The 2016 Platts Nuclear Energy conference left us with some insight into the issues facing nuclear energy. It’s clear the industry is facing some strong headwinds; however, the wind’s direction could change quickly. We have certainly seen this before. Luckily there are many people working to improve the economics, safety, performance, and public image/perceptions of nuclear energy. Here’s what we heard at the conference this year:
1) If we’re serious about reducing Carbon, and pollution in general, nuclear must be in the mix:
- To economically reduce carbon from our energy profile, nuclear has to take a major role – everything else is simply too expensive at this time to make a serious dent without dramatically increasing prices.
- Currently more than 60% of non-carbon producing electricity generation comes from nuclear power.
- Allowing the nuclear fleet to retire, rather than extending its operating life, will most likely increase CO2 emissions because the electricity currently generated by nuclear power plants will most likely be replaced by natural gas, at least over the next few decades.
- What we should be most concerned about over the near-term is eliminating electricity generation from coal; pollution from coal has caused and continues to cause more deaths than any other source of electricity.
- A diversified electricity portfolio has significant value; relying on wind, solar or natural gas alone is risky, not only from a cost perspective, but potentially from a supply perspective.
2) There is a lot of early stage activity around advanced reactors with some very promising technologies; however, there are many hurdles ahead before they become a reality:
- NuScale’s Small Modular Reactor is the closest to market of the new technologies – design certification and licensing could happen within two years with construction commencing in the late 2010s and operations in the early 2020s.
- There is a lot of interest in advanced reactors with several dozen designs in early stages. ARPA-E, similar to the Department of Defense’s advanced research program, DARPA, and several privately funded startups are pushing designs forward very quickly.
- Close coordination between startups, the Department of Energy, and the Nuclear Regulatory Commission is needed to keep the pace of progress while maintaining appropriate oversight.
- Both the Department of Energy and the Nuclear Regulatory Commission are increasing funding and personnel dedicated to advance reactors.
3) Nuclear energy is expensive and, in some markets, is losing to other types of generation, mainly natural gas generation. Are all the factors being considered?
- Similar to gasoline, not all electricity generation is the same “grade”, but it is largely priced that way in the market. For example, renewables are not always available, nuclear power largely is; nuclear produces no air pollution, fossil generation does. There is very little compensation in the market for those benefits – it’s kind of like having only one type of gas at the pump, when in reality, there are big differences between diesel, mid-grade, or high-octane.
- Externalities such as the cost of carbon are excluded from the price of electricity, skewing the cost of fossil energy lower and pushing those costs onto other parties.
- There are significant tax incentives, subsidies, and the like for all forms of energy (renewable, nuclear, and fossil); however, a more level playing field is needed all around the market to determine the best electricity supply options.
- The nuclear industry has put in place a set of initiatives to reduce operating costs 30% by 2020 to maintain the fleet’s competitiveness against other generation sources.
As the winds swirl, the future of nuclear looks promising, but its exact place in the U.S. and global energy mix is unforetold. We are closely watching all the great momentum surrounding this maelstrom with anticipation and optimism.
