Climate change

March 2, 2009

Prescription for the Planet – Part IV – Show me the money!

We’ve now covered all the major technologies proposed by Tom Blees in the book Prescription for the PlanetIntegral Fast Reactor nuclear power for electricity generation, boron-fuelled vehicles for transport, and plasma burners for recycling of waste. Set in the context of a legacy of ongoing problems, with stockpiles of nuclear waste and weapons, a rapidly degrading environment and climate system, world energy security standing on a knife edge, and a future of looming shortages as we struggle to make up shortfalls using zero-carbon energy, Blees says we either founder as a civilisation, or choose to re-invent ourselves and emerge renewed as an equitable and sustainable society.

Now that all sounds fine and dandy, but in the cold hard light of day, it’s not all that realistic… is it? I mean, the staggering cost of retooling our entire energy and transport industry, on a planetary scale, is just too high and too difficult, and the pay offs such change might yield are just not worth the pain of adjustment. Business-as-usual is surely the better, cheaper course, at least for now; we should let future generations sort out the energy problem since they’ll all be richer than us thanks to the magic of economic growth. Well, that, in caricature, is what the ‘fossil fools forever’ mob will try to tell you. Blees says they’re wrong — on both counts.

This post, part IV of VI, reviews chapters 8 and 9:

– Chapter 8: Check, Please! (pg 197-240)

– Chapter 9: Cui Bono? (pg 241-262)

I’ll give you the bottom line of these two chapters up front: it will almost certainly cost us less to power the world with IFRs (and whatever contribution renewable energy ends up making — sizeable, I hope) than it will to try and reinforce our creaking, aging fossil fuel infrastructure. Economic arguments pass muster.

Let’s start with the basics. If you are seeking solid ground on relative costs of delivered energy, the assessment of the real-world price of any energy technology can be grounded on three basic principles [you need all three]: (i) discounted cash flow analysis, (ii) scale-up capacity assessment, and (iii) recent experience.

Step (i) is always possible, but  can be prone to wild speculation when hard data on the model parameters are lacking or difficult to estimate in context. For instance, you really need all of the following: interest/discount rate for future value of money estimates, lifetime of infrastructure, capital recovery factor, installed capital cost including interest during construction, average capacity factor of power delivery, annualised capital and decomissioning cost, fuel cost, and cost of operation and maintenance.

Phew! Of course there are, in truth, many details besides these that are involved, such as relative baseload vs peak usage (usually subsumed with the capacity factor and annualised cost estimates), transmission connection (usually within installed capital costs), etc. But putting these complexities aside, the end product of such accounting really depends on whether you are able to get accurate operational data on each of these inputs, or alternatively, whether you pull some parameter values out of certain dark orifices.  Indeed, you can basically come up with anything, from quite reasonable estimates through to wildly under- or over-blown costings of long-term delivered energy (usually expressed as c/KWh). My advice — check assumptions carefully!

Step (ii) is really a topic for another day, but involves the costs and logistical challenges associated with going from small-scale to large-scale operation. For instance, wind power operates perfectly well on a fossil-fuel-based grid infrastructure when it contributes a small fraction of total power, but as it constitutes more and more of the total installed capacity, issues of energy storage or backup from other generating sources come into play. Such problems are not insoluble, but they do impact on the bottom line in ways that cannot necessarily be anticipated using simple ‘bottom-up’ approaches that work by costing each unit and then multiplying by the amount that would be needed.

The guts of Chapter 8 is lots of numbers — really big numbers. It even comes with a vertigo warning. There is a lot of material here, and so I can’t cover all of the key details in a brief review like this. Which is kind of a shame, because you really have to assess the logic of the chapter in full to appreciate the validity of the fundamental argument Blees is trying to make: it can make real financial sense to build IFRs on a massive scale.

Step (iii), recent experience, is the primary basis upon which Blees bases his costings. Perhaps some of the details can come out in the comments of this post, when folks here have specific questions. So, just the core points then:

1) Repeated studies from authoritative sources such as the OECD and IEA show nuclear power is highly cost-competitive with coal (indeed, cheaper 10 of 12 countries assessed).

2) Recent experience shows that modern nuclear reactors can indeed be built to a tight budget — in the range of $1.4 to $2.5 billion per GW capital cost.

3) Reactors become far cheaper if they have the following characteristics: (a) standardised blueprints, (b) simpler design, (c) factory-built modular units, which can be trucked to site, (d) a system within which legalistic impediments are surmounted by sound legislation (one of the big problems in the US).

