Admiral visions of a future now past

As the great sage Yogi Berra once observed, “It’s tough to make predictions, especially about the future.”. (Another that is particularly appropriate to climate change pseudo-scepticism is “It’s like deja vu all over again“). Or, to paraphrase Shakespeare’s Hamlet in his description of death, it is “The undiscovered country from whose bourn, No traveller returns, puzzles the will, And makes us rather bear those ills we have, Than fly to others that we know not of?

We know not of what is to come — what descisions will be made or delayed, what paths will be taken or abandoned, what pitfalls and breakthroughs will characterise humanity’s journey through the 21st century. We can know, as the quotes above aptly convey, that we will be mostly wrong in the detail of our prognostications. But that doesn’t mean we can’t be mostly right in the broad generalities. Simulations of possible climate change scenarios and strategic visions of future energy mixes, are not and cannot ever be ‘truth’, yet that doesn’t mean they are not worthy of our best efforts to imagine the real.

Back in 1954, in a speech to the National Association of Science Writers, Admiral Lewis L. Strauss, then Chairman of the U.S. Atomic Energy Commission, saw a vision of future society. As part of his speech, he said: “It is not too much to expect that our children will enjoy electrical energy in their homes too cheap to meter.” — a phrase now repeated ad nauseum by the opponents of nuclear power as a device to dismiss the appeal of current and future innovation. Clearly, the economics of nuclear power, whilst robust and highly competitive with other zero-carbon energy sources, is far from meeting that vision. Yet in reality, how ‘wrong’ was Strauss? A few people have looked at this, and concluded that he has been badly misrepreseted (and taken out of context). For instance, it is argued by Canadian J.A.L. Robertson, in his book “Decide the Nuclear Issues For Yourself: NUclear need not be UNclear“, that:

What the critics do not tell is that Strauss was talking about nuclear fusion energy, not fission that is today’s nuclear energy. 

The phrase has reportedly been repeated by the respected nuclear pioneer Alvin Weinberg. Nevertheless, it is a stupid remark. Anyone can understand that any means of generating and distributing large amounts of electricity, renewable or non-renewable, requires large and hence expensive engineering structures. Thus even if the fuel were free, capital charges for a reactor, heat exchangers, an electric generator, a switchyard, transmission lines and a distribution system would still be appreciable. 

The Canadian situation was never confused by this myth. Here, nuclear energy was introduced in the 1950s as a result of Ontario Hydro running out of readily accessible hydroelectric sites to exploit. It was importing coal from the U.S. for its fossil-fired stations. AECL made its proposal for what later became CANDU reactors only when it could demonstrate that these offered the prospect of being competitive with coal-fired stations, both economically and for safety. There is no evidence that the Canadian nuclear industry promised “electricity too cheap to meter”.

A further, very well researched analysis on this phrase, is given in this excellent essay — I’d encourage you to read it before you throw this critique around liberally. After outlining the background to Strauss’ speech and quotes from others in the 1950s, the Canadian Nuclear Society concludes:

…the nuclear industry in many countries foresaw a promising future in the 1950s, along with many other scientific and technical fields. But the industry, confronted with the practicalities of converting fission heat into useable electricity, did not expect a Utopian world with energy “too cheap to meter”. That was simply one phrase in one man’s litany of futuristic visions.

Rod Adams also provides a perspective here. Basically, it’s a classic example of a meme.

Less well known, but remarkably insightful, was speech from the same era, delivered in 1957 by another US Admiral, Hyman G. Rickover, called “Energy Resources and Our Future”. It was recently highlighted here in Energy Bulletin. It makes for a fascinating read, and as EB have noted, is quite prescient. Looking forward from 50 years ago, Rickover foresaw many of the problems we now face, and yet remained optimistic about humanity’s ability to confront these enormous challenges in energy and resource use. If you want to understand where we have come from, and what we have not yet fully faced up to, then you must read the whole speech (it will take you perhaps 20 minutes — time well spent). Rickover’s conclusion was thus:

“I suggest that this is a good time to think soberly about our responsibilities to our descendents – those who will ring out the Fossil Fuel Age. Our greatest responsibility, as parents and as citizens, is to give America’s youngsters the best possible education. We need the best teachers and enough of them to prepare our young people for a future immeasurably more complex than the present, and calling for ever larger numbers of competent and highly trained men and women. This means that we must not delay building more schools, colleges, and playgrounds. It means that we must reconcile ourselves to continuing higher taxes to build up and maintain at decent salaries a greatly enlarged corps of much better trained teachers, even at the cost of denying ourselves such momentary pleasures as buying a bigger new car, or a TV set, or household gadget. We should find – I believe – that these small self-denials would be far more than offset by the benefits they would buy for tomorrow’s America. We might even — if we wanted — give a break to these youngsters by cutting fuel and metal consumption a little here and there so as to provide a safer margin for the necessary adjustments which eventually must be made in a world without fossil fuels.

