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

Speech on Peak Oil and US Energy Policy

UPDATE 2: June 11, 2011, I wrote below that OPEC took steps to bring the price of oil down to $80 per barrel to prevent the US from building coal-to-liquids plants and thus reduce imported oil quantities. However, it appears that OPEC now considers $100 per barrel an acceptable price for crude oil. This is approximately 25 percent greater than $80 that was their previous mark. This is likely due to 1) the USA's threat of a "Carbon tax" on new coal-fired power plants, or 2) new EPA requirements for mercury emissions on coal-fired power plants, or 3) any of the other costly environmental restrictions on coal-fired processes, or 4) the devaluation of the US dollar due to Obama's inflationary spending during his term of office ($800 billion stimulus spending, Quantitative Easing, huge budget deficits). Compared to 1980, a coal-to-liquids plant built in 2012 would very likely cost 25 percent more in real terms. This would allow OPEC to increase crude oil prices from $80 to $100, a 25 percent increase. OPEC met this week and held production steady, indicating the present prices are acceptable. -- RES

UPDATE 1: April 24, 2011, key slides from the presentation are now included. -- RES

On April 2, 2011, I was honored to speak at Tulane Law School in New Orleans, Louisiana, as one of three panelists discussing US Energy Policy and Peak Oil. While I don't have a recording of the speech, I have included below the prepared remarks. I will post the presentation slides showing the various graphs, soon. This was an excellent event, well-attended, and run extremely well. I enjoyed meeting everyone, and having discussions on many points. I want to extend a special thank you to Mr. Wesley Rosenfeld, Tulane second-year law student for inviting me and acting as my host, also Ms. Sarah Dawkins, Tulane law student and Treasurer of the Environmental Law Society. It was a pleasure to meet and talk to Professor Oliver Houck, who had many kind things to say about the Peak Oil session. It was also a pleasure to meet and exchange views with the other panelists, Mr. John Kaufman and Professor of Law Joshua Fershee. Finally, it was a pleasure to meet our panel's moderator, Dr. Geoffrey Parker, Professor of Economic Sciences and Director of Energy Policy at Tulane University. Thank you to all for making the Tulane Environmenal Law Summit a great success.

Figure 1

Speaking on 4-2-2011 at Tulane Law School, New Orleans

Prepared remarks:

Thank you, Mr. Rosenfeld for inviting me to speak today at the Tulane Law School Environmental Law Summit here in New Orleans. It’s a pleasure for me to return to New Orleans, where I worked some 30 years ago just up the river doing consulting engineering for Kaiser at the Gramercy plant.

Today, I want to address a very serious issue, the US Energy Policy with respect to Peak Oil. This speech today is but a small portion, an overview, of a much longer speech I give on the topic so I’ll just hit the high points.

The main points are divided into two sections, Peak Oil, and Energy Policy. Under Peak Oil, I will discuss why Peak Oil predictions fail and the false model used; Oil demand is not increasing at a compound growth rate; Oil Reserves are increasing; Oil price shocks are not catastrophic; and Many more options exist today.

Under Energy Policy, the main points are Take the Long View; Preserve our domestic resources; Maintain a vital oil industry; Develop Coal-to Liquids; Policy options to increase supply and decrease demand; and finally, OPEC’s new role.

First, Peak Oil has always been a false prediction. I first heard the term Peak Oil in 1972 as a freshman in engineering school. It has been predicted many times since the mid-1950s yet never comes true. The reason is that the model that is used to forecast peak oil is false; it is wrong. To paraphrase one of the US’s most brilliant scientists, Dr. Richard Feynman, when the predictions are wrong, you must get a new model. Dr. Feynman won the Nobel prize in physics for his work in QED, quantum electro-dynamics.

Second, Peak Oil proponents state that the world consumption of oil grows at an ever-increasing, compound annual growth rate or 2 or 3 percent per year. This is false, as the graph clearly shows (Figure 2). During the past 20 years or so, oil growth has been linear, at 1 million barrels per day per year. This chart shows world oil consumption by year, with two prominent peaks that coincide with OPEC oil supply disruptions in 1973 and again in 1979. The growth since 1985 has been very close to linear.

Figure 2: World Oil Production

(Click image for enlarged view)

This next chart (Figure 3) shows a closer view of just the data since 1985, with a linear trend line shown in black. The correlation coefficient is 0.98. The data is taken from BP Statistical Review of World Energy 2010, and is available on their website. Other sources show similar results.Thus, we can see that there is no escalating growth in oil consumption, indeed, the past 5 years have shown a flat or zero growth rate. This is very odd, considering the growing economies and oil demand in China and India.

Figure 3: World Oil Production since 1985

(Click image for enlarged view)

Next, looking only at the US oil consumption data (Figure 4), we see that oil use has stabilized and is steadily decreasing since 2004. Therefore, the Peak Oil claim of ever-increasing oil use is simply not true.

