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Page added on January 5, 2015
Can Nuclear Energy Compete In Today’s Energy Markets?
The passing of the 2014 holiday season also witnessed the passing of another landmark, which is the Vermont Yankee Nuclear Power Station that had been in business since 1972. The questions now are from where will New England get its electricity and how will power markets there be affected?
The 604-megawatt nuclear generation plant had been operating at more than 90 percent capacity for the last three years, providing consumers with about 35 percent of the electricity that they had been using. But the plant succumbed to market forces, namely from low-cost natural gas as well as restructured markets that favor subsidized sustainable fuels — and which receive state sanctioned, long-term contracts. Existing merchant generators that sell their power at market prices are unable to compete with cheaper and subsidized fuels.
“Our projected revenues were significantly lower than the projected costs,” says Bill Mohl, president of Entergy Corp.’s merchant nuclear operations, in an interview. “We could no longer make significant investments.” Entergy will still have 4,400 megawatts of nuclear generating capacity that it is committed to keeping, he adds, noting that Vermont Yankee was licensed to run until 2032.
Currently, 100 nuclear plants are operational in the United States, although five plants have been or are getting nixed. Besides Entergy’s plant, there are also ones by Duke Energy and Southern California Edison that closed facilities in Florida and in California, respectively, for technical reasons. Also, Dominion Resources has shut down a Wisconsin unit while Exelon Corp. will close one in New Jersey, neither of which has been able to compete with cheap natural gas.
About half of the nuclear power facilities running today go head-to-head with plants using other fuels. Exelon has been the most vocal critic of fuels that receive government-backed supports, such as wind energy. In a news release, it says that its merchant nuclear units have lost $1 billion over the last five years.
Beyond what the company labels as flaws in the market design, it also says that it is suffering from an “increasing regulatory burden” that is adding 4 percent to 5 percent a year in plant economics; the Nuclear Regulatory Commission is requiring capital investments. “The problem is that, despite outstanding performance, we are experiencing major financial losses,” says Christopher Crane, chief executive, in a Nuclear Energy Institute statement.
Consider the Northeast where Vermont Yankee had been operating: Over the last decade, it has moved from having a mixed portfolio of fuel sources consisting of oil, coal, nuclear, hydro and natural gas to one that is now heavily dependent on natural gas. In 2013, natural gas provided 46 percent of the region’s electricity, which is up from 15 percent in 2000, according to Gordon van Welie, chief executive of the ISO New England.
Altogether, the area is expected to see about 1,400 megawatts of electricity generation retire — plants that have run around-the-clock. That’s coming almost entirely from the Vermont Yankee closure as well as a plant in Massachusetts that runs on coal-and-oil. Half of that loss will be made back up from new natural gas plants as well as a third from new wind farms and increased exports from Canadian hydro facilities.
“System operators will have fewer non-[natural] gas resources to turn to when … gas supply is limited,” van Welie says. In addition, “the region will continue to be susceptible to natural gas price fluctuations” until more pipelines are built. “Loss of additional non-gas-fired generation, in particular nuclear generation, will exacerbate the situation facing the region.”
No doubt, the closure of Vermont Yankee will be felt. But according to the New England ISO, the electric grid can still be reliably operated. The grid operator, which is independent and which orders up power generation before scheduling the deliver over the wires, says that beyond the new energy resources, the area has made transmission upgrades and implemented conservation efforts.
Natural gas generated 52 percent of the energy produced for New England in 2013, in large part because those fuel costs there have fallen by 23 percent — to the cheapest levels since 2003. In recent times, nuclear energy has generated 31 percent of the region’s electricity, which includes four other plants beside Vermont Yankee in the vicinity.
Consumers are benefiting from reduced utility bills. But what should merchant nuclear facilities do? ISO New England says that those are proprietary decisions, not ones to be calculated by grid operators.
However, “The marketplace innovates,” adds Boone Pickens, in an interview with this writer, with the admonition that free markets work better than tightly regulated ones and in the context of energy markets, generally. “It is the player with the latest technology. If you don’t make money, you get eliminated.”
While some approve of Vermont Yankee’s downfall, many others are bemoaning the loss of a reliable fuel source that has little to no carbon releases. It’s unlikely that nuclear energy will go through amajor expansion in this country, although the goal for now is to ensure that it does not have a major retraction.