One final thought I should like to leave with you. High-energy consumption has always been a prerequisite of political power. The tendency is for political power to be concentrated in an ever-smaller number of countries. Ultimately, the nation which control the largest energy resources will become dominant. If we give thought to the problem of energy resources, if we act wisely and in time to conserve what we have and prepare well for necessary future changes, we shall insure this dominant position for our own country.”

Admiral Rickover was instrumental in the development of the US Atomic energy programme, after overseeing the naval reactor programme for aircraft carriers and submarines. Clearly, nuclear power was strongly in his mind when he reflectd on a vision of America’s energy security. For instance, he said:

“More promising is the outlook for nuclear fuels. These are not, properly speaking, renewable energy sources, at least not in the present state of technology, but their capacity to “breed” and the very high energy output from small quantities of fissionable material, as well as the fact that such materials are relatively abundant, do seem to put nuclear fuels into a separate category from exhaustible fossil fuels.”

But his ambit was no doubt broader than this, and indeed would apply well to other sustainable sources of energy (within realistic bounds) and to the need to reinforce the security of the modern global economy. Delay, he said, risks catastrophic failure. The age of fossil fuels, which has brought such great prosperity to our modern society, is a limited and diminishing resource, which has now become an addiction with many unfortunate side effects.

Both Strauss and Rickover were of the view that future energy must be sustainable in the long term, and freed from the hegemony that is created by unequal distribution and access to critical resources (think where the oil, gas and coal is found and exploited…). Nuclear power, based on modular fast reactors with closed fuel cycles (overseen by an international organisation akin to the UN), nuclear batteries, a wide-reaching high voltage direct current transmission network, and an ongoing worldwide development of distributed renewable energy resources, will all be key features of this future world of energy.

I’m quite certain that, fifty years on, both Admirals would still agree on the fundamentals of this future vision, imperfect though the details remain. After all, as Yogi Berra observed: “You’ve got to be very careful if you don’t know where you’re going, because you might not get there.”.

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33 Comments

  1. Barry:

    I have also looked into the history, context and economics of the phrase “too cheap to meter”. I contend that Strauss was as prescient as Rickover in his expansive view of the future. One must understand that “too cheap to METER” does not mean free and that Strauss understood that the development would take decades, not years.

    You might find my essay on the subject worth a few minutes of your time.

    Too Cheap to Meter – It’s Now True.

    Rod Adams
    Publisher, Atomic Insights

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  2. One final thought I should like to leave with you. High-energy consumption has always been a prerequisite of political power. The tendency is for political power to be concentrated in an ever-smaller number of countries. Ultimately, the nation which control the largest energy resources will become dominant.

    (Setting aside all skeptism of various technology) The above quote raise an important issue when considering trade and who gets nulcear power. If IFR needs to be controlled under a non-proliferation regieme (assuming infaliability), there should be consideration given to compensating nations exclude on the grounds of global security.

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  3. We do know that Lewis L. Strauss, chairman of the Atomic Energy Commission did say:

    “Our children will enjoy in their homes electrical energy too cheap to meter,” he declared. … “It is not too much to expect that our children will know of great periodic regional famines in the world only as matters of history, will travel effortlessly over the seas and under them and through the air with a minimum of danger and at great speeds, and will experience a lifespan far longer than ours, as disease yields and man comes to understand what causes him to age.”

    So the chairman of the Atomic Energy Commission did say, >”Our children will enjoy in their homes electrical energy too cheap to meter”.
    And this was the message of vision put out by the leading press. What do you think he was trying to convey?

    Cetrainly a sober assessment reveals that this was not beleived literally by many at the time. Yet it appeared what was repoprted from atomic chiefs’ presentation. An amazingly sucessful bit of PR at a time the nuclear industry wanted to capture the imagination.

    So while not belived by many in the know, what do you think the take home message was to punters in the street?

    I think this remains one of several false promises about the performance of nuclear power.

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  4. I think it is relevant to be upfront about the the broken nuclear promises. In terms of budget it seem almost routine:

    Nuclear construction costs consistently rocket above forecasts. Finland’s OL3 reactor – under construction since 2005 – is three years behind schedule and 1.5 billion euros over budget. The last ten reactors built in India have on average been 300% over budget. The Czech Republic’s Temelin reactor was finished ten years late and five times over budget. Across the world, the average construction time for nuclear plants has increased from five and half years in the 1970s to nearly ten years between 1995 and 2000.
    The UK government’s Stern Report said the costs of energy production have ‘fallen systematically’ since the 1970s – except for those of nuclear power. As few new reactors have been built in recent years, there can be little confidence in the forecasts of future construction costs.

    http://www.greenpeace.org/international/press/reports/the-economics-of-nuclear-power

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  5. Mark:

    It is not fair to quote someone starting in the middle of a sentence and capitalize that quote as if the initial clause did not exist.

    Here is the quote with slightly more words included that show a completely different meaning than what you imply:

    It is not too much to expect that our children will enjoy in their homes electrical energy too cheap to meter, will know of great periodic regional famines in the world only as matters of history, will travel effortlessly over the seas and under them and through the air with a minimum of danger and at great speeds, and will experience a lifespan far longer than ours as disease yields and man comes to understand what causes him to age.” (Emphasis added)

    Lewis L. Strauss
    Speech to the National Association of Science Writers, New York City September 16th, 1954.

