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Nuclear Power Risk Management and Climate Change

image credit: Joe Sohm | Dreamstime.com

Nuclear Power has had a roller-coaster ride over its lifetime. Once proclaimed as power too cheap to meter, it has suffered from accidents such as Chernobyl and Fukushima. Now new challenges arise: as the industry needs to adapt to climate change.

Some environmentalists have become pro-nuclear, seeing it as necessary to run the electricity grid with lots of intermittent renewable sources. George Monbiot and Mark Lynas in the UK and Patrick Moore in the USA have argued that Nuclear Power is necessary to ensure our power networks will be sufficiently decarbonized in a short enough time-frame.

This year climate records have been broken yet again: “Summer 2020 was within the top 10 hottest summers for 37% (452) of 1203 cities analyzed, and 55 cities across the U.S had their hottest summer on record. Furthermore, from January to August 2020, local record highs outpaced record lows in most places—a hallmark of climate change as global temperatures increase.” ClimateCentral.org

However as global heating gets more intense, this will create difficulties for existing and planned nuclear power stations. These are normally built in low-lying areas adjacent to water, mainly coastlines. Now this is becoming an increased risk for the utilities and their managements.

Rising air and water temperatures will make the plants need more cooling, and therefore be less efficient, cutting into profits, which is painful when the plants are operating on very small margins. Severe weather such as flooding, hurricanes and storm surges will increase. This means more risk assessments and disaster plans must be prepared, then implemented, hiking costs.

A recent report by Moody's Investors Service observed: “Climate hazards are likely to worsen for nuclear power plant operators over the next two decades, with severity varying by region.

“Ultimate credit impact depends on the ability of plant operators to invest in mitigating measures to manage risks. Over the next 10 to 20 years, nuclear operators will face growing credit risks associated with climate change.”

While nuclear power stations are among the most strongly-built infrastructure assets, plant operators may have to take additional measures to reduce exposure to these growing climate risks,

David Kamran, a Moody's Analyst, said, "Parts of the Midwest and southern Florida face the highest levels of heat stress, while the Rocky Mountain region and California face the greatest uncertainty regarding long-term water supplies. We count about 48 GW of nuclear capacity with elevated exposure to combined rising heat and water stress across the US."

Several operators have applied to the Nuclear Regulatory Commission to have their licenses extended. These and other plants will be operating till the 2050s, but it is unclear how their functionality will be affected by climate change by that time.

High temperatures have already affected nuclear plant operation: in 2019, there were seventeen incidents reported where a nuclear plant had to cut power and operate at a reduced capacity until hot weather returned to normal, according to the NRC. This year there were 25 incidents which is a significant increase. These effects will need to be monitored carefully so regulators and operators can implement mitigation policies if they continue to affect nuclear plants.

Given pressure from industry and politicians to support base-load demand, Moody's expects many nuclear plant operators to file for license extensions over the next decade. As their ability to operate effectively will be impacted by climate hazards, nuclear plant operators will continue to determine the exposure they face and design and implement resilience measures to adapt to these risks.

Julian Jackson's picture

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Discussions

Bob Meinetz's picture
Bob Meinetz on Sep 17, 2020 4:55 pm GMT

"Over the next 10 to 20 years, nuclear operators will face growing credit risks associated with climate change.”

Julian, operational nuclear plants have never needed to borrow money, so that they face "credit risks" is irrelevant. Their reliability and resistance to environmental impacts is a tremendous asset - for the environment, and for ratepayers.

More nuclear plants will be built in coming years, ones designed to withstand any foreseeable impacts just as their predecessors were. And maybe if enough are built, their carbon-free generation will prevent the impacts brought on by misguided energy policy.

Michael Keller's picture
Michael Keller on Sep 22, 2020 5:18 am GMT

Bob, operational nuclear plants have borrowed money, and lots of it. As a financial sleight-of-hand, units were sold to "operating companies" by utilities to show a profit on the utility company's books, with the "operating company" borrowing money to finance buying the assets. The sale price was generally exorbitant and the new debt has to be paid back. This has occurred numerous times and partially explains some of the non-competitive position of a number of the nuclear plants. However, even with all of the debt paid off, nuclear plants cannot compete with cheap natural gas and subsidized (and mandated) green energy.
Curiously, nuclear plants have no greenhouse gas emissions. The financial deck has clearly been rigged to support green energy; as in unfairly line the pockets of utitilites and private investors.
 

Bob Meinetz's picture
Bob Meinetz on Sep 23, 2020 1:44 am GMT

Michael, if an entity has already purchased a nuke plant with a loan, obtaining credit obviously wasn't a problem. It's likely some plants will need upgrades to deal with climate change, but it's not a deal breaker - the cost is paid for by ratepayers. And it's not just nuclear plants - coal plants, gas plants, and solar panels don't work very well under water, either.

I'm aware of one nuke plant that was closed because of flood risks (Ft. Calhoun, Nebraska in 2016), and there was a plant on the Garonne River in France that had to have water trucked during a very dry summer, in 2011.

It's interesting when people claim nuclear plants are "non-competitive" when there is no competition in electricity (electrical utilities are monopolies). Though deregulation has created the appearance of a wholesale electricity market. it's a sham. Each state has a loading order that favors renewables, or gas, or whatever energy company is donating to the campaigns of the state legislators who created it.

But that's changing. FERC is in the process of breaking up the influence of the New York Independent System Operator (NYISO) on PJM, and it's likely they'll follow suit in California with the domination of Western markets by CAISO. Electricity rates are going through the roof across the country, and in not one state can it be blamed on costs. What's to blame? The exploitation of electricity customers by utility holding companies, and FERC is determined to put an end to it.

Michael Keller's picture
Michael Keller on Sep 23, 2020 5:11 pm GMT

Bob, you are spot on target about "deregulation". More accurately, is re-regulation. Rather than the charade going on in many states, the bureaucrats and politicians need to acknowledege that energy production is fundamentally a monopoly, with attempts to mimic a free market highly deceptive and grossly unfair to consumers and businesses. Regulate the effort to provide reasonably priced, reasonably clean and reliable energy. That will no doubt enrage utilities, investment bankers, and the green energy mafia. The financial gravy train would come to an end.

Bob Meinetz's picture
Bob Meinetz on Sep 24, 2020 1:14 am GMT

Michael, interesingly enough it's been almost a century since we went through exactly rhe same phenomenon in electricity. We fixed it in 1935, and utilities were enraged. They spent the next 70 years trying to undo it, and finally succeeded in 2005. Now, we're right back where we started.

Much more predictable than the sun and wind is exploitation of the public by unregulated monopolies - it was just a matter of time.

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