Thursday, February 03, 2011

How Nuclear Fits into Obama's Ambitious Goal

By Dan O'Connor | Originally published at Americans for Energy Leadership

The target which President Obama proposed in his State of the Union address – that 80% of the United States’ (US) energy would originate from clean sources by 2035 – sets the bar for near-term clean energy implementation absurdly high. But there is no real disappointment in failing to reach an unreachable goal, so long as significant progress is made toward it. Seemingly, how near the target (or how far off) we land depends on, more so than any other realistic strategy, badly-needed reform in the regulatory and financial systems associated with the nuclear industry.

The energy industry has many technologies and tools for tackling the 80% challenge, but most are small in the face of such a daunting task. Electricity generation from solar photovoltaic cells and wind turbines cannot meet base load demand without breakthroughs in energy storage technology. Solar water-heating systems could be more widely implemented but their collective reduction of natural gas and electric heating would be tiny given the localized and season-dependent solar availability in much of the US.

Optimistically, hydroelectric capacity could be increased by 50% to top out once and for all at about 6% of current national energy production. Fusion technology is further from being economically-viable than it is from being sufficiently-proven in the lab. And while “clean coal” could eventually do its part to reduce carbon-to-energy ratios, a teeth-laden federal clean energy standard would be necessary, very soon, to incentivize the expensive technology’s installation in new or existing coal plants.

To be sure, all of these options should be tried and will improve in time, but the scales on which they currently or could soon operate are too small to have both quick and significant impacts on clean energy numbers. For instance, a recent assessment by Ken Kolk of the American Society of Mechanical Engineers Energy Committee concluded that the 80% target would necessitate installing 1,410,060 2.5-MW wind turbines in tandem with 1,568 500-MW natural gas plants for support during intermittency. That is not going to happen in 25 years, if ever. Granted, this is a high level calculation that makes broad assumptions; it also equates to 784 1,000-MW nuclear plants by 2035, which is infeasible too. But it illustrates the enormity of the task.

The fact that the nuclear industry provides 70% of US carbon-free energy without a new plant built in the last 3 decades, while the renewable sector still only contributes a minority share but has seen 31% growth in generation in the last 3 years, points to nuclear as the appropriately-sized tool for the president’s challenge. But how do we make it happen?

The first move in ramping up clean energy production is to ensure we squeeze as much out of our current nuclear fleet as possible. This means optimizing operations in order to maximize capacity factors, as well as extending reactor-lifetimes from the typical 4 decades out to 6 or even 8. The former approach has been in the works since the first nuclear plant was switched on, and it is nearing its apex. The capacity factors in the nuclear industry, now consistently 90% or greater, are the highest in the energy business.

The latter strategy has more recently been adopted as our reactors close in on their originally-assigned retirement ages. Indeed, reactor retirement is the single biggest threat - not even to our clean energy portfolio’s growth - but to its maintenance. The trends, depicted from left to right in the plot above, project total US nuclear capacity (1) without license renewal, (2) with current renewals, (3) with proposed renewals, (4) with all licenses renewed, from 2010 to 2055.

It is clear that, were our reactors allowed to retire as originally planned, the nuclear industry’s contribution to clean energy production would all but disappear by 2035. Fortunately, some license renewals, which extend a reactor’s lifetime by 20 years, have been approved and others are in line. There is also growing support for 40 rather than 20-year extensions, but “degradation phenomena that affect performance of plants operating for as long as 80 years are not well understood…and further research is needed prior to decisions about further license extensions,” according to “America’s Energy Future” (AEF) published in 2009 by the National Academies. Therefore, even in the best case, in which all licenses are renewed, about 25% of our fleet will be retiring in 2035, making it very unlikely that the US’s clean energy portfolio can grow in that time frame.

This alarming scenario should hurry the construction of new reactors. Though building 784 new plants is an impossible target, the AEF Committee judged that 5 to 9 additional nuclear plants could be brought online by 2020. As espoused in my first article, there is no need to wait around for research breakthroughs; proven reactor technologies are ready to be built now, as China continues to demonstrate.