    Of course, you are not the only anti-nuclear person in the past 55 years to have selected the words from that quote that you wanted to use and ignored the rest.

    By the way – I am just a bit more than half way through my life expectancy. My father was 29 years old at the time of the speech. My point in mentioning that is that Strauss was providing a visionary concept that he knew would take time to achieve – if at all.

    The time limit for the prediction has not yet been reached, but the “very expensive” nuclear plants that were built in the twenty-thirty years or so after the speech are now producing power that is so inexpensive to produce that the utilities could sell it in the same non metered way as cell phone carriers use. The cost of a nuclear facility is essentially the same whether it operates at full power or not at all – the power could be profitably sold to customers for a fixed capacity payment.

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  6. Rod, I’m afraid, you’ve got the wrong party if you want to charge “selective quoting”. I took the quote directly from the “excellent essay” by the Canadian Nuclear Society, link by Barry. http://www.cns-snc.ca/media/toocheap/toocheap.html

    The run in sentence as doesn’t change the meaning or emphasis or the take out point for the punters. An excellent bit of PR from a chief of the atomic energy agency who was obviously trying to capture the imagination of the layperson.

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  7. The time limit for the prediction has not yet been reached, but the “very expensive” nuclear plants that were built in the twenty-thirty years or so after the speech are now producing power that is so inexpensive to same non metered way as cell phone carriers use. The cost of a nuclear facility is essentially the same whether it operates at full power or not at all – the power could be profitably sold to customers for a fixed capacity payment.

    So if I’ve got it wrong and Strauss was not trying to influence lay people about the promise of nuclear power, then I should instead say Rod Adams in trying to influence people to think nuclear power might be too cheap to meter?

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  8. Strauss’s claim is just as absurd in hindsight with or without the extra words. It turns out it was WAY too much to expect, at least for a SANE and HONEST person. So it was a WAY false promise, at least given what we know now.

    And if anybody wants to dig up the moldy old articles by W. Bennett Lewis — usually called “the Father of the CANDU Reactor” — they will find virtually the same false promise, almost word for word. Lewis made his false promise in the context of ever larger and larger Organically Cooled next-gen CANDU reactors. If Archie Robertson isn’t familiar with his mentor’s writings, he should be ashamed. (And if he’s ignoring false promises he IS aware of, he should also be ashamed.)

    With the AVOIDABLE costs of running the two $$$$$-refurbished Pickering-A reactors averaging 10.5 c/kwh for the past 3 years — that’s not counting anything for the original capital costs OR the enormously over-budget refurbishment costs! — it’s hard to avoid tarring the whole industry, in both countries, with negative labels. Those outrageous costs were uncovered last Summer from sworn testimony before the Ont. Energy Board, in the first-ever regulatory hearing to decide how much money ratepayers should be forced to pay for the output from OPG’s reactors at Pickering and Darlington. The final report, the transcripts, and most of the written testimony and arguments, are all available online.

    This industry should never ask “Have I ever lied to you before?”

    Ironically, the inflexibility of nuclear power’s much-vaunted “baseload” output, combined with rapidly falling power demand in Ontario (even before this nasty recession began), and combined with recent additions of equally inflexible wind capacity, has made a nasty little corner of the promise come true: At more and more times, including a LOT of time during this past month, Ontario has had such a glut of inflexible generation that the IESO’s market price has dropped and often stayed BELOW ZERO!

    Of course, the owners of the nuclear reactors have mostly been collecting excessive above-zero prices for their worthless power during these demand “valleys” — but that’s just because governments have traditionally been sucked in by the false promises, and have given away the farm to this “promising” industry. So we’re still paying above-market prices for the inflexible output of the nukes, but its inflexibility is forcing the System Operator to jump through hoops (including giving the power away for less than free!) to try to dump the stuff!

    It is also hilarious to read you speculating self-servingly about Admiral Rickover’s later views of nuclear power: “I’m quite certain that, fifty years on, both Admirals would still agree on the fundamentals of this future vision. . .” Well, none of us has to speculate, because Rickover was crystal clear about his own views toward the end of his life, and testified about them to the US Congress. In short, he viewed his involvement in developing nuclear technology — including commercial fission — as the biggest mistake of his life, and his biggest regret. As I recall, his final testimony was even published in a paperback book. . .

    You are welcome to disagree with him, but speculating that he believed the opposite of what he stated so clearly and forcefully just makes your detractors’ jobs too easy!

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  9. Mark:

    I will freely admit that I am trying to influence people to take a hard, numerically based look at what nuclear fission power plants are achieving today and what they might be able to achieve in the future. The predictions of high cost power and expensive plants with unpredictable investment costs are nothing new – they have been associated with the technology since the basic physical reaction was discovered and the initial technological approaches to capturing the heat released were selected.

