The Case For Nuclear Energy
image credit: California's San Onofre nuclear power plant
- Mar 25, 2020 11:45 am GMT
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In the United States and around the world, we hear continued interest in the premature closing of operational and currently-viable nuclear power plants. Is this desire based on safety, economics, or have promoters of this strategy also considered the emissions impact of their decision? How are we to increase our energy supply, grow our economy, reduce emissions, and lower costs, all at the same time? This article will look into both the economics of nuclear plant closings, along with the potential emissions impact.
Electricity sources in the U.S.
Before we analyze the changes proposed for America’s nuclear fleet, let’s first look at the generation sources for the U.S. electrical energy demand.
Graph 1 illustrates that the U.S. receives about 19.45% of its electrical energy from nuclear power plants, so retiring this fleet before its useful service life will require additional energy-generating capacity.
Graph 1: 2018 U.S. Electricity Generation Sources
Nuclear Plant Closings:
With regards to safety, there is little doubt in the closing in 2013 of the 860 megawatt (MW) Crystal River 3 unit and the 2,150 MW San Onofre 2 & 3 units due to their mechanical issues. CR3 was operational in December 1976, and SO 2 & 3 were operational in 1983 and 1984, respectively, representing useful lives of 37, 30, and 29 years. However, premature closing of nuclear units should be evaluated on their emissions impact and economic impact. Graph 2 shows the electricity generation capacities of retired and retiring nuclear plants (2013-2025).
Graph 2: Electricity Generation Capacities Of Retired and Retiring Nuclear Plants (2013-2025)
Overall U.S. carbon dioxide (CO2) emissions rose in 2018 by 3.4% (after a 0.90% reduction in 2017), however, the electricity generation industry experienced only a small increase of 1.15%. All electricity generation segments were unchanged or saw a slight reduction in CO2 emissions, except from natural gas which saw a 14.58% increase in emissions.
Also in 2018, the U.S. saw the retirement of the Oyster Creek Nuclear Station (625 MW). At a 90% capacity factor, the closure of this plant reduced energy production by 4.93 million megawatt-hours (MWh) per year which had to be replaced by natural gas generation with its attendant increase in CO2 emissions, partially explaining the rise in U.S. CO2 emissions.
To replace nuclear energy’s 2.75 quadrillion British Thermal Units (BTU) in 2018 with coal increases CO2 emissions by 283.20 million tonnes per year; with natural gas by 161.08 million tonnes. In addition to increased emissions from natural gas generators are incremental capital expenditure for new installations and an ongoing cost for fuel.
Economics of U.S. nuclear fleet unit replacement:
To replace nuclear energy’s 807 million MWh per year with solar, requires 368,493 MWs of new installations, covering 73,699 acres or over 115 square miles of land.
At a rough capex estimate of $1.7 million per MW of solar installed capacity, the capital to replace nuclear energy’s 807 million MWh production per year is over $626 billion. For this incremental solar energy capital expenditure to replace existing nuclear energy production, ratepayers will pay an extra $0.0819 per kwh over 20 years of solar production (assuming an 8% cost of capital).
For the solar energy generation expenditure to replace closed existing nuclear energy production, the federal government (it’s really us as taxpayers) will subsidize solar over 20 years of production at a rate of $0.0246 per kwh (assuming a 30% investment tax credit and an 8% cost of capital).
Adding both the federal tax credit subsidy and the increased cost of generating solar energy to replace nuclear, the projected incremental cost vs. using existing nuclear generating facilities is $0.1064/kwh. This translates to a $86 billion charge per year to taxpayers/ratepayers. Is the American public prepared for this increased cost of energy?
In addition to solar installation capital expenditures of $626 billion, additional capex would be needed for energy storage since the solar energy generation is only available at an approximate 25% capacity factor.
The $0.1064/kwh charge for solar does not include nuclear power plant infrastructure dismantling and cleanup.
Before we begin closing useful, safe, and viable nuclear power plants, we need to consider additional economic information from James Conca’s 25 Nov 2019 Forbes article, “Nuclear Power Does Slow Climate Change”:
Over the next 20 to 40 years, the Levelized Cost of Energy “LCOE” for an existing nuclear plant is only 3¢/kWh; existing gas plant the LCOE is 5¢/kWh; an existing coal plant it’s 4¢/kWh. The LCOE for a new gas plant is 7¢/kWh, for a new nuclear plant is 9¢/kWh, for a new coal plant is 10¢/kWh, and for new wind is 11¢/kWh.
Surely, if baseload nuclear energy generation is not economically-competitive with solar/wind/gas generation in each of the 24 hours of the day throughout the year, is there a relatively-small subsidy that ratepayers could pay for nuclear energy that is less than the $0.1064/kwh cost previously-mentioned and makes nuclear energy more economically-attractive than prematurely closing viable nuclear power plants?
* Pay a “nuclear subsidy” less than $0.1064/kwh to extract all the value from existing viable and safe nuclear power stations
* Save the estimated annual increase of 161.08 million tonnes of CO2 from natural gas generation to replace nuclear
* Save the incremental energy expenditure to acquire solar to replace nuclear energy of $86 billion charge per year
* Save the solar installation capital expenditures of $626 billion to replace nuclear energy which has a much higher capacity factor.
Copyright © March 2020 Ronald L. Miller All Rights Reserved