13 Comments on "Can Nuclear Energy Compete In Today’s Energy Markets?"
shortonoil on Mon, 5th Jan 2015 5:58 pm
It’s unlikely that nuclear energy will go through amajor expansion in this country, although the goal for now is to ensure that it does not have a major retraction
The dog of dogs just bit the dust. There is good news out there. Of course Forbes is still acting as the nuclear energy cheerleader. It would be interesting to know just who owns Forbes.
Back in may good oil college days at UVM (the University of Vermont) I was one of the hundreds who protested construction of Vermont Yankee. Of course a bunch of idealistic students weren’t any match for VELCO, the transmission giant that owned CVPS, and the the state governments of upper New England. One of my best friends was a fellow by the name of Tom Carr. Tom was the manager, and engineer who built the Burlington wood fired plant. The first in the nation. As the manager of the state’s largest power plant, Burlington Electric, he sat at the permitting procedures for Yankee. Hydro Quebec had offered Vermont a 30 year contract for power at half the cost a new nuclear plant would have cost. The state legislature, well lubricated by CVPS lobbyist, rejected the offer, and approved the permit for Vermont Yankee.
Of course,Yankee came in over budget, and behind schedule just like every other nuclear plant ever built in the Western World. The lucky Vermont residents got to pay for it through some of the highest power rates in the county for 30 years. Yankee is now gone, and Vermont has 40,000 used, and radioactive fuel rods to watch over for the next 1000 years. It is quit likely that VELCO will work its magic, and not be the recipient of the bill!
Bob Owens on Mon, 5th Jan 2015 6:06 pm
I can’t take this any more. They, nuclear, complain that wind is subsidized and they are losing money. Gee, the gov’t only pays their insurance costs, does R&D for them, the NRC does everything to keep nuclear costs low (and they still complain), they close up shop and say they will start decomissioning the plant in about 60 years! So all that nuclear debris will be left in their backyard forever and they just couldn’t make any money! If Vermont is smart they will replace nuclear with wind power and ditch both nuclear and gas.
Kenz300 on Mon, 5th Jan 2015 6:20 pm
Nuclear energy is too costly and too dangerous….
The snake oil that was sold to the public has been exposed as an over priced sham………..
The nuclear plants that were supposed to generate electricity too cheap to meter are now to costly to decommission. How much will it cost to decommission all these old nuclear power plants and store the radioactive waste forever?
Time to replace these aging nuclear plants with safer, cleaner and cheaper wind and solar plants.
——————
Utility-scale Solar Has Another Record Year in 2014
http://www.renewableenergyworld.com/rea/news/article/2014/12/utility-scale-solar-has-another-record-year-in-2014
——————-
Dizzying Renewable Energy Price Declines Can Help States Meet Ambitious Carbon Targets Under The EPA’s Clean Power Plan
http://www.renewableenergyworld.com/rea/news/article/2014/12/dizzying-renewable-energy-price-declines-can-help-states-meet-ambitious-carbon-targets-under-the-epas-clean-power-plan
GregT on Mon, 5th Jan 2015 7:09 pm
The more I ponder our global predicaments, the more I believe that Jim Hanson is right. Nuclear is our only hope, even though we don’t have the slightest idea what the ramifications are, or how to safeguard the waste for a thousand years. Unfortunately we are now too late for even nuclear power keeping the lights on. Decades too late, and trillions of dollars short. It’s been one hell of a party, it’s going to be one hell of a hangover.
Makati1 on Mon, 5th Jan 2015 7:10 pm
Bob, wind energy is only going to last as long as the oil based financial system that makes them possible. Meaning, they will be just towers with broken equipment on the top in less than 20 years. Granted, they will not be radioactive, but they are not the future either.
shortonoil on Mon, 5th Jan 2015 7:21 pm
If Vermont is smart they will replace nuclear with wind power and ditch both nuclear and gas.
Tom Carr did an extensive review of the state’s power needs. What he found was that the state had enough micro hydro to power the entire state, and have power left over to sell. The dam at Winooski could have powered all of Chittenden County, the largest population area of the state. The power plant a Carvers Falls in Fairhaven could have powered all of Rutland County, the second most populous region in the state. The state had a large number of small hydro plants run by municipalities.
In the twenty years prior to the construction of Vermont Yankee, CVPS, and Green Mountain Power had covered the state. They bought all the water rights in the state. The power plant at Carvers Falls they tore down, and dismantled the dam. I watched them pull the turbines out, and ship them out as scrap. The reason they gave was that the plant was no longer economical to operate. No one questioned them!