    Ever since fission burst onto the energy market scene, there have been people who with great authority have proclaimed that it is too expensive to matter much. Some of those detractors had significant motive for slowing nuclear development – it is a competitor in the energy market against their favored power source.

    The economic facts as demonstrated from experience, not predictions, paint a mixed picture that can point to an optimistic future. When done correctly, fission has demonstrated that it can produce a lot of clean, reliable energy for a low marginal cost that approaches “free”. That is not the same as saying it is without cost, but that the plants cost as much to own and maintain regardless of whether they are operating at full power or shut down. The “all in” average O&M cost for nuclear plants in the US in 2008 was 1.76 cents per kilowatt hour, but 2/3 or more of the components in that total do not change if the plant does not operate.

    It is certainly possible to make nuclear power plants cost an infinite amount of money per unit power output – all of the cancelled plants that never produced grid power prove that out. However, people need to know that it is also possible to produce high quality power that is available whenever customers need it by making prudent investments, training operators, applying risk based regulations, and enabling rather than inhibiting development.

    Continually tagging nuclear fission power promoters as failing to deliver on promises is not productive or honest. Compared to the success rate of promise achievement by supporters of “renewable” energy, fission promoters have done pretty well. We have many notable failures, but there are a whole bunch of wind, solar, biofuels, and geothermal projects that have broken their budgets and failed to deliver on their promised power as well.

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  10. This is perhaps a bit of a side track, but I think the whole issue of meme’s is central to strategy on climate change. Big polluters and others who don’t care about climate change have been propagating the meme that action on climate change will be bad for jobs, send pollution overseas, ruin the economy, and generally cause the sky to fall in. Now that the denialist meme has largely been trashed, the people who don’t care about climate change are pushing the meme that mitigation will ruin the economy. This meme needs to be countered. One approach would push the idea (which I got from Joe Romm’s blog) that “climate denialism is junk science — the idea that mitigation will be bad for jobs and the economy is junk economics”.

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  11. Barry, I just noticed another amazing quote above, from your trusted source Rod Adams:

    [I’d love to have a “preview” feature, to see if the “blockquote” tag works the way I THINK it does.]

    Adams obviously and expressly interprets this “cost structure” as a pure economic advantage — one that “that can point to an optimistic future”. Put bluntly, the point is wrong. In addition to wind and solar, generating electricity by waiting for lightning strikes, or waiting for all the air molecules in a room to randomly line up on one side of an indoor wind turbine share the same cost structure. This characteristic has a technical name — capital intensity — and an associated trait that has a common name — operational inflexibility.

    If the TASK is to run a reliable and efficient electrical grid, which can accommodate times of high and low demand and maybe also times of high and low supply from other sources, this operational inflexibility is a very serious disadvantage, which translates into headaches for the System Operator. In a well-designed electricity marketplace, it also translates into very low payments per kwh for this relatively unhelpful energy.

    To a grid operator, nuclear capacity looks a lot like wind. But instead of being very prone to short-term drop-outs like wind, the reactors specialize in long outages — like the 7-year period during which EIGHT of Ontario’s CANDU reactors generated absolutely no electricity, or the summer peak-demand season of 2007, when both refurbished reactors at Pickering A generated nothing. That’s nothing on the windy days AND the calm ones, so CANDU — despite high capacity factors in good years — yields nothing to wind in the area of not helping to keep the lights on.

    In the real world, the risks of creating instabilities in reactor dynamics from intentionally changing reactivity and power levels to follow a load (in addition to the economic costs of losing expensive but low-MARGINAL-cost output) lead to grid-operator rules that favor nuclear operators over their competitors that have even lower — or zero — marginal costs. In Ontario, OPG routinely chooses to spill free water at its hydroelectric facilities rather than throttle back its precious CANDU reactors, even though that would save some non-free uranium fuel. Is that crazy? Probably not, given the risks. Is it artificially supportive of the least flexible technology on the grid? You betcha!

    (BTW, the fact that some of our nukes — take Pickering A, please! — have MARGINAL costs that are much higher than the value of their electricity, just makes the situation nuttier!)

    And then the “nukeheads” have the gall to trumpet their half-decent capacity factors — which are largely the result of these “most favourable supplier” rules, and NOT the result of low total costs or even low marginal costs — as if they were a proof of high value, desirability, or cost-effectiveness! They are none of the above.

    Of course, we shouldn’t have to debate the cost-effectiveness of ways to manufacture electricity, any more than we debate the cost-effectiveness of ways to manufacture cars, or airplanes, or MP3 players. This is clearly a job for the marketplace, i.e., smart people risking their own money. Unfortunately, even relatively modern and relatively democratic governments like Ontario’s, while quite willing to saddle renewable generators with the financial risks of their installations, are totally unwilling to impose the same financial discipline on providers of nuclear power. Check out the OCAA’s current campaign to get the government to put that kind of economic accountability into the new Green Energy Act.