Note: Standardisation and modularity are the game-changers for the nuclear power industry. For instance, Generation III and III+ light water reactors, which follow these principles, such as France’s European Pressurised Reactor (EPR), GE’s Advanced Boiling Water Reactor (ABWR) and Economic Simplified Boiling Water Reactor (ESBWR), and Westinghouse’s AP-1000, cost around $1 to 2 billion per GW installed. Two ABWR were built in the late nineties in Japan for $1.4 B/GW within 36 months, and China has ordered 100 x AP-1000 units, carrying a price tag of $1 B/GW. These are likely to most closely reflect the price tag attached to an S-PRISM (Super Power Reactor Innovative Small Module — a sodium-cooled fast spectrum reactor with metal fuel). GEH estimates the cost of an S-PRISM at $1.3 B/GW, with a high-end estimate for fast reactors of $2.5 B/GW. As to a nation going nuclear in a big way, and benefiting, France is the stand-out real-world example on a per captia basis, with 59 light water reactor plants generating over 63 GWe (80% of supply). Their electricity costs are among the lowest in Europe, at around 3 eurocents per KWh.

4) If the world was to replace it’s energy supply with IFRs, the cost would be roughly $28 trillion (including transmission lines). That’s on the basis of a capital cost of $2 B/GW (so ignoring likely economies of scale that will bring prices down) and the need to supply around 8.75 terrawatts (TW) of generating capacity (for all energy use). For this, you’d need about 3,500 power plants of 2.5 GW each (using 8 x 380 MW modular reactor vessels within 4 power blocks). Any further energy supplied by renewables, geothermal and syngas (e.g., from plasma burners) would be a bonus. For reference, global electricity production in 2005 amounted to 2.3 TW, 16% of which came from nuclear.

5) What may be surprising to many is that the cost of business-as-usual energy development, or a gradual path to de-carbonisation, is about $26 to 35 trillion from 2010 to 2030! These are estimates that come from credible sources such as the International Energy Agency’s World Energy Outlook 2008 and Stern Review on the Economics of Climate Change 2006. This is for the cost of shoring up our fossil fuel infrastructure and upgrading/replacing transmission infrastructure (IEA), or investing 1% of GDP per annum on carbon mitigation (Stern).

6) At the height of its nuclear build-out phase, France was rolling out 6 plants per year. Six countries have a GDP higher than France and all already possess the technology to build fast reactors: USA, China, Japan, India (building one now), Germany and the UK. At France’s historical rate, these countries could together build 117 IFR plants per year, with no greater urgency than the French brought to bear on their road to energy independence. Indeed, China is rolling out over 50 large coal-fired power stations of equivalent size each year. So at this quite feasible rate, it would take 30 years to build 3,500 plants in 7 countries. For less than the cost of reinforcing our fossil fuel infrastructure.

7) There are further paybacks from an IFR roll out: we solve the multi-billion dollar nuclear waste problem fully, and we also save big $$ (and lots of lives and avoidable misery) by drastically cutting air pollution (renewables also achieves this) — a best estimate of $167 billion per year, each year, from the US alone (and a whole lot more from China — I can attest personally to the health effects of that Asian Brown Cloud).

graphic-2largeGo and read the extended version in P4TP and see what you think about the credibility of the above analysis. It certainly looks robust to me.

Chapter 9, Cui Bono? (who benefits?), explores the multitude of problems with the privatised portion of the American power industry, with special attention to the past litany of misdemeanours and cover-ups of some nuclear utilities and related problems with its regulator, the Nuclear Regulatory Commission (NRC).

Basically, due to the regulatory framework in the US, energy utilities have the ability to gouge their customers with exorbitant pricing (under certain conditions), and most take full advantage of that opportunity whenever they can. Energy is like a societal drug addiction – we can’t do without it (even for a short while), and so we are acutely vulnerable to being exploited by ‘dealers’ when energy is not in abundant supply. Indeed, this goes right through from spot prices of energy delivered to cost estimates of new nuclear power stations. Remember Step (i) above? Well, in the good old US of A, nuclear utilities can have a field day with that number crunching, and charge customers for current power costs on the basis of these pick-and-choose models!

Being rather sympathetic myself to the benefits of publically owned service providers, I think Blees makes a strong case for full public ownership of nuclear power. It’s a form of socialism, to be sure, but before the free market ideologues start frothing at the mouth, consider where society would be without public ownership. Transportation infrastructure, public education, national defense, standards authorities, etc. It’s really a matter not of if public ownership is appropriate, but when. And when we are talking about something as crucial as oversight of nuclear power and a secure energy supply, well… I’ll leave you to judge (but after you’ve read the chapter, please!).

The message about ownership and oversight has a deeper purpose than merely bringing energy costs in America under control. Without something similar operating worldwide, the risks of rampant unmanaged global nuclear energy deployment could well outweigh the benefits it brings to individual countries — perhaps catastrophically so.

We need something GREAT to ensure a global rollout of IFRs is safe and equitable. That’s just what the next part of P4TP is all about…


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