Nuclear Plant Closures Show Why, When It Comes To Energy, Small Is Expensive

Stock SectorAugust 1, 201821min6
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From wind to nuclear, bigger is cheaperBNEF & EP

Another U.S. nuclear plant is at risk of being closed prematurely and replaced by fossil fuels.

Last week, the owner of the Duane Arnold nuclear plant in Iowa, NextEra, announced it had secretly negotiated a deal with a state electric utility to close the plant early.

If all of the announced nuclear closures go forward, the total number of operating nuclear reactors in the United States will decline precipitously — from 99 to 89 — by 2025.

The amount of clean electricity lost from those 10 reactors would be 23 percent more than all of the solar electricity generated in the U.S. in 2017.

NextEra claims its deal to close Duane Arnold will save each customer in Iowa $42 annually in energy costs starting in 2021, but has requested that the Iowa Utilities Board keep its calculations about future energy savings confidential.

In truth, the deal could raise electricity prices in the state and result in adding the equivalent of between 700,000 and 1,000,000 cars to the road, depending on if the plant is replaced by a mix of gas and coal, or entirely by coal, respectively.

A group of climate scientists and environmental scholars, including James Hansen and myself, sent an open letter this morning to President Donald Trump, Iowa Governor Kim Reynolds, Iowa legislative leaders, and the Iowa Utilities Board, urging them to take action to kill the secret deal to close Duane Arnold.

In contrast to fossil fuel plants, once a nuclear plant is closed, it is closed forever, due to discriminatory federal policies. What’s also lost is the chance to expand America’s clean energy. History shows shows that adding a new reactor to an existing nuclear plant is often the lowest cost way of replacing fossil fuels. 

Anti-nuclear groups claim the plant will be replaced by wind energy, but even if the total quantity of wind energy added were equal to the total output of Duane Arnold, the people of Iowa will still heavily depend on coal and natural gas.

For example, during July and August, when high temperatures push up demand for air conditioning, Iowa’s wind output falls to about one-third of the output in January and February.

What’s certain is that closing the plant prematurely will result in higher emissions than would be the case had the plant stayed open. Any new wind energy could have — and should have been — additional rather than replacement for lost nuclear.

If all 10 reactors close, the U.S. will lose 23% more clean energy than all U.S. solar.EP

The 10 nuclear reactors scheduled to close have an average age of 40 years, and well-maintained nuclear plants can operate for at least 80 years and perhaps 100 or more, which means that Duane Arnold could potentially be operated until 2054.

Journalists, climate advocates, and policymakers who themselves hope to live to 80 or 100 demonstrate their anti-nuclear bias by mischaracterizing 40-something nuclear plants like Duane Arnold as “old” or “aging.”

For example, the owner of the Peach Bottom nuclear plant in Pennsylvania has applied to extend its license so the plant will operate until 2054. Coincidentally, the two units still operating today came online just months before Duane Arnold.

The deal would be a bad one for people and businesses in Iowa. They will lose a vital power plant for keeping electricity rates steady and low as it hedges against natural gas and coal prices.

While nobody knows what natural gas prices will be in 2020, much less 2034 or 2054, what is certain is that they will not be any cheaper than they are today. The fracking boom has reduced natural gas prices to uneconomically low levels, bankrupting many companies involved in natural gas production.

Why Bigger Is Cheaper

A lesson from the proposed closure of Duane Arnold is that small nuclear plants remain at highest risk of closure in the United States. Of the ten plants slated for premature closure, seven of them are single reactor (unit) rather than two- or three-unit plants.

Single-unit “orphans” cost a full one-third more per megawatt-hour ( $45/MWh) than multi-unit plants ($33/MWh) according to a 2016 Bloomberg New Energy Finance study. That amount can be the difference between profitable or unprofitable in today’s low-price market.

Several of the plants in Illinois and New York that were set to close, but were saved by state-level policies, were single unit plants.

And unless the Ohio and Pennsylvania legislature — or President Donald Trump — take action soon, the single-unit Three Mile Island, Davis-Besse, and Perry nuclear plants will close in 2019 or shortly thereafter.

This reality underscores that bigger is almost always cheaper, and smaller is almost always more expensive, when it comes to “primary energy” technologies.

That’s true for everything from nuclear and solar to coal and natural gas plants for inherently physical — and human — reasons.

The age of computers and smartphones has misled otherwise intelligent people into believing that primary energy technologies will become cheaper as they become smaller.

Uninformed if well-meaning people compare solar panels to microchips because both use similar manufacturing processes, but converting sunlight into electricity is utterly unlike using electricity to operate circuits made of semiconductors on a microchip to store, process, and communicate information.

The processing of information is fundamentally different from the conversion of natural energy “stocks” (e.g., uranium, coal, oil and gas) and “flows” (e.g., sunlight, wind, water) into usable energy, namely electricity (but also gasoline and hydrogen).

