Nuclear Power Costs SOAR and Kill New U.S. Plant Projects

Today, the Wall Street Journal reports a decision by utility Scana Corp. to abandon construction of the V.C. Summer Nuclear Station. It was one of only two projects under construction in the U.S., the other similar one being owned by Southern Company and now under review for a new "cost to complete" calculation.

The V.C. Summer plant was initially supposed to cost $11 BILLION DOLLARS, when proposed in 2008. 

That estimate had gone to $15 BILLION DOLLARS as of this year. 

Now, after it drove Westinghouse into bankruptcy, the cost is estimated at OVER $25 BILLION DOLLARS.  227% of the original cost.

And, with a track record like that, who knows how much it would actually cost by the time it started generating power.

The Business Risk of New Coal Plants in Japan

Chinese coal plant

Japan is one of the few major OECD countries where there are plans to build lots of new coal power plants. Of course, these plants will largely replace older, dirtier and less efficient coal plants. But still, they will lock Japan into coal-fired power for the next 50+ years, just as many other advanced countries are not building ANY new coal plants, and are shutting down the existing ones as quickly as practical ... and much faster than anticipated only a few years ago.

Japan's Renewable Energy Institute ("REI", not to be confused with REI Corporation, the famous outdoor goods cooperative based in Seattle) has released a Japanese language report entitled, roughly translated, "The Business Risk of Building New Coal Plants in Japan".

The article points out, in some careful detail, what I have been arguing based on rest-of-world knowledge and seat-of-the-pants common sense these past few years: a new coal plant planned in 2017 will be a big money-loser, and may even be a stranded asset shortly after completion.

According to REI, the government already has plans showing that utilization for coal fired power will fall from 80% in 2015 to 69% in 2026. Assuming for 2030 that (1) nuclear restarts result in 10% of Japan's power supply coming from nuclear power (only half of the governments 20-22% target), (2) that solar PV ends up somewhere around 82GW--much lower than likely or possible, and (3) the various coal plants now under development/construction are completed, REI's report indicates that:

• the facility utilization rate of coal-fired power plants will decline considerably below 69%, should be about 56%.

• Coal-fired facility utilization rate will be 62% if the restart of nuclear power plants does not proceed and nuclear is limited to 5% of the electricity supply amount.
• But if energy efficiency has improved resulting in a 5% decline in demand for electricity, coal utilization will be around 49%.

• The new coal plants are all planned around an unrealistic assumption of 70% facility utilization and 40 year operation, which is not feasible. The investments will be unprofitable.

Moreover, coal power production will face stiffer and stiffer headwinds, as many major users (including, recently, some Japanese companies) are adopting 100% renewable targets, and the Paris Agreement has led Japan to adopt, in March 2017, a "long-term low carbon vision" of the country, under which 90% of energy supply is covered by low-carbon power supply in 2050. That vision is not consistent with 40 years of continuing use of coal fired power.

The report (in Japanese) is available here. 
A summary (try Google Translate on it) is available here.

Update: An English summary is NOW available here.
And the full report will be translated into English, so check back here soon.

U.S. "Clean Coal" Flagship Project Killed - Instead will burn Natural Gas

This is the end of the effort at "clean coal", at least in the short term. Billions in cost overruns in an effort to get CO2 recapture (carbon capture and sequestration - CCS) to work. Reports from the MIT Technology Review and, originator of the story, the NY Times.

It costs much, much less ,and creates less CO2, if the project ... just keeps burning natural gas!

----------------------------------------

Update, July 2017 -- I just heard a podcast interview with Mark Jacobson of Stanford, one of the authors of a much-discussed 100% renewables scenario paper. His comment on CCS:

1. Takes 25% more energy to run the CCS project, so you burn a lot more coal than a normal project.
2. 1/3 of the pollution and CO2 associated with coal is "upstream" - mining, transport. That remains despite CCS. In fact, it increases by 25% since you need more coal!
3. CCS does not reduce the OTHER, awful pollutants associated with coal, which do not exist with renewables.

