Monday, August 14, 2017

Some Economics of Solar vs Nuclear

The recent abandonment of the two nuclear reactors under construction in South Carolina deserves some scrutiny with regards to our energy technologies and policy.  There were two main reasons for scrapping the 45% completed projects: cost overruns, and falling behind construction schedule.

Each reactor would have been able to churn out 1000 megawatts (1 million kw) of electricity per hour, 24/7, for about 85% of each year.  That’s a lot of electricity.  We measure our own residential usage in kilowatt/hours.  The original construction cost estimate back in 2006 was $4 billion per reactor.  The most recent estimate is over $12 billion per reactor.  This translates into construction costs of $12,000/kw of installed capacity.  Comparing that to what is available today, new natural gas generation is coming in at about $1000-1500/kw capacity.  PG&E in Humboldt County recently built a new 160MW state of the art natural gas facility for $250m. This is just the cost to build the power plant, and does not take into account the cost of the fuel, the operation and maintenance of the facilities, and in the case of nuclear, the equally expensive future decommissioning costs, and the unknown storage and maintenance costs of the radioactive wastes.  That being said, it is important to realize that the biggest problem with nuclear plants already in operation, and new ones proposed, is that they cannot compete on the open market with the currently cheap price of natural gas.  That is why so many of the old nuclear plants are now being scheduled for retirement…too expensive to do the upgrades and the maintenance required.

But true to form, the powers that be in the energy world have been/are very reluctant to discuss the other major player today…the significance of renewables in this economic equation.  We've passed the point of saying solar is too expensive, too intermittent, and incapable of ramping up fast enough to meet our increasing (?) electricity demands.  Solar prices (the focus here is on photovoltaics) have decreased dramatically in the past 5+ years.  The magic number bantered around for decades, has been 50 cents/watt for solar panels to be competitive.  That means the equipment for the plant would have to cost $500/kw.  Add to that the cost of installation, and you can then compare total construction costs.  We're way past that…panels now cost between 25-35 cents/watt, and estimates are that those costs will be reduced even more by new technology using new materials and increasing efficiency.  Spain just installed a 100MW plant for 65 cents/watt…$650/kw INSTALLED.  A friend works for a major international company that manufactures and installs large scale PV tracking systems, and he just finished a project in Mexico…965MW for under $1/watt.  He now is being transferred to Australia for two years because of the growing market there.  Tunisia is in the planning stage of 4,500MW in the Sahara Desert, with three transmission lines sending that electricity to Europe.  Lots of sun in Tunisia!  And Australia!  And the US!

I am fortunate to have a lot of friends “on the inside” who are working and are knowledgeable of what is really going on.  The “fake” news media…actually, most of the media has shied away from reporting on the tremendous gains solar is making not only here, but throughout the world.   In 2016, The US installed 14,626 MW of solar with a total of over 40,000MW nationwide.  This is mainly large-scale commercial projects, and does not include residential solar which is difficult to tally because of the small size of those systems.  But those small and diverse systems on residential roofs, churches, schools, parking lots, ballparks, etc. do add up, and will continue to push the ramping up of our solar capacity to meet the new electricity demands in transportation and communications. The wind industry installed 8,203 MW in the US (2,611) in 2016, bringing the combined capacity total to 82,143MW.  All this data is readily available from government and industry sources, but rarely makes the mainstream media.

