Response To Levelized Cost of Electric Generation

Response to WUWT post of 2/16/2014 by W. Eschenbach (see link)

I browsed through, looking for something else, and saw the linked article on levelized costs for new power plants from EIA in 2013.  I am too late to add a comment, so offer this as a response.  There are many points made by the author of that article that are simply wrong, or misleading. 

Pumped Storage Hydroelectric Plant - Lake Michigan
approximately 1,900 MW of energy production

Eschenbach writes: “The power grid is a jealous bitch, there’s not an iota of storage.”   That statement is simply not true.  US data shows pumped storage hydroelectric plants presently provide 20 GW (20,000 MW) of energy. [Update 4/26/14: EIA shows 22,368 MW installed as of 2012 see link - end update] That is grid-scale storage.   For some perspective, 1,000 MW is the output from a typical nuclear-powered single-reactor plant.  The photo nearby of the Ludington, Michigan plant shows Lake Michigan in the foreground, and the elevated storage lake in the background.  Off-peak power at night is used to pump water up into the upper reservoir, then the water generates power the next day during peak demand.  It is one of the largest such grid-scale power storage systems in the US.   There is also a battery-based storage system in use on Santa Catalina Island, offshore Los Angeles, California.  

Eschenbach writes: “when demand goes up, as it always does…”   Again, simply not true.  Electric demand historically has followed the population trend, roughly.  When Cleveland, Ohio, for example, experienced its 50-plus percent population decline in the 20th century, the demand for electricity also declined.  More recently, many utility planners remark that decreased demand is confounding their estimates for future needs. Eschenbach ignores the concept of cogeneration, also known as CHP for combined heat and power.  (see link to Truth About Nuclear Power – 7 for chart on CHP growth).    CHP capacity is currently around 100 GW   82 GW [Update 4/26/2014]  That also represents 20 percent of US electric power, not an amount to ignore.  EIA shows 160 billion kWh produced via CHP in 2013.  Total US power generated was 4,058 billion kWh.  That is 160 / 4058 = 3.9 percent or almost 4 percent of all power sold.   The trend is to more CHP, or distributed generation as it is also called.  This also reduces grid demand. 

Eschenbach writes:  “if you add a hundred megawatts of wind at $0.09 per kWh to the system, you also need to add a hundred megawatts of natural gas or geothermal or nuclear to the system.”   This is simply not true.  In fact, the opposite is occurring in today’s market.  In Texas, for example, 12,000 MW of wind-based energy has been installed to date.   The market added additional, non-wind-based capacity (primarily natural gas power plants) but it would have added that capacity in any event.   In Texas, the regulating body is ERCOT.  Their considered assessment of wind energy plants in Texas is that almost 10 percent of installed wind capacity can be included as dispatchable, what they refer to as ELCC, effective load-carrying capability.  This (8.7 percent) is presently at 920 MW out of an installed base of 12,000 MW wind energy.  That 920 MW is non-trivial, almost equivalent to one nuclear power plant.  See link  

Eschenbach writes: “As a result, for all of the non-dispatchable power sources, those gray bars in Figure 1,you need to add at least seven cents per kilowatt-hour to the prices shown there, so you’ll have dispatchable power when you need it.” [emphasis in original]   The opposite is shown for actual prices in states with substantial wind:  Iowa, 5.45, South Dakota, 7.03, Texas 6.4, and US avg 7.12 cents per kWh for industrial price in Feb 2014, latest figures from EIA.   Industrial prices best represent the cost of power production, since there is very little added for transmission and distribution costs.  Iowa and South Dakota each have more than 25 percent wind power on their grids at the present.  Texas has only about 9 percent grid power, but has the most wind energy of any state at this time, at 12,000 MW.   see link 