    If nuclear technology could find investors willing to accept its risks — including the simple risk of non-performance — that would be the end of these debates. It’s only because all the investors are too smart to accept these dumb arguments, that we’ve got to hear them in public-policy circles, as arguments for financial support from UNwilling investors, like me. Me, I’d love to wait ’til I’ve paid down my share of Darlington’s and Pickering-A’s cost-overruns before I get billed for Darlington B’s, or Pickering-Bs. But we’re not that democratic (or smart) yet.

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  12. OK, “blockquote” didn’t do what I expected. Instead of putting the stuff between quotes into a block quote, it put the rest of my post in a block quote. Sorry ’bout that!

    The missing quote, which should go right above the block, is this:
    “The economic facts as demonstrated from experience, not predictions, paint a mixed picture that can point to an optimistic future. When done correctly, fission has demonstrated that it can produce a lot of clean, reliable energy for a low marginal cost that approaches “free”. That is not the same as saying it is without cost, but that the plants cost as much to own and maintain regardless of whether they are operating at full power or shut down.”

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  13. Rod, I wasn’t quite sure from your last post if you are now backing away or confirming the claim that nuclear power will be too cheap to meter. Which is it?

    So far you’ve erroneously charged me with selective quoting and dishonestly “continually tagging” nuclear fission promoters as failing to deliver on promises.

    As far as I can see this topic is on what has and hasn’t been promised by nuclear proponents, so it is the place to raise concerns about unmet expectations (and the manufacture of expectations).

    I don’t see this as in dishonest. And some other readers may find your resort to this attack as a deficiency in your argument.

    Below I have linked to a Greenpeace report showing budget and time over run for new nuclear plant. These are so numerous that it seems routine. The percentage cost and time of over run seems significant.

    Also when you advance the cost competiveness of nuclear power, don’t you think you should factor in the cost of insurance that nuclear doesn’t pay, instead foisting the bulk onto society? The Greenpeace report suggests that Nuclear power would be upto 300% higher if nuclear generators pickup this cost . Are they wrong?

    Nuclear plants also continue venting radioactive gas into the atmosphere. How appropriate is this? What promises have the nuclear industry made in regards to the safety of this?

    Have the nuclear industry been open and accurate in their disclosure of extent and risk of previous nuclear accidents?

    What is your assessment of Tom Blees’ account that negative assessments of IFR by various nuclear industry reports are distorted by politics?

    Perhaps you think it unfair for me to raise these questions? Perhaps you believe me to be “dishonest”, if so please dispel my concerns about industry promises with facts.

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  14. Norman – Yes, I do believe that low marginal cost generation from existing nuclear power plants points to an optimistic future. I do not, however, believe that that the existing plants, which were designed in a long ago technological era with far less information available to the designers than is available today, are the final word in how to approach that future state.

    I cannot deny or overcome what has been done in the past. As I stated earlier, it is possible to make the cost of a unit of power from a nuclear power plant investment reach infinity. (Shoreham cost about $6 billion and never generated any commercial power. Only fusion and space solar power can come close to that cost per kilowatt-hour.)

    I also cannot deny that some existing nuclear plants are inflexible and cannot respond to loads, but as a former nuclear submarine engineer officer, I also cannot agree that nuclear fission itself is unresponsive to the demands of the operator. Putting the petal to the metal or the brakes to the floor is possible in a plant designed for transients.

    My optimistic future is based on learning a lot of lessons from the past and applying those to future designs. If you are really interested, you can visit Adams Atomic Engines, Inc. to see how I would design a plant.

    I fully agree with this statement from your comment

    “Of course, we shouldn’t have to debate the cost-effectiveness of ways to manufacture electricity, any more than we debate the cost-effectiveness of ways to manufacture cars, or airplanes, or MP3 players. This is clearly a job for the marketplace, i.e., smart people risking their own money.”

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  15. “Ironically, the inflexibility of nuclear power’s much-vaunted “baseload” output, combined with rapidly falling power demand in Ontario (even before this nasty recession began), and combined with recent additions of equally inflexible wind capacity, has made a nasty little corner of the promise come true: At more and more times, including a LOT of time during this past month, Ontario has had such a glut of inflexible generation that the IESO’s market price has dropped and often stayed BELOW ZERO!”

    Gee, what a terrible problem to have. Oodles of electricity , more than people know what to do with.

    How will the citizens of Ontario ever manage to cope?

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  16. Norman – thanks for that post – I found it very interesting. This is what the French do to load follow their nuclear plants:

    http://www.world-nuclear.org/info/inf40.html
    “All France’s nuclear capacity is from PWR units. There are two ways of varying the power output from a PWR: control rods, and boron addition to the primary cooling water. Using normal control rods to reduce power means that there is a portion of the core where neutrons are being absorbed rather than creating fission, and if this is maintained it creates an imbalance in the fuel, with the lower part of the fuel assemblies being more reactive that the upper parts. Adding boron to the water diminishes the reactivity uniformly, but to reverse the effect the water has to be treated to remove the boron, which is slow and costly, and it creates a radioactive waste.”