Here are several points to put all this in perspective.
1.          Renewables are by far way cheaper than building new nuclear power plants.  Enter the argument that the sun doesn’t always shine or the wind doesn’t always blow, and the 1/3rd rule comes into play…it takes about 3X the capacity of renewables to match the constant output of a nuclear or fossil power plant over a long period of time.  Even so, construction costs still favor renewables.  And the big argument/dilemma is the need for constant base-load power, and the role of renewables and natural gas meeting peak load demand, which varies from geographic area and season.  With the advent of new smart technology in our management of the national grid, with changes in electricity demand due to efficiency, and with the soon to come introduction of battery and other storage systems, the base-load plants become unnecessary and expensive.
2.          A 1000MW plant takes 10+ years to build, and when it comes on line it would generate 1000+/- MW each hour that it runs.  If it has a lifetime expectancy of 30 years, it would produce some 7 million MW hours.  A lot of electricity.  The US installed 8,203 MW of solar last year, which will produce 8,203MW each hour that the sun shines…the ball park figure is 8 hours/day for 1/3 of the year.  Those facilities would crank out about 2 million MWH.  True…no comparison here…BUT if the US were to install 8,000MW of solar EACH year, the total output would be exponential…the 2016 installations would produce 240,000MW capacity over 30 years, and each additional new installation would contribute an additional equal amount EACH YEAR!  Large renewable projects take 2-3 years to construct, providing many jobs, and can be tailored to specific geographic needs.  New nuclear takes decades to plan and construct, and is limited to a geographic area.  The potential is overwhelming.
3.          Another major component in this discussion, which receives little lip service, is that the fuel for renewables is FREE.  That is the major stumbling block in our current capitalistic system.  There is no profit to come from exploration, extraction, processing, and transportation.  Once you've built the solar plant (like you build a nuclear or fossil fuel plant), it operates with a minimum of maintenance, expense, and oversight.  In 1990, my colleague and I tour several megawatt sized PV installations in Southern California.  We were not able to talk to anyone about those projects because the gates were locked and there was nobody there!  Yet the plants were fully operating on line.  That was 27 years ago, and the technology has improved greatly.  Much is made of the fact that natural gas is cheap…will it stay cheap?  It is definitely a transition fuel, which has its place as a compliment to renewable generation, but the big unknown as to its availability and future cost pales in relationship to the sun.
4.          The "hard" energy folks propose a lot of misstatements and untruths about solar PV cells.  Since there are no moving parts (just electrons), they should last forever.  Degradation due to the glass encapsulating materials and the external framework and wiring is vastly improving.  New cells are guaranteed to maintain 90% of their output at the end of 20 years.  Systems are warranted for 25+ years. New cells with new technology are on the immediate horizon, with estimates of 10 cents/watt coming soon.  This, of course, impacts manufacturing companies…the only way they will be able to make a profit will be through mass production…selling a lot of product at a low cost.  This is all part of the economic dilemma. Others argue about production processes, which do use nasty chemicals.  As with any manufacturing procedure, waste products are produced and have to be regulated to protect air, water, land, and people resources.  These wastes are nothing compared to the high-level and low-level wastes created by the nuclear industry fuel cycle, the coal industry, and the tar-sands and fracking technologies
5.          A last piece of this discussion must include the concept of technology change and time.  It is admirable to strive for 50%, 100% renewable for electricity generation, for electric cars replacing gas engines, and for a modern efficient grid to run everything.  This transition will take time, and we also need to realize that it is really not necessary or even possible to do completely away with burning fossil fuels, or even implementing new nuclear technologies as they are developed.  We need to be guided by the appropriate application of technology to the needs of energy demand, and address the full assessment of environmental, geographic, social, and economic impacts.   What I am hearing is that there are amazing new technologies coming very soon…cheaper, more efficient, easier to use energy technologies.  A lot of these cut out the middleman…the oil and energy companies, the big utilities, the traditional Wall Street investors, and the huge lobby interests.  It's politics at its pinnacle.  Why is Massachusetts moving forward on renewable implementation, while next door, Maine is almost outlawing solar systems?  Why are Arizona, Nevada, New Mexico…the entire South where the sun really shines, not leaping forward in developing their renewable resources?  There is an enormous potential for not only cheap abundant energy, but also for clean jobs, and even lots of money to be made.  Politics and Dark Money!  It's where we are today, but stay tuned, because things can change very rapidly in today's world.

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