the transportation of uranium ore to facilities, and then the transport of spent fuel to on-site storage, not to mention the increasing amount of energy needed to mine decreasing sources of uranium... it all adds up pretty fast.

Besides, world energy production only counts for about 16% of pollution, so it's not like nuclear energy producing slightly less CO2 at the end of calculations really helps all that much. The lack of research and development for truly renewable energy sources that could actually make a difference, such as wind, solar, or wave power, is (wait for it...) less a result of financial barriers than political ones.

Hewitt:

Nuclear power has a very high capacity cost but a very low energy cost, no CO2, NO2, and SO2 emissions, and a long, 40 year or more service life. Thus, a simple comparison of resources by their capacity costs or by their energy costs (without specifying the assumed service life and alternative fuel costs), or by their pollution footprint, is not adequate.

Mufson is correct that the biggest barrier to nuclear power is financial: no one wants to bet the company on those capacity costs. Federal government loan guarantees is one way around that problem. To complain of the subsidy offered ignores the reality that ALL electric generation sources are subsidized. Compare, for example, a hydroelectric dam, entirely financed and build by the federal government. If you want electric generation that does not add to global warming, then subsidies can be justified.

Dimitry, the problems with a net energy analysis are two fold. First, how deep do you go? Do you include the fuel used in the project's delivery trucks? Do you include the power expended on the offices of the project's attorneys and accountants? If you go deep enough, then everything has a negative net energy, because society consumes energy.

Second, how broadly do you make the comparison? A fair comparison of electricity resources would look at the net energy ratios of every alternative analyzed to the same depth. This is extremely difficult to do and depends on some fairly arbitrary assumptions.

Finally, Anson is correct that waste disposal is not a significant financial barrier; it's a political barrier.

Dimitry:

At these prices, and with the imbedded energy they will possess at completion, and with the very high operating expenses they need, and the with the high cost of waste disposal, and with the high energy and costs required for uranium fuel rod production, do nuclear power plants actually produce net energy surplus over their typical life times?

Can anyone point to a clear analysis showing that a modern nuclear power plant is or is not a net energy producer? I think it is kind of important to figure out, before we embark on a huge building program. We seem to have committed to ethanol without a clear understanding of the numbers behind such a change, both energy efficiency-wise as well as its effects on food prices.

Anson Burlingame:

Excellent article with real zinger for a closing.

Instead of loan guarantees, the Fed Gov should streamline the regulating and lisencing processes. Doesn't cost the tax payers a dime. It does however force politicians to make a choice. They have to decide whether plentiful energy without dependence on foreign supply is worth the risk inherent in nuclear power generation.

Oh yeah. How about a place to put the waste (Yucca Mountain). Again a political choice. Good news is it won't cost money. We have already built the thing at a cost of ??$$$??. Why not choose to use it as designed?

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