    Because of this load following French nuclear has the lowest capacity factor of 78% of any nuclear country perhaps contributing to this:

    http://www.huffingtonpost.com/harvey-wasserman/frances-nuke-power-poster_b_176690.html
    “But on March 11, European Union regulators raided EdF offices because “suspected illegal conduct may include actions to raise prices on the French wholesale electricity market.” The stunning action against the massive conglomerate, which is 84.8% owned by the French government, could result in huge fines.

    The EU says EdF may have manipulated prices and redrawn contracts for some 60 key corporate users. Nuke backers constantly tout that close to 80% of France’s electricity comes from reactors whose power flows through EdF. But Areva’s cash shortage and EdF’s price-fixing scandal underscore the huge financial imbalances imposed by building and operating atomic reactors. According to Schneider, “EDF’s shares dropped by over 40% during the last six months alone. When management in February 2009 announced that larger than expected charges had corroded profits, share value dropped by 7% overnight and continued to fall since. The EDF share now stands 12% below the value when it was first introduced to the stock market in November 2005. Not really a brilliant investment.” ”

    Running an expensive nuke in load following mode might not be so economic.

    However I do have a question – how do you modify the IFR to run in load following mode?

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  17. Ender – you are not fully versed in the control mechanisms for LWR load following. Remember, large central station power plants are not the only LWRs in operation. Aircraft carriers, ice breakers and submarines also have LWR power plants and they have no difficulty accelerating and decelerating at will.

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  18. Rod Adams – “you are not fully versed in the control mechanisms for LWR load following. Remember, large central station power plants are not the only LWRs in operation. Aircraft carriers, ice breakers and submarines also have LWR power plants and they have no difficulty accelerating and decelerating at will.”

    No however they are smaller units built without any cost or profit in mind and are built to much higher standards than any commercial nuclear plant.

    Are you suggesting that we build commercial power reactors to military standards and design?

    Also are you versed in how commercial LWR are varied and can comment on the French – are they doing it wrong?

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  19. [See the missing block quote from my post above, in my post below!]
    Rod, I do appreciate your point of view. (Heck, I once shared it!) Nuclear energy technology has always had a theoretical future that’s rosy. In theory, reactors can follow a load, cost less, run reliably, achieve inherent safety, recycle their own wastes, produce transportation fuels,. . . you name it.
    It’s only in the real world that the outcomes seem to fall way short. At least so far, but maybe never again starting tomorrow! (That’s why I want to wait for this technology to find willing investors — maybe Rip Van Winkle?)

    But capital intensity — the flip side of low short-run marginal cost — is a disadvantage, not an advantage. First, it leads directly to operational inflexibility: Even if you can TECHNICALLY throttle back to follow a changing load, you can’t afford to do it, because you can’t pay the mortgage without running flat out whenever you can.

    Secondly, it substitutes “pay sooner” for “pay later”. That’s always scary from a financial POV, even when the world seems relatively predictable. But when forecasts aren’t worth the paper they’re printed on, capital intensity is unusually tough.

    Wind and solar are competing in North America only with guaranteed access to the market at above-market rates, and Canada’s existing reactors all have similar deals — forgiveness of mortgage payments, guaranteed sales, regulated rates that are above-market (though not as high as wind and especially solar).

    And you may have noticed that the prospects for new reactors — even to replace dying reactors — seems to be fading fast, with falling forecasts, no willing investors, skyrocketing costs, and the real-world failures of the few reactors that are already under construction. Take Olkiluoto-3 and Flamanville, please!

    It must be frustrating to have long-term dreams of a nuclear future, while the present and the near-term future keep bringing lots of bad news. Of course, I’d be happier if NanoSolar already had inexpensive (“grid-competitive”) solar collectors for sale in my local stores. But at least their costs are going down, not up. . .

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  20. I’m not sure the corporate malfeasance you describe bears on nuclear power in particular. A large wind power monopoly, or cardboard box manufacturer, would be just as ripe for price fixing. The 40% drop in EDFs shares in the last six months just sounds like its followed the rest of the market.

    If you’re reading Tom’s book, you’ll see he advocates keeping nuclear out of private industry and in the hands of non profit public utilities, like our electricity used to be. It seems a sensible idea.

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  21. Ender – I have to take anything that Wasserman says about nuclear power with a large dose of skepticism, knowing his long history of religious opposition to the technology.

    Areva and EDF both have very profitable enterprises, but that does not always mean that they have enough cash available for their investment plans. One advantage that both of them have is that their activity is largely independent of the stock market since both have a significant majority of their shares in the hands of the French government. One disadvantage that they have is that they are not able to raise additional capital as easily as they might if they were better able to issue more shares like other companies with exceptional growth prospects.

    I am not going to defend any particularly business practice – that is not part of my argument for a reconsideration of fission energy technology. From a technical point of view, however, I see nothing wrong with the way that EDF uses the load following capability of their large nuclear power stations to supply the electrical power needs of its home country and many of its neighbors. By definition, any power plant that is used in a load following mode will achieve an average capacity factor that is lower than it would have achieved if it ran as a bistable – either full power or shut down for a refueling. Any hours at less than 100% would count against that capacity factor and reduce the total amount of electricity produced.