Coal India Closes 37 Mines

India transition away from coal faster than anticipated as solar gains quickly.

Solar for off grid in Africa - No brainer!

Nice piece in the New Yorker about how solar is electrifying off-grid Africa.

We can debate how quickly and completely solar and wind will replace coal and gas in the developed world ... but there is no debate about its substantial role in the off-grid developing world. A lot is needed -- financing model, installation in remote areas -- but solar PV + storage has no serious competition in such roles.

"In 2009, a radio, a mobile-phone charger, and a solar system big enough to provide four hours of light and television a day would have cost a Kenyan a thousand dollars; now it’s three hundred and fifty dollars."

Cheap Natural Gas, Wind and, increasingly, Solar, are Killing Coal, not Regulation

This NY Times opinion piece has a state-by-state look at the decline of coal, growth of gas, wind and solar, and why Trump's withdrawal from Paris is little more than a symbol within the U.S. The article focuses on the positive economic impact (or at least correlation) of clean energy and CO2 reduction.

This is another example of the NY Times using graphics effectively to drive home a point -- much more impact than with words. Co-authorship of the article is credited the "graphics director" of the NY Times opinion section, Stuart A. Thompson.

Snapshots of a few of the charts below -- but please go to the article to see how they really tell the story!

This round to the NY Times.

John Oliver sends up Coal

Trump Cannot Bring Back Coal

It cannot be said often enough. Coal is not coming back in the U.S.

First cheap gas, now wind, and eventually solar, will taken it all the way to zero in coming years.

Here is an article from Bloomberg on the theme.

And Bloomberg does not even show solar "on the radar screen". That is changing very rapidly.

Decommissioning - big business ahead

A story in the WSJ today about the more than $100 billion of decommissioning work ahead to shut down many of Europe's aging nuclear plants. Each plant requires an average of around $1.5 billion, and often the plant designs do not offer any roadmap for disassembly.

Likewise, Japan has decades of work ahead. Can Japan get this done "on time and under budget", or will it drag out and increase in cost like most things nuclear energy-related? A crucial question.

The Future of Nuclear Power - Switzerland Bans New Plants

News that a direct vote in Switzerland (using its famous system of binding national referenda) has agreed to ban construction of any new nuclear plants.

Nuclear currently provides roughly one third of Switzerland's electric power, so this is a big shift, for a country that is not an obvious place for solar or wind, and that already uses a lot of hydro power.

Nuclear power SHOULD play a big role in the transition away from fossil fuels around the world, but the set backs keep coming.  One might support a major role for nuclear in Switzerland and the U.S. midwest, but oppose it in earthquake/tsunami prone zones such as Japan and California. One might support shutting down older reactors, but still want to encourage construction of newer, safer models, repleat with "passive safety" features that would prevent a Fukushima-type or Chernobyl-type disaster. Environmentalists still see a crucial role for nuclear power in transition to a low carbon dioxide emission future and in keeping global warming below 2 degrees celsius (or, if that is impossible, at least as close as possible).

But economics seem to be dooming the nuclear business.

-- Areva, the major French player, has had a financial disaster in Finland, with a decade long delay and an increase in cost of over 300% (so far -- not done yet).

-- Toshiba, the largest Japanese player, has had a disaster in the U.S., with its subsidiary Westinghouse, likely to drag the entire company into or near insolvency, with its life turning on whether it can get an attractive price for its flash memory business.

Of course, the Japanese domestic market is dead, post-Fukushima

The U.S. market is dead because of cheap natural gas and wind.

The French have decided to shift away from nuclear. The Germans are winding it down.

The U.K. is going forward with the new Hinkley Point C plant, at a cost of 18 billion pound Sterling (!), but only with massive government support.

And still, there is no real long-term waste storage solution, 60 years after the industry has started to operate commercial plants!

Developing countries such as China and India must be watching and learning from these developments.