Yes, bigger power plants, solar farms, and wind turbines are more expensive than smaller ones, but the electricity they produce is cheaper on a per unit of energy basis.

Consider:

  • Solar farms, which benefit from economies of scale, produce electricity at about half the cost of rooftop solar systems;
  • Wind energy has come down in price thanks in large measure to increasing the size of turbine blades and height of towers;
  • Natural gas turbines increased in size 30-fold — from 10 MW to 300 MW — since 1970;
  • Even when larger nuclear plants take longer and are more expensive to build, the electricity they produce is still cheaper than it is from smaller ones;
  • Nuclear reactors grow larger and higher in number, per plant, around the world, to achieve economies of scale;
  • From South Korea to the U.S. to France, utilities buy larger reactors to reduce costs.

Why is this? Mostly because nuclear reactors, gas turbines, wind turbines, and solar farms can be made — and operated — at incrementally larger sizes without correspondingly large increases in the number of people required to build and operate them.

Demand is rising for larger reactors.EP

Consider these examples:

  • Duane Arnold in Iowa has one reactor with a net capacity of 601 MW and a plant staff of 500 people for a worker to megawatt ratio of 0.83;
  • Palo Verde generating station in Arizona has three reactors with a combined net capacity of 3,094 MW and a plant staff of 2,055 people for a worker to megawatt ratio of 0.66;
  • Gravelines nuclear power station in France has six reactors with a combined net capacity of 5,460 MW and a plant staff of 1,680 people for a worker to megawatt ratio of 0.31.

Increasing the size of nuclear plants makes them more profitable in other ways. For example, “up-rates” that increase the size of key pieces of equipment, including the turbine, allow existing plants to produce more electricity.

This doesn’t mean bigger is always better. Sometimes smaller plants are a better fit to particular markets. What Georgia or Ontario need to replace their coal plants is different from what a less-populated rural area might need.

But, all else being equal, larger power plants produce cheaper electricity for a well-understood reason: they require fewer people per unit of energy generated.

Stemming the Loss of Nuclear Power

What should be done?

First, President Trump, Governor Reynolds, and Iowa lawmakers should take immediate action to prevent Duane Arnold and small nuclear plants like it from closing down. A subsidy just a fraction of the subsidies given to wind and solar would save the roughly half of America’s nuclear plants at risk of closing.

Second, local governments, union locals, and the communities that depend on nuclear plants at risk of premature closure must organize immediately to prevent the closure of any more plants.

Every time a utility wants to close a nuclear plant — whether for economic reasons as in Iowa or political reasons as in California and New York — they seek to cut a deal behind closed doors.

Pro-nuclear advocates must become proactive to prevent this from continuing to happen.

Third, the nuclear industry must act urgently to stop the loss of plants.

In contrast to NextEra’s short-sighted behavior, nuclear-owning utilities in New York, Illinois, New Jersey and Connecticut fought and won support from lawmakers to continue operating their plants, while utilities in Ohio and Pennsylvania, too, are seeking aid.

Before cutting its deal to close Duane Arnold, NextEra quit the Nuclear Energy Institute (NEI), the Washington, D.C.-based industry association, and promptly sued NEI, claiming NEI was trying to “distort energy markets.”

That’s a particularly ironic claim coming from NextEra, which has taken full advantage of the federal government’s large subsidies for wind energy — subsidies that are, incidentally, more than a quarter-century old.

“The economic case for Duane Arnold’s continued operation is undermined by our failure,” NEI’s John Kotek said, “to value the emissions-free attribute of nuclear in the same way we do for wind.”

Renewables received 94 times more in federal subsidies in 2016 than nuclear per unit electricity generated.EP

That’s putting it mildly. The most recent study by the Congressional Budget Office finds that renewables received 94 times more in federal subsidies in 2016 than nuclear per unit electricity generated.

The good news is that coordinated action by unions, concerned lawmakers, local businesses, and community leaders works. Their involvement was critical to saving nuclear plants in New York.

They along with nuclear scientists and engineers must become stronger leaders and advocates for nuclear at times like this when the industry is severely weakened.

When the state-owned nuclear industry was paralyzed during last year’s “citizens jury” on nuclear power, South Korean nuclear scientists and engineers proved they could speak persuasively and directly to the public about the truth facing nuclear plants. The result was a 60-40 vote in favor of finishing new nuclear reactors.

And few things have been more effective in saving nuclear power in recent years than the outspoken advocacy of nuclear power by climate scientist James Hansen, Pulitzer-winner Richard Rhodes, Whole Earth Catalog Founder Stewart Brand, Enlightenment Now author Steven Pinker, and dozens of other climate scientists and pro-nuclear environmentalists.

The crisis facing nuclear, and the need for action, are clear. The environmental case has been made. The economic cost of saving nuclear is insignificant by any measure — especially compared to wind and solar subsidies.

Nobody — not politicians and philanthropists nor scientists and environmentalists — can claim to be serious about addressing climate change and stand by as America loses any more of its largest source of clean energy.  

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