    However, it is a very complicated argument to determine if that mode is economical or not because of the relationship between the decision to supply the power that the market demands and the temporal nature of the market price of electricity.

    The following quote from the World Nuclear Association article that you linked to demonstrates rather conclusively to me that Wasserman is out to lunch if he is attempting to imply that the French decision to go nuclear was a bad business decision or bad for economic security:

    France’s nuclear power program has cost some FF 400 billion in 1993 currency, excluding interest during construction. Half of this was self-financed by Electricité de France, 8% (FF 32 billion) was invested by the state but discounted in 1981, and 42% (FF 168 billion) was financed by commercial loans. In 1988 medium and long-term debt amounted to FF 233 billion, or 1.8 times EdF’s sales revenue. However, by the end of 1998 EdF had reduced this to FF 122 billion, about two thirds of sales revenue (FF 185 billion) and less than three times annual cash flow. Net interest charges had dropped to FF 7.7 billion (4.16% of sales) by 1998.

    In 2006 EdF sales revenue was EUR 58.9 billion and debt had fallen to EUR 14.9 billion – 25% of this.

    TThe cost of nuclear-generated electricity fell by 7% from 1998 to 2001 and is now about EUR 3 cents/kWh, which is very competitive in Europe. The back-end costs (reprocessing, wastes disposal, etc) are fairly small when compared to the total kWh cost, typically about 5%.

    From being a net electricity importer through most of the 1970s, France now has steadily growing net exports of electricity, and is the world’s largest net electricity exporter, with electricity being France’s fourth largest export. (Next door is Italy, without any operating nuclear power plants. It is Europe’s largest importer of electricity, most coming ultimately from France.) The UK has also become a major customer for French electricity.

    France’s nuclear reactors comprise 90% of EdF’s capacity and hence are used in load-following mode and are even sometimes closed over weekends, so their capacity factor is low by world standards, at 77.3%. However, availability is almost 84% and increasing.

    My read is that the French nuclear power champions (Areva, EDF and their predecessor organizations) made a huge capital investment, completed the projects, and have produced sufficient revenue to pay off the debt incurred. They are now on the second phase – using much of the cash flow generated by their largely paid off, low marginal cost electricity factories – to build out new power stations in Finland, the UK, France, and many other places around the world.

    That activity is going to cost a lot of money and will require the accumulation of a large quantity of debt financing. It will eventually generate a lot of income from electricity sales if the project completion rate is anything like it was during their second generation construction projects.

    The French nuclear power suppliers are also going to get a lot of criticism, both from the likes of Wasserman and from the competition (other nuclear, fossil and alternative energy suppliers) that will be jealous of their success and upset about their own loss of power and wealth.

    Rod Adams
    Publisher, Atomic Insights

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  22. Rod Adams – “However, it is a very complicated argument to determine if that mode is economical or not because of the relationship between the decision to supply the power that the market demands and the temporal nature of the market price of electricity.”

    That was not my point anyway. The point is that nuclear reactors are only marginally economical in a commercial environment if they are run flat out all the time. Putting aside Blee’s ‘idea’ of putting all nukes in UN control for the moment and moving to the real world of commercial electricity, which nuclear operators are you going to tell to load follow? Who’s going to be the bunny? What is going to stop a cheap gas plant, even if a carbon price is set, to undersell load following nuclear by any manner they choose. If given the choice what commercial nuclear operator is going to operate in load following mode without subsidies?

    Also can an IFR be modified to run in load following mode?

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  23. I think it is a huge understatement to say that “nuclear reactors are only marginally economical in a commercial environment if they are run flat out all the time”. If anybody knows of a single nuclear generating station in North America that is still carrying the remainder of its original “mortgage” from its electricity-sales revenues, please share all the details!

    I don’t think there are any. I know we don’t come close in Ontario, where nuclear debt bankrupted one of North America’s most impressive integrated power monopolies (Ontario Hydro). At dissolution, they were worth Cdn$6 billion less than zero on their own books. Using more honest and more commercial accounting at dissolution, it was more like $25 billion. Including unfunded environmental cleanup liabilities etc., we’ve seen over $30 billion of debt forgiveness — and wealth destruction — on our way to pretending these things can pay their bills. (And at least several of them still can’t.)

    In the US, many reactors changed ownership, and the average price tag was the value of the fuel inside the reactor core! And yes, these reactors get paid to generate whenever they’re capable, whether or not the local grid needs the power! Then there’s subsidized research, DoE funding for waste disposal, Price-Anderson for catastrophic-accident risk.

    So it’s no wonder that the investment community is too clever by half to risk its own money on NEW reactors, even if they have the right to run as zero-dispatch “baseload” plants.

    And you don’t have to know anything complicated to know that getting paid at market-value rates, or having to stop generating when there’s no demand, all make it harder to pay the mortgage, not easier. And they all increase risks for investors, which naturally makes them demand higher likely rewards (and the historical evidence is that there aren’t any).