Eschenbach writes: “Finally, I’m not sure I believe the maintenance figures in their report about wind.”  The value he refers to, of 1.3 cents per kWh, is the same as California’s Energy Commission reported in 2009.   This is based on actual operating experience and millions of hours of operation.  The statement from AWEA is:  “A typical wind turbine requires routine service once or twice per year. Oil and filters need to be changed, operating components need to be inspected, and bolts need to be torqued.”  Also, some parts require replacement after 5 to 15 years, depending on the part.   Unusual environmental or electrical damage also requires replacement.  (AWEA is the American Wind Energy Association)

I write this with the knowledge that Mr. Eschenbach is quite sensitive to any criticism.   He frequently uses capitalized words to indicate shouting in internet useage.  He has, in the past, been quite rude in responses to my comments on his writings.  Quite recently, however, he has shown a more civil tone, and I hope he continues the civility if he chooses to respond to this article.

Roger E. Sowell, Esq.

Marina del Rey, California

The Truth About Nuclear Power - Part Three

Subtitle: Nuclear power plants cost far too much to construct.  

The instant cost plus inflation, escalation, and interest on loans adds up to more than $10,000 per kW. 

Vogtle Nuclear Plant and Construction Site
photo - Wiki Commons by Charles C. Watson Jr.

One reason that nuclear power plants are uneconomic is they cost far too much to construct for the amount of power that they produce.  If one were to build a new nuclear power plant in the USA today, the final cost would be more than $10,000 per kW.   Several references support this assertion, Severance (2009), MIT (2003), and California EnergyCommission (2010).  All of these three referenced sources use $4,000 per kW as the overnight cost.

Overnight cost is the cost to construct if the plant could be built all at one time, or “over night”.  Of course, a nuclear power plant cannot be built overnight, as they require years to construct.  The added years increase the cost by escalation of materials and labor, and by interest on construction loans.   

Severance calculates the escalation for materials and labor to be $3,400 per kW, and for interest on construction loans to be an additional $3,100 per kW (figures rounded).   The total then is $4,000 plus $3,400 plus $3,100 equals $10,500 per kW.  A new, twin-reactor plant that produces 2,000 MW net electricity would then cost $21 billion to construct.   However, as indicated in Part Two of this series, Severance and the others did not include funds to make the plant operate safely if a large commercial aircraft crashes into the plant.  Not only the reactor, but the spent fuel storage area and the cooling water system must remain operable, per new NRC regulations.  This brings the cost to construct to approximately $12,000 per kW. 

How does this estimate compare to recent experience in the US?  There are two reactors under construction in Georgia, at the Vogtle plant.  Two more reactors were cancelled in Texas due to the excessive cost estimate at the South Texas Nuclear Project, STNP.   The STNP expansion project would add two reactors to the existing two, and was cancelled after a cost estimate of $17 billion was conceded by the reactor vendors to be too low.  As a result, we will never know how much that plant would cost to construct. 

The Vogtle plant is advertised as costing “only” $14.3 billion for twin reactors at 1100 MW each using the Westinghouse AP-1000 design.  However, cost overruns already incurred have increased the cost to $15.5 billion.  It is notable that Georgia changed the state law to allow the utility to bill customers in advance for construction costs.  This was an attempt to not pay finance charges on the construction loans.  In essence, rate-payers pay more money for electricity they are already using, and the utility company spends that cash for the nuclear construction.  Without this creative financing, the Vogtle plant would be right in line with Severance’s number, $20 billion more or less.   

The Vogtle plant is also plagued by delays in the construction, which would add to the cost if traditional financing were used.   At present (1Q 2014), the reactors are two years behind schedule, with four years to go for the first reactor to start up.  Many problems can arise in the next four years, which will likely add to the cost and delays.  As Severance shows, each year of delay adds approximately $1.2 to $1.6 billion in interest costs to the final cost for a twin-reactor plant.    An interesting account of the Vogtle plant’s progress can be found at 

http://www.taxpayer.net/library/article/doe-loan-guarantee-program-vogtle-reactors-34

[Update 6/24/2014: Vogtle facing more delays and cost increases  see link  -- end update]

In Finland, a single-reactor Areva nuclear plant is experiencing similar cost overruns and schedule delays. 