The electric utility industry in this county is not about economics, efficiency, or conservation. It is about centralized control of the power structure. A very few companies now control the bulk of the power production, and distribution system. It is not likely that they will be giving that up any time soon!
Speculawyer on Mon, 5th Jan 2015 8:53 pm
Nuclear is pretty damn expensive. And you better not build it heavy seismic areas. But I’m for it as PART of the mix of solar PV, offshore wind, geothermal, hydropower, onshore wind, tidal, concentrated nuclear power, biomass, etc.
GregT on Mon, 5th Jan 2015 10:22 pm
“The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.”
“Oil peaking represents a liquid fuels problem, not an “energy crisis” in the sense that term has been used. Motor vehicles, aircraft, trains, and ships simply have no ready alternative to liquid fuels. Non-hydrocarbon-based energy sources, such as solar, wind, photovoltaics, nuclear power, geothermal, fusion, etc. produce electricity, not liquid fuels, so their widespread use in transportation is at best decades away. Accordingly, mitigation of declining world oil production must be narrowly focused.”
PEAKING OF WORLD OIL PRODUCTION:
IMPACTS, MITIGATION, & RISK MANAGEMENT
Robert L. Hirsch, SAIC, Project Leader
Roger Bezdek, MISI
Robert Wendling, MISI
February 2005
http://www.netl.doe.gov/publications/others/pdf/oil_peaking_netl.pdf
Davy on Tue, 6th Jan 2015 6:25 am
Greg, I got the book that is an offshoot of that report:
The Impending World Energy Mess Paperback – October 1, 2010by Robert L. Hirsch (Author), Roger H. Bezdek (Author), Robert M. Wendling (Author)
It is a great book as for PO mitigation ideas. Some of the ideas are not practical from what we know now but there are some great ideas on possible rationing strategies. These rationing strategies are extremely important now but we hear little about them. I see few article on the alternative sites or of course God forbid any on the MSM site. Read that book folks if you are interested in PO, Doom, and prepping.
GregT on Tue, 6th Jan 2015 9:20 am
The Hirsch report also talks about tight oil, Tar sands, coal gasification etc. as strategies to mitigate the effects of PO. Of course it also maintains that we would have needed to use these energy sources to build out alternate transportation and energy systems at least 20 years in advance of conventional oil peaking in order to make any difference. Considering that conventional oil peaked six or seven years ago, we kind of blew it, so to speak.
shortonoil on Tue, 6th Jan 2015 9:22 am
“The world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary.”
The statement above can be demonstrated in a Bloomberg article that came out today:
http://www.bloomberg.com/news/2015-01-05/oilfield-writedowns-loom-as-market-collapse-guts-drilling-values.html
The price drop of the last six months is going to wipe $trillions off the balance sheets of oil producers all over the world. It is occurring so rapidly that mitigation efforts will be next to useless. It takes 8 to 10 years to build a nuclear power plant, and frankly, we don’t have 8 to 10 years.
There is a price at which the consumer can afford to purchase all the petroleum that is produced. Above that price there is surplus production. Below it shortages. That price is now $76/barrel. Because of depletion that equilibrium price is declining!
http://www.thehillsgroup.org/depletion2_022.htm
The graphs in the page above were constructed from the output of energy balance equations, and they correlate to the past 53 year price of petroleum almost perfectly (r=0.965).
The world’s petroleum production hit a critical point in 2012. It was the first time in the history of the oil industry that the consumer could no longer afford to purchase all of the petroleum produced at a price that the industry required for the volume it was producing. Prior to 2012 the consumer was always able to pay more than what the industry required. After that point the balance was made up with massive debt formation that is now coming back to haunt the industry.
The reparation of this accumulated debt can only be resolved through significant cuts in investment, and employment. The present drastic decline in prices is occurring to bring the consumer’s ability to pay, and the industries ability to produce back into equilibrium. The result will be a hollowed out industry with no capacity to increase production in the future.
http://www.thehillsgroup.org/
baptised on Tue, 6th Jan 2015 12:33 pm
So if USA cannot pay the oil price. Will big oil countries start selling only to countries that can?
Makati1 on Tue, 6th Jan 2015 7:13 pm
baptised, you understand capitalism. The oil will go to the highest bidder as it always has. If the West is not the highest bidder, then it will not go there. I suspect that the majority of future oil will go East where it is still used to make real things of value, not vehicle exhaust.