    So let’s be clear: At least as far as I can see, today’s operating nuclear stations — certainly in North America, and likely everywhere in the world — are NOT covering their full financial costs with the commercial value of their electrical output, even with the right to get paid to generate at all times.

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  24. Norman:

    Nearly every reactor currently operating in the US is no longer carrying a “mortgage” because the loads were PAID OFF, not because the debt was retired. That situation may be different in Hydro’s territory, but most US plants do not compete in markets where the price is set by established hydro electric power plants.

    The cash flow from operating reactors is enormous – for large reactors the owner is likely to see sales revenues in excess of $500 million per year in rate regulated areas and in excess of $1 billion per year in areas where the rates have been deregulated.

    Your comment about the sales prices only applied to the first couple of sales – later sales took place with significantly greater valuations.

    For example – EDF just closed a deal with Constellation for a 49.9% interest in its operating power plants. That deal was worth about $4.5 BILLION for a portion of 5 plants. The total plant capacity is about 4,084 MW, so the EDF purchase values that capacity at $2,200 per kilowatt. That is a pretty significant valuation considering we are talking about plants that are all more than 30 years old!

    Finally – if you think that a gas fired power plant has a prayer of undercutting an operating nuclear plant in sales price, you need to go back to Economics 101 and review the effect of marginal COST on market price and profitability. Even with “cheap” gas at $3.50 per million BTU, the fuel alone costs 2-3 times the total marginal cost of a well operated nuclear plant.

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  25. One more thing – if you thing the investor community is clever, may I remind you of the incredible pain that their decisions have caused in recent years! The bailout of a single investment bank has made the costs of the errors of the first nuclear age pale in comparison to the crisis caused by their short term approach to risk management.

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  26. John’s quite right here,
    That any technology can be monopolized. (think 14 or 28 year patents or monopolizing land ownership for wind sites).

    However, the distributed nature and diverse cost structure of renwables means they are more monopoloy resistant compared to the centralized concentrated nature of nuclear power.

    I can put any number of renewable power generators on my home, school or businsess, there are a few barriers to this option with nuclear.

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  27. I don’t think the investment community is uniquely “clever”, but I do think that it’s uniquely accountable. It also learns valuable lessons about gains and losses from experience. So instead of having a bunch of qualified and unqualified windbags jaw-boning online about the financial wisdom of building different kinds of electricity factories, we should let investors decide, at their own risk, without special subsidies or guarantees.

    Personally, I think we all (or nearly all) know what would happen to nuclear investment under that kind of real-world discipline. The empty rhetoric would be revealed for what it is. One or two groups with X-games-sized cohones would charge ahead the way the old British Energy did (and they way “son of British Energy” aka Bruce Power seems to be doing now), and would likely continue until they met the fate of the old British Energy.

    Manufacturing electricity is a business. Some groups, and some technologies, do it more efficiently and profitably and reliably than others. We need a regulatory system to regulate the monopolies, governments and laws to ensure that the rules are fair and applied fairly and to prevent off-loading of “externalities”, and an independent system operator to run the market and dispatch individual generators. Stop the crazy subsidies and let the game be played!

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  28. Norman – I agree with most of what you said except for the part about accountability. In my professional line of employment – when I am not a jaw boning windbag – we have a rather different view of what happens to people who make mistakes and cause huge financial losses. Instead of providing bonuses to retain them to clean up their own messes or moving them from private aircraft to first class cabins, we fire them. The standard phrasing used is that their bosses have “lost confidence in their ability to command”.

    (I have served as a professional naval officer since 1981.)

    With regard to competition – the only “subsidy” that I ask for is a reasonably efficient regulatory system that does not charge me $258 per bureaucrat hour and make me pay for an uncontrollable number of hours for at least 42 months before giving permission to even break ground on facilities using technology that has been proven safe through a multi-decade testing program. Even with check in hand, developers of other than enormous central station light water reactor power plants are told that they have to wait in line because the NRC does not have sufficient resources to address their request; federal budget rules in the US make it take about 2-3 years for the check to reach the NRC and it might get stolen by other pressing needs in the interim.

    In other words – the electricity supply playing field is pretty slanted towards coal, gas, and oil already and against a threat to their dominance.

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  29. The picture you show at the top of this blog is of a real admiral of the US Navy, Hyman Rickover, an engineer , not the picture of Lewis L Strauss who was a financier and politician and an HONORARY Admiral who claimed that nuclear electricity would be too cheap to meter.

    Strauss’s statement was political, not practical, simply wrong because all forms of electricity generation need capital and working expenditure.

    50 years later, Strauss’s statement continues used as an argument against nuclear electricity.

    Does electricity produced by a taxpayer subsidised solar cell installation become too cheap to meter because the energy is free? Does that happen after taxpayers pay another subsidy for the electricity produced.

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  30. Jim, re-read the post – more than half of it is about Rickover.

    I agree with what you say about reality of energy costs. Even if solar PV cost 1c/W to make at some time in the future, the cost of rooftop installation, inverter etc. would still be significant

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