[Update 7/16/2014:  Finland's Areva EPL reactor plant is 7 years behind schedule and Billions of Euros over budget.  Per the article linked below:

“ "Areva was ready to do anything to win the Olkiluoto deal, including downplaying project management deficiencies. They had also previously delivered and commissioned nuclear reactors but they had never undertaken an entire project end-to-end, since the main French contractor had always been the EDF Group (Électricité de France), explained Les Échos editor in chief Pascal Pogam in an interview with Yle’s A-Studio current affairs program.

Based on accounts by parties such as the Olkiluoto owner-operator, the Finnish power consortium Teollisuuden Voima or TVO, Areva is said to have lied about the possibility of constructing a nuclear reactor within the agreed schedule."   see link  -- end update ]

Criticism

It is asserted that other countries can and do build nuclear power plants for approximately $2000 per kW.  As an example, China claims to build AP-1000 reactors at $2,000 per kW, according to world-nuclear.org.   One must pause at that; perhaps the lower labor rate in China is the reason, perhaps lower escalation for materials, and perhaps favorable (read: zero) cost for interest on construction.   However, the same website (world-nuclear.org) states that France’s current program has reactors that cost the US-equivalent of $5,000 per kW for overnight costs.  (Euro 3,700 per kW)

Conclusion

Truth Number 3:  Nuclear power plants cost far too much to construct, more than $10,000 per kW. 

Overview of The Truth About Nuclear Power series:

The series on Truth About Nuclear Power has several main themes:

1         

          Nuclear power operating costs are too high, cannot compete

2         

         Nuclear power costs too much to construct, require government assistance in loan guarantees or bill current ratepayers for construction funds (Georgia).

3         

         Nuclear power is unsafe to operate, near-misses occur frequently, disasters happen too; they must run at steady, high output to reduce upsets; this increases revenue to spread out the very high fixed costs; older reactors are more uneconomic and less safe (San Onofre leaks in new heat exchanger is a prime example)

4         

         Nuclear power is unsafe long-term for spent fuel storage

5         

         Nuclear power consumes far too much precious water

6         

         New designs to overcome these failures are unlikely to work, or to be economic if they can be made to work

a.       Thorium Reactors have serious developmental issues

b.      Modularized, smaller PWR (pressurized water reactor) reactors lose economy of scale advantages

c.       High temperature gas-turbine style reactors are far from developed

d.      Fusion at high temperature e.g. in magnetic bottle, is a pipe dream

7         

         Nuclear death spiral on the demand for power is real and present, customers have a variety of ways to self-generate (distributed generation), and alternatives become attractive as power prices increase.  Nuclear power will increase power prices, the greater the percent nuclear, the more alternatives become attractive. 

      Part One  --  Nuclear Power Plants Cannot Compete.

Part Two  --  Preposterous Power Pricing in Nuclear Proponents Prevail
Part Three -- this article
Part Four  --  Nuclear Plants Use Far More Fresh Water
Part Five --   Cannot Simply Turn Off a Nuclear Power Plant

Part Six –  Nuclear Plants are Huge to Reduce Costs

Part Seven -- All Nuclear Grid Will Sell Less Power

Part Eight – No Benefits from Smaller Modular Nuclear Plants

Part Nine -- Nuclear Plants Require Long Construction Schedules

Part Ten - Nuclear Plants Require Costly Upgrades After 20 to 30 Years

Part Eleven - Following France in Nuclear Is Not The Way To Go

Part Twelve - Nuclear Plants Cannot Provide Cheap Power on Small Islands
Part Thirteen - Nuclear Plants Are Heavily Subsidized
Part Fourteen - A Few More Reasons Nuclear Cannot Compete
Part Fifteen - Nuclear Safety Compromised by Bending the Rules
Part Sixteen - Near Misses on Meltdowns Occur Every 3 Weeks
Part Seventeen - Storing Spent Fuel is Hazardous for Short or Long Term