USA - Past Peak Electricity Consumption

Nice article in Bloomberg explaining another reason why coal is not coming back. U.S. electricity demand is flat and heading down, even with economic growth. Lots of reasons for this.

https://www.bloomberg.com/view/articles/2017-04-12/the-de-electrification-of-the-u-s-economy

Clean Coal? Bad Joke!

How clean is "clean coal"? Well, if by "clean coal" you mean anything other than carbon capture and storage (CCS), the answer is "dirtier than everything else except older, even worse coal."

As this nice summary of Credit Suisse research at Macrobusiness points out, even "advanced ultra super critical" technologies involve more twice the CO2 of gas combined cycle. Of course, other gas combined heat and power solutions can do better yet!

And carbon capture and storage is not advancing toward commercialization and seems to have a number of significant issues.

And it is absolute folly to invest in new ultra super-critical plants today, since they only achieve very modest CO2 reductions over old plans, and they will be around for the next 50 years or more once built.

See:  https://www.macrobusiness.com.au/2017/04/clean-coal-bad-joke/

Heck, even the Kentucky "coal mining museum" is adding solar.

So remember:  coal belongs IN the museum: and solar belongs ON the roof!

Trump Administration vs. Science

Miscalculating the social cost of carbon -- coming soon to the U.S.A. to justify the result the climate change deniers want.


http://www.politico.com/agenda/story/2017/03/the-hidden-impact-of-trumps-energy-executive-order-000384

Coal in the USA - plants to close despite Trump

Some more about coal in the USA?

Reuters reports 2 more coal plant closings announced this week, for mid-2018 (3000MW).

"U.S. power companies retired or converted over 14,000 MW of coal-fired plants in 2016 after shutting a record of over 17,000 MW in 2015, according to Thomson Reuters data."  

http://www.reuters.com/article/us-usa-coal-closures-idUSKBN16R2D4

Coal Power Plants Frozen in India and China - Japan is the Odd Man Out

As the Japanese government looks to expand coal's share over the next 15 years (and reduce gas), Japan looks increasingly like a global outlier. Of course, even with President Trump's cheerleading for coal, it is not likely any new coal plants will be built in the U.S.A.  And China and India have recently "frozen" construction of over 100 new plants, according to the Financial Times.

The global pipeline for new coal power plants is shrinking dramatically, giving hope that at least the COP21 Paris climate commitments can be met.

Of course, as the article also notes, Japan has lots of new coal plants on the drawing board. And Vietnam and Indonesia continue to push development/construction of new coal plants. Who is supplying, financing and building those plants?

U.S. Solar installation in 2016 -- up 95% over 2015 -- total 14.6GW ... Japan off 20% to 8.6GW

So if China had a HUGE years with 34GW new solar installed, at least the U.S. was no slouch, with 14.6GW.

https://www.greentechmedia.com/articles/read/us-solar-market-grows-95-in-2016-smashes-records

As for Japan, based on the METI feed-in tariff statistics installations have been gradually tapering off over the past 12 months (at least through October 2016, the latest data METI has made available). RTS puts Japan 2016 installations at 8.6GW, down from 10.6GW in 2015. The bloom is off the rose.

Sunday Morning Feb 12, 2017 - Wind Power supplies >50% of U.S. Great Plains Area Grid Electricity

For the first time, wind power supplied a MAJORITY of the electricity in a major U.S. region - the Southwest Power Pool.

https://www.bloomberg.com/news/articles/2017-02-13/wind-on-the-plains-supplied-more-than-half-region-s-power-needs

It sux to be in the coal business these days.

More gas

Bloomberg reports that recent natural gas discoveries under the Eastern Mediterranean are huge:

"The whole area from Cyprus to Lebanon and Egypt may be sitting on even bigger gas fields. The United States Geological Survey estimates they could hold more than 340 trillion cubic feet, an amount that would surpass U.S. proven reserves, though many in the industry think the actual volume may be lower."