The AEF Committee predicted that the successful completion of new builds would inspire public confidence in the awakening industry and the construction experience would reduce the duration and cost of subsequent builds. On this “Nuclear Renaissance” track, the Committee concluded that a 73% increase in nuclear energy production is feasible by 2035 (this estimate involves uprating existing plants, building new ones, and retiring some). This result would fall well-short of the measures necessary to meet the president’s target, but it would still represent momentous progress. Without the 5 to 9 plants built by 2020, the track tends toward a “Nuclear Stall,” and the capacity could drop by 14% by 2035.

Two questions naturally arise from these possible scenarios. First, how many reactors are likely to be relicensed? The decision to apply for a license renewal is entirely voluntary and up to the organization which owns or operates the aging plant. In nearly all cases, extending the life of a nuclear plant that is already paid off makes economic sense. The Nuclear Regulatory Commission (NRC) considers and grants the licenses in a process that takes about 30 months. The NRC has already renewed licenses for 34 power plants, is currently reviewing 14 renewal applications, and anticipates 12 more through 2017. This activity is certainly a promising sign, and there is good reason to believe that the majority of plants will eventually be cleared for this 20-year extension. However, looking forward, the NRC should demonstrate urgent concern in the aging fleet and strongly consider the possibility of 80-year reactor lifetimes. Deep research is necessary, as 80-years of material exposure to fission is uncharted territory, but without this option nearly all currently operating reactors will be retired by 2050.

Second, which nuclear track are we actually on, a renaissance or a stall? The NRC can play a crucial role in answering this question as well. At the moment, 17 new license applications and 3 design certifications are pending its approval. Accelerated hiring at the Commission may be necessary were the country to follow the former track; the AEF Committee notes that “the processing of the current surge of applications could cause short-term delays in beginning new plant construction.” However, the expertise required of an NRC employee is considerable and expensive to draw. Moreover, the wealth of experience in reactor operations and design has begun to dwindle and is unlikely to be replenished unless we revitalize the industry soon. In order to streamline the design certification and license application processes (consequently reducing power plant price tags), the NRC should work with companies like General Electric, Westinghouse, and Areva to consider a booklet of standardized plant designs for customers to choose from. Such a project could attract new talent to the Commission and nurture a new brand of engineering leaders able to engender and manage public-private cooperation in the industry.

But of course, which nuclear track we follow is largely controlled by funding issues. The federal loan guarantees program has fallen short because the possibility of accruing a decade’s worth of interest on $10 billion remains too risky for most utilities to swallow, especially when there is cheap electricity to be made with low-cost natural gas.

So, in addition to the regulatory reform proposed above, a well-developed financial-assistance system is needed for the rapid deployment of nuclear power, and a federal clean energy standard may be just the solution. Granted, the idea of a CES has been interpreted differently across energy industry experts, and some designs would help the nuclear industry more than other. A design that would help the industry deal with its financing problems would be as follows: Utilities operating coal, natural gas, and nuclear power plants could be made to allot a certain percentage of revenue generated by carbon-intensive technologies for investing in carbon-free technology. Instead of loans for nuclear power plants, the federal government could match the utility’s carbon-derived investment. Construction could happen once the required cash accumulates, and the utility could slowly pay back the government for its initial investment.

There is plenty of room for brainstorming ways to incentivize clean energy as the federal standard idea picks up steam, and the next few months promise to be active in this regard. As the proposals materialize, it will be important to keep in mind the necessarily public-private nature of the energy-utility sector so we ensure that regulatory reform and financial incentives grow together as one cooperative system. Without the necessary reforms the trajectory of the nuclear industry could prove to be more of a burden than boon on Obama's ambitious goal to produce 80% clean energy by 2035.

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Dan O’Connor is a Policy Fellow in AEL’s New Energy Leaders Project and will be a regular contributor to the website. The views expressed are those of the author and do not necessarily reflect the position of AEL.

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