Part Eighteen - Reprocessing Spent Fuel Is Not Safe

Part Nineteen - Nuclear Radiation Injures People and Other Living Things
Part Twenty - Chernobyl Meltdown and Explosion
Part Twenty One - Three Mile Island Unit 2 Meltdown 1979
Part Twenty Two - Fukushima The Disaster That Could Not Happen
Part Twenty Three - San Onofre Shutdown Saga
Part Twenty Four - St. Lucie Ominous Tube Wear

Part Twenty Five - Price-Anderson Act Protects Nuclear Plants Too Much

Part Twenty Six - Evacuation Plans Required at Nuclear Plants

Part Twenty Seven - Power From Nuclear Fusion
Part Twenty Eight - Thorium MSR No Better Than Uranium Process
Part Twenty Nine - High Temperature Gas Reactor Still A Dream
Part Thirty - Conclusion

      Roger E. Sowell, Esq.

      Marina del Rey, California

On Nuclear Power Plants

I was part of a discussion over the past few days on WattsUpWithThat, that started out (the primary topic) discussing Obama's statement that within 5 years, the US would have a car battery that would achieve 130 miles per gallon.   While that is a non-sensical statement from an engineering standpoint, it was made by a career politician who is also an attorney - that is, he has zero background in this.  He did refer to Energy Secretary Chu, a Nobel-prize-winning physicist who should have known better than to make such a statement.  However, it is possible that Obama got it wrong and mis-quoted Secretary Chu.

Batteries contain what is referred to as amp-hours, not gallons, and the amp-hours are available at a certain voltage (within a relatively low tolerance).  That is, the battery's voltage will decline somewhat as the battery is discharged.  Standard car batteries in the US operate at 12 volts, nominally.  Electric car batteries operate at far higher voltages, and this varies depending on the manufacturer.  

At some point in the commentary on WUWT, nuclear power plants were brought up and their virtues were extolled.  I, of course, stand ready to refute any and all such extollations because nuclear power is about the worst way to generate electricity known to man.

As support for my proposition, I cited two studies, one being the excellent analysis by Craig A. Severance, CPA, where he produced results that show a new  US-built nuclear power plant must charge 25 to 30 cents per kWh in order to pay for the investment plus operating costs.    Unfortunately, that paper does not appear to be available on the internet at this time.  Even then, Severance's number is too low because it did not reflect the subsequent US requirement that all new nuclear power plants be designed and constructed to withstand a direct hit from a large commercial aircraft.  Furthermore, the new plants must be designed so that not only the containment building is intact, but also the cooling system and the spent fuel storage area.   I have stated that this requirement should add another 5 cents per kWh to that calculated by Severance, thus bringing the cost to 35 cents per kWh.

The second study I cited, since the doubters in the comment thread demanded "proof," was from the California Energy Commission, a state agency, and their published comparison of multiple generating technologies for both 2009 and for 2018.  The report is "Comparative Costs of California Central Stations Electricity Generation" dated January 2010. One of the technologies is a single reactor, Westinghouse AP-1000 design that produces 960 MW.  Their assessment also concluded that a merchant nuclear plant's levelized cost of electricity is 34 cents per kWh.  They also assessed Investor Owned Utilities and Publicly Owned Utilities, with costs at 27 and 17 cents, respectively.

The WUWT commenters of course disagreed, and cited some other studies giving the cost of power from new nuclear plants at 3 to 6 cents per kWh.   This is, of course, ludicrous.  Anyone with the slightest background in cost estimating and financial analysis will conclude that no project can be built without massive subsidies that costs $8 to $10 billion, requires 4 to 8 years construction time, and produces only 1000 MW electricity at maximum output, plus relies on sale of electricity at 6 cents per kWh.  One must bear in mind that the plant also must shut down periodically for refueling and will incur other operating problems that curtail generation.  Therefore, over the long term, the 1000 MW will be derated to approximately 850 to 900 MW.