Of course, Europe now gets its gas from Russia, Norway, and a mix of other sources - North Africa and even now the U.S. Gulf and East coasts.

If some of this Mediterranean gas resource can be developed, it will shift demand away from Russia and Norway. To the extent of a shift from Russia, Russia will look to export more to China and Asia. And North American gas exporters will seek other markets in the Americas and Asia.  That will push back against potential development of new resources from Madagascar to Canada.

Still, the bountiful nature of natural gas finds suggests to me that the world CAN move away from coal at a faster pace, with just a little political will.  It also suggests that we need to accelerate research, development and commercialization efforts at using natural gas as efficiently as possible. It is going to be with us for awhile, and it should be the last fossil fuel we are using as we continue on a longer scale transition to 100% renewables.

BNEF Publishes Predictions for 2017

You can find BNEF Advisory Board Chair Michael Liebreich and Chief Editor Angus McCrone's ten predictions for 2017 this link.

A few highlights (quoting from the report):

• "Super-low-cost renewable power – what we are now calling “base-cost renewables” – is going to force a revolution in the way power grids are designed, and the way they are regulated.

• The old rules were all about locking in cheap base-load power, generally from coal or hydro plants, then supplementing it with more expensive capacity, generally gas, to meet the peaks. The new way of doing things will be about locking in as much locally-available base-cost renewable power as possible, and then supplementing it with more expensive flexible capacity from demand response, storage and gas, and then importing the remaining needs from neighbouring grids.

• New nuclear plants will remain the political bauble they currently are, unless next-generation nuclear can prove it can deliver fail-safe designs at affordable cost. Demand will be suppressed by energy efficiency and self-generation, and augmented by electrified transport and heat.

• Putting super-cheap, “base-cost” renewable power at the heart of the world’s grids in this way will require a revolution in the way the electricity system is regulated.

Nonetheless global markets in renewable energy will slow in 2017, because of (1) cost/price reductions, (2) China slowdown, and (3) Japan:

• The third reason is Japan, where the runaway solar boom of recent years has turned to the predicted bust, and few utility-scale plants are likely to be given grid permits from now on. Instead, rooftop solar will become the main game, but its best years lie some way in the future, not in 2017.

As for cost and price -- BNEF predicts another 25% drop in module prices and 10% overall system cost drop, this year!

Just imagine the headline "nuclear power system cost to fall another 10% in 2017"?  Pretty hard to imagine. All we get is "if you pay $100 billion now to develop it, the next generation should be cheaper and safer ... no guarantees though folks", and not a really good track record of delivering on time and under budget. Meanwhile, the nuclear sector seems to have much bigger, and almost as numerous, corporate financial disasters as the solar PV sector.

Japan's plans are a bit underwhelming, and will likely continue to be so until the electricity sector deregulation is implemented down the road.  But at least as a result of the feed-in tariff, Japan has a base of domestic AND foreign participants in the electricity sector who will play a role in pushing the energy transition going forward. And its manufacturers will see the incredible global business opportunities they will have IF they can incubate successfully in the domestic market.

The U.S. is likely to backslide significantly at the Federal level, but that is a topic for another day.

US cedes leadership on climate change

This NY Times article spells it out. The Obama Administration quickly restored America's position in the world as a leader of a community of nations. The Trump Administration trashed that during the transition and the Inaugural address, with climate change one of many areas where we may have a bumpy road ahead.

Meanwhile China already seized the mantle this week at the World Economic Forum ... with India perhaps not far behind.

China adds 34GW of solar PV in 2016

China solar additions in 2016 reported at 34 Gigawatts.  That is a huge number.

Meanwhile, Japan's 2016 solar additions are ... well, I do not know since the METI site which tracks FIT projects (the vast bulk of the total) only shows additions through September. Maybe BNEF or RTS has

Over the first 3 quarters, Japan added approximately 600MW of residential solar capacity), and 4.95GW of commercial and industrial solar (in each case measured by AC not DC module capacity. So a nine month total of 5.55GW.

