Video killed the radio star – just as natural gas, wind and solar are slowly but surely killing the nuclear power industry (we’re already saying good bye to coal). Unfortunately, the venerable Westinghouse Electric Company filed for Chapter 11 bankruptcy on March 29th 2017, dragged down by huge losses in their nuclear power plant construction business. But the story about the demise of Westinghouse is more nuanced, read on to find out how and why solar killed nuclear.
George Westinghouse founded the Westinghouse Electric Corporation in 1886. He teamed up with Nikola Tesla to develop and promote AC power, instead of the DC power infrastructure preferred by Thomas Edison. By using transformers to step up voltages for long distance power distribution and then step down voltages again for home use, the economics of AC power turned out to be much more favorable than DC power (the geeky reason is explained by Ohm’s Law and conductor sizes). To this day the world’s electrical system is still almost exclusively based on AC power. Over a 100-year period the Westinghouse Electric Corporation expanded into appliances, locomotives, entertainment – and even solar power (for many years Westinghouse held the record for solar cell efficiency).
Fast forward to the 1990s when the Westinghouse Electric Corporation came to the conclusion that their broadcasting subsidiary – the Columbia Broadcasting System (CBS) – had the potential to be more profitable than their manufacturing businesses. So they sold off all of their manufacturing operations, renamed the parent company as CBS, and licensed the Westinghouse name to leading companies in related market segments. Their nuclear business, which was named the Westinghouse Electric Company, eventually ended up as a subsidiary of Toshiba.
Toshiba expected to benefit from a renaissance in nuclear power, leveraging less expensive reactor designs and the need for carbon-free electricity. But three developments prevented this nuclear renaissance. First, the actual construction of these new reactor designs ended up being very expensive and time consuming. Second, nuclear power is still plagued by safety (Fukushima), nuclear waste and proliferation issues. And the final nail in the nuclear coffin is economic: electric power plants fueled by natural gas, solar and wind are much less expensive to build and operate, and can be constructed in several years – as opposed to several decades for a new nuclear plant. For more about the fate of the nuclear power industry and how solar killed Nuclear Energy, Listen Up to the Energy Show on Renewable Energy World.
Our sources of electrical power are quickly shifting. In 2016 there was 26 gigawatts of new electrical-utility capacity added in the U.S. Of this new capacity, 33% natural gas, 30% wind, 30% utility-scale solar (plus another 10% from rooftop solar), 5% nuclear, 1.2% hydro-electric, 0.8% biomass, 0.2% oil and 0.2% coal plants. With 70% from renewable sources, this is a colossal shift from the predominantly oil and coal power-plants that dominated the 20th century. Old technologies are losing steam (hah!) … are they still viable in this new age of energy competition?
Utilities are tasked by Public Utilities Commissions in each state to provide electricity to consumers at “fair” rates, while at the same time maintaining a guaranteed rate of return to the utility (typically about 10%). Since natural gas, wind, and solar are the most cost-effective fuel source, it’s no surprise that they have become favored by utilities. While solar and wind are favored for new power plants, there is still a long way to go before replacing all the existing power plants. Nevertheless, favorable economics for solar and wind are accelerating this transition.
One quick way to compare the economics of different power plants is to evaluate their thermal efficiency (the usable kwh energy generated by the plant divided by the heat energy consumed by the plant). Coal, oil, and nuclear hover at roughly 30% efficiency, and new natural gas plants run at 40% efficiency. For these fuels, 60 to 70% of the fuel purchased is wasted as heat. The reason the economics for solar and wind are so favorable is that – once the plants are built – their fuel (sun and wind) is virtually free. For more about utilities transition away from most fossil fuels towards wind and solar, listen up to this week’s Energy Show on Renewable Energy World.
Some nuclear power news: PG&E is shutting down the Diablo Canyon nuclear power plant, the last plant in California. Their decision is not for safety or reliability reasons, it’s simply because other energy sources — such as solar, wind and natural gas — are cheaper. And other utilities around the country are coming to the same conclusion.