There are several key points to keep in mind about the true costs of nuclear power.  First, what is the cost of the design, materials, services, equipment, and labor to construct.   This would be the "instant" cost, that is, if it could all be built in a single month, what would it cost?  Typically, the instant cost is approximately $4 billion for a 1000 MW plant.  California Energy Commission (CEC) used $3.95 billion for 960 MW.   But, of course a nuclear power plant cannot be constructed in a single month and will be built over a period of several years.   The longer the construction schedule, the more that two other items become important: materials and labor inflation, and financing costs.

The great debatable item is the time to construct.  Nuclear power proponents insist that new plants will be built in only 4 years, or 48 months from groundbreaking to first generation.  This has never been the case in the US, and indeed throughout most of the world.  Typical for the US is 7 to 10 years, and some lasted much, much longer.  Even in Europe, the plant being built in Finland is years behind schedule and has issued no expected completion date  (see second half of my article at this link).

As the construction period increases, so too will the costs of materials and labor increase due to inflation.  Nuclear power plants require great quantities of concrete and steel, which are subject to cost inflation.  Also, each year that construction continues adds a higher and higher amount of interest on the financing costs.  For a large nuclear project, it is common for the financing interest alone to reach $1 billion per year in the latter years of construction, especially for a two-reactor plant with both reactors proceeding at the same time.

Another key aspect of a nuclear power plant being constructed is the need to reassess the design and incorporate any lessons learned from recent disasters or mishaps from the approximately 400 operating reactors around the world.  This is frequently cited by nuclear advocates as the key reason plants' costs spiraled out of control in the 70s and 80s, and they insist that such days are behind us and nuclear power plant design is now mature.  This is not the case, as the recent disaster at Japan's Fukushima nuclear complex clearly demonstrated.  That disaster was the result of two almost-simultaneous events, a large earthquake and a large tsunami a few minutes later.   Many nuclear advocates point to the land-locked sites of nuclear power plants in the US and concluded that they are perfectly safe because a tsunami cannot possibly reach them.  However, a recent earthquake on the East Coast shook at least one nuclear power plant and the structural damage is not yet clear.  The simple fact is that we do not know how to predict the largest earthquake that could strike.  We could design for an earthquake of magnitude 7.0 and then experience an earthquake of 8.0 or even 8.5.

Also, earthquakes are not all the same.  Some shake the ground from side to side, others have more vertical shaking.  Some are a combination.  Designs for such earthquakes are very complex.

Yet another key aspect of new nuclear power plants is the intense opposition by well-funded groups that bring lawsuits to halt construction.  The anti-nuclear sentiment is very strong around the world, and in the US.  The memories of the faulty construction, gross abuses during construction, and sheer incompetence of some project management from the 70s and 80s is still very fresh.  If the next round of nuclear power plants also has the same shoddy workmanship, intimidation and threats to inspectors and auditors, the advent of the internet will ensure rapid whistleblowing.  Delays will inevitably result.

Furthermore, it can now be shown via various studies that new nuclear power is not a cost-effective means of generating power  (see Figure 1, below).  It can be argued that the state governing boards must agree to power projects that provide safe, reliable, and low-cost power to the public.   Nuclear power does not fit those criteria.

Figure 1

Relative Costs of Power Generation in 2018

Source: California Energy Commission study from January 2010

Note that the Nuclear Power Plant is the most expensive, except for the

three simple-cycle natural gas plants that are used for peak power only

Finally, nuclear power plants consume far more water per unit of electricity produced than almost any other technology.  The reactor must be kept cooled, and the steam from the turbines must be condensed.  A nuclear plant will deliver approximately 3 times as much heat into cooling water as is delivered as electricity.  In contrast, a natural gas-fired combined cycle gas turbine plant will use approximately one-fourth of that cooling water.  Stated another way, the nuclear plant will require 4 to 5 times as much cooling water.  By cooling water, the meaning here is water that is evaporated in the heat removal process.

For all these reasons, nuclear power plants should never be built.  There are far safer, more cost effective, and less water intensive means of producing electricity for the future.

Roger E. Sowell, Esq.
Marina del Rey, California