In the months leading up to September 30, monthly completions were running at around 75MW residential and 425MW commercial/industrial, so by year end Japan may have added an additional 1.5GW, putting the total around 7.05GW (AC) --maybe between 8GW and 9GW DC.)

That number would be MUCH lower than the BNEF Japan forecast at the beginning of the year of 13.2-14.3GW. And only about 25% of China.  Japan has likely ceded the #2 solar market position to the US and perhaps also has slipped behind India.  And Japan will fall further in 2017, and in 2018.

Renewables and CO2 emissions under a Trump Administration ... ban wind and solar in Wyoming??

The incoming Trump administration campaigned on bringing back jobs to coal country by ... bringing back coal (!).  Trump threatened (tweeted?) about pulling the U.S. out of the COP 21 accord. Then again, he met with Al Gore and said he has an "open mind" on things related to climate change. And some of his buddies in private equity and finance invest in renewables.  So there was hope. Next, he nominated a bunch of neanderthals to run the EPA, Department of Energy and other posts that might have something to do with U.S. climate change and renewables-related policies. All hope was lost. Or was it?

So like many policy areas, we know that we may be in for a very rough ride with a Trump administration, but do not really know what they will do.

I have drawn comfort from a couple things.

First, the price of renewables (and storage) are dropping so fast that we are beyond the point of turning back.  Likewise, electrification of the transport fleet will continue.

Second, businesses cannot plan based on a 2-year or 4-year election cycle.  A U.S. utility would be crazy to plan a new coal plant starting today just because of the results of the 2016 election -- the asset would probably, very likely, be stranded before it is complete. A total write-off. (Indeed, this is why the ExxonMobils of the world support a carbon tax -- they want a global, predictable price for CO2 emissions that makes it possible to plan long-term investments).

Third, much of the most aggressive policy in the U.S. promoting renewables has come out of state public utility commissions (PUCs) and legislatures, not from Washington.  So even if the EPA's "clean power plan" is dead on day one of the Trump Administration, the states with a healthy share of of the nation's population and energy consumption.

But what I was not counting on was THIS kind of activity (see link). Wyoming has both huge coal and very plentiful wind resources. Now the legislature is trying to ban the state utilities from using wind and solar power. Wow. Talk about interference with the "free market"!

Let's hope this does not pass.

Of course, even if Wyoming does pass this legislation, it will not be such a big thing for U.S. renewables policy. Despite Wyoming's bountiful energy resources, it has a very small population -- less than 2% the size of California.  So a regulation that involves the state's sources of electric power is only a drop in the bucket compared with what major states are doing.  And do not be surprised if certain other states and localities (especially up and down the west coast) do everything in their power to block Wyoming coal shipments for export (if they are not already doing so). There are limits on that kind of activity (under the interstate commerce clause of the U.S. constitution, many local regulations of transportation activity are "pre-empted"), but there is often a way.

Exxon Supports a Carbon Tax

Several years ago, all the major European oil and gas "majors" (Shell, BP, Total) were publicly advocating for a globally consistent "carbon tax".

But Exxon and Chevron, the two largest U.S. based oil companies, declined to join the group, saying they wanted to retain individual control of their "messages" on these issues. 

So now, as we enter 2017 and Exxon's former CEO is nominated for Secretary of State, what is Exxon's position?  The company supports a carbon tax. You can read it in the NY Times, December 30, 2016 opinion page (below).  And this has been their position for awhile, and for good reason.

As for Chevron, they support ... well, lots of nice vague words on their website policy page about the need for global solutions to complex problems. It looks like a bunch of baloney to me that refuses to face up to a life and death issue. And they are selling their Asia geothermal operations which are the bulk of their global geothermal assets.  I guess they need the cash to complete major natural gas investments, so no place for renewables when the projects being sold represent the bulk of their portfolio?