Utilities have three primary goals: generate profits for their stockholders, keep the lights on, and keep people safe. Although nuclear plants were at one time thought to be the cheapest and most reliable way to generate safe electricity, rapid cost declines in renewables (wind and solar) and natural gas have made these generation technologies much cheaper on a lifecycle basis.
The decision by PG&E was partially motivated by California’s goals of 50% renewable power by 2030. A compromise was reached among PG&E, California’s Public Utility Commission, environmental groups and unions representing nuclear workers to shut down Diablo Canyon earlier than scheduled — while at the same time shifting more towards renewable power generation instead of natural gas. For more about the $3.8 billion early shutdown of Diablo Canyon, Listen Up to the Energy Show on Renewable Energy World.
Last month was the 30th anniversary of Chernobyl. The meltdown at this Soviet plant was the worst nuclear power disaster in history. It was a Level 7 disaster on the International Nuclear Event Scale. Fukushima was also a Level 7; Three Mile Island (TMI) was only a Level 5. This nuclear disaster permanently poisoned large parts of eastern Europe. There is a similar contamination situation at Fukushima; fortunately, much less so at Three Mile Island.
New nuclear power technology and safety procedures will hopefully prevent another disaster (although that’s what we thought after TMI). But what happens at a plant that isn’t crippled by a disaster? Surprisingly, even cleaning up existing nuclear plants is outrageously expensive. Ever wonder why every electric bill has a line item called “Nuclear Decommissioning?” It costs about $750 million to shut down existing plants in a process that can take 20 years or more. Around the world, nuclear plant operators have budgeted over $1 trillion dollars to clean up existing nuclear reactors (think about how many solar panels and batteries we can buy for $1 trillion dollars).
Once they are up and running, the economics of a nuclear plant are pretty good. But they are expensive to build, expensive to decommission, and outrageously expensive to clean up after a disaster. Compare that to a “solar spill” – which is basically a very sunny day. For these economic reasons, from a utility’s perspective the pendulum has swung completely way from nuclear power towards solar. Please join me on this week’s Energy Show on Renewable Energy World as we delve into the long term costs of nuclear energy.
With energy prices changing so quickly — and new technologies ramping up into the marketplace — the “conventional wisdom” about energy is often wrong. We’ve been as guilty as others when it comes to trusting emotions and public opinion about energy, as opposed to real math and science.
See if you can guess the answer to ten simple questions in our energy savings myths quiz:
1. Are electric cars cheaper than gas cars?
2. Is rooftop solar expensive?
3. Will you save money if you buy new energy saving appliances?
4. Will gas prices stay low?
5. Is solar for no money down a good investment?
6. Are LED bulbs expensive?
7. Do electric utilities like customer energy efficiency?
8. Is clean coal cost effective?
9. Is nuclear power the best baseload power source?
10.Has energy efficiency reduced our per capita energy usage?
If you answered “yes” to ANY of these energy savings myths, then make sure to listen up to this week’s Energy Show. The conventional wisdom is wrong — all of these energy saving ideas are myths.
It’s the environmentalist’s third rail question: “Should we promote nuclear power as an expedient way to reduce CO2 emissions?” On the one hand, nuclear power generates electricity with almost negligible CO2 emissions — potentially a good way for our society to reverse the current global warming trends. On the other hand, nuclear power is…well…nuclear. Problems related to waste disposal, proliferation and high costs have not been solved, and we still have the occasional disaster.
Nuclear technology continues to improve. Today we have more efficient reactors, lower cost modular designs, safer fuel cycles, better materials and control systems, and a heightened awareness of reliability and safety issues. We also have a determined and well-funded nuclear industry pushing the “restart” button. But alternative sources of electricity — particularly solar and wind — also continue to improve. Moreover, developments in more cost-effective storage are starting to negate nuclear’s biggest base load generating benefits.
The nuclear question is not only about costs and technology, it’s also about anticipated trends in our electrical distribution system — particularly what types of companies will be around a dozen years from now installing power plants of all sizes. The surging solar industry is probably the biggest long term threat to a nuclear renaissance. Please listen to this week’s Energy Show for my perspective on the future of nuclear power, especially in light of practical and cost-effective solar power and battery storage.