Figure 4: US Oil Consumption

(Click image for enlarged view)

Third, Oil reserves are increasing, not decreasing. Proven oil reserves are the most-cited number, and we must recognize that these numbers are very uncertain. No one knows how much oil is in the ground. We make our best estimates and that is all we can do. But, making those best estimates, we can see from this chart (Figure 5) that proven oil reserves are increasing each year at the rate of 20 billion barrels per year. How can that be? Mostly it is due to improved oil production technologies, which I really don’t have the time to explore in detail today.

Figure 5: World Oil Proved Reserves

(Click image for enlarged view)

Fourth, Oil price shocks are not catastrophic. The Peak Oil theory holds that all manner of calamity will occur when Peak Oil happens: economic ruin, depressions, rampant unemployment, starvation, wars for oil, etc. The price of oil is predicted to double, or triple, or go even higher.Yet, the reality is that none of those terrible things happened even though the price of oil went up 10-fold in less than a decade, in the 1970s. I lived through it, and many of you did, too. This chart (Figure 6) shows the oil price went from $3.50 per barrel to $35 between 1973 and 1980.We coped. We survived. We built better cars and conserved.

It is very instructive to examine this price chart, and while I can’t go into all the details, I can say that $32 was the price Saudi Arabia chose for oil in 1980. That was the highest price they could get without triggering the USA building our coal-to-liquids plants.

However, it is a fact that today, $80 per barrel is the same as that $32 in 1980, adjusted for inflation. Saudis maintain the price by adjusting production, and bring the price down to $80 as soon as possible. This happened in 2008, most recently. If the price of oil gets much above $80, we will drill for and produce much more oil, just like we did the last time that oil price shot up.We found oil in Alaska, the North Sea, Indonesia, and other places. Therefore, we will not see a doubling of oil price ever again. The threat of converting US coal to oil is simply too real. We know how. And, we could do it.

Figure 6: World Crude Oil Price

(Nominal dollars, not adjusted for inflation)

(Click image for enlarged view)

Fifth, many more options exist today compared to 1980. Among these are Hybrid vehicles, algae-to-oil, CTL, GTL, CNG vehicles, directional drilling, 3D seismic. [note, CTL is Coal-to-Liquids, GTL is Gas-to-Liquids, CNG is Compressed Natural Gas, 3D is Three-Dimensional imaging -- RES]

In summary, Peak Oil is not a problem. Demand is decreasing, supply is increasing, and there are far more options today.

Turning next to Energy Policy, the absolutely most important point is that we must take the long view and not be short-sighted. It is critical that the US be prepared for that day when we will desperately need our domestic oil. That day when our foreign supplies are cut off yet again, and this time we are in a prolonged world war, similar to World War II. To meet that day, we must have oil in our own lands. Every president since Truman has known this to be true, and therefore have made so much of the USA offshore off-limits to drilling. The West Coast, East Coast, and eastern Gulf of Mexico are off-limits to drilling. Much of the on-shore lands are also off-limits, including the ANWR. We know the oil is there. We don’t need that oil right now. Preserving that oil for the future is critical, and that is why Drill, Baby, Drill is Dumb, Baby, Dumb. (as an aside, this phrase drew spontaneous applause, much to my great surprise. – RES)

Next we must maintain a vital oil industry. It is critical that the US maintain the ability to drill, produce, refine, and transport oil and oil products to meet that dreaded day. We must attract and retain highly qualified and motivated personnel in the entire oil industry.

Next, we must develop 1 million barrels per day of Coal-to Liquids production using our domestic coal reserves. The Canadians have done something similar with their oil sands, even though they lost money for the first few decades. They went up the learning curve, reduced their operating costs and now are somewhat profitable. We must do the same with our coal.

Next, there are many policy options to increase supply and decrease demand. National speed limits will decrease demand by as much as 20 percent. Raising gasoline taxes are politically unpopular but will decrease demand. Mandating higher CAFÉ standards and government rebates for hybrid vehicles also decrease demand. There are many, many other policy options we could employ. By the way, the US already has more than two dozen federal laws regarding energy policy.

But, the most important supply-side policy choice is to promote recycling of CO2 by assisting the algae-to-oil processes. Here are a few photos of this technology. It works. This makes oil a renewable resource. [photo not included in this blog, due to copyright violation. Readers are encouraged to do an Internet search on images for "algae to oil." -- RES]

Another policy option is bio-ethanol. Mandating Corn-based ethanol is one of the dumbest things our government has ever done and should be repealed as soon as possible. (more applause at this statement. – RES)

Finally, all of the above has been based on OPEC maintaining their hold over world oil price. That is likely to change. OPEC’s new role is uncertain due to the recent events in the Middle East, particularly the change in governments in oil-producing countries. No one knows how this will all turn out, but it is very likely that the new governments will break away from OPEC and produce all the oil they can. That will decrease oil prices, in fact, we may see prices drop all the way to $20 or even $10 per barrel.

To conclude, we see that the data simply does not support the Peak Oil theory. Furthermore, even if oil were someday to be in short supply, there are many policy options to reduce oil consumption and increase oil supply. The most critical point is to not use up our domestic reserves but keep the oil in the ground as security against that day when we will need it most.

Thank you, and I’ll be happy to answer any questions. -- End prepared remarks.

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