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The high financial risk of nuclear power

scrutiny-on-costsA nuclear tale that sounds too good to be true Business Day BY CAROL PATON, 15 SEPTEMBER 2014, “…….The World Nuclear Industry Status Report 2014, sponsored in part by the anti-nuclear Green Party in the European Parliament, contains dire warnings on accepting these undertakings at face value. The report shows that nuclear energy globally is in decline due in the most part to nuclear accidents, the scale of the finance required, and the enormous risk of cost and time overruns during construction. The world has 50 fewer nuclear plants today than in 2002, with an installed capacity less than two decades ago.

The high risk in the construction of nuclear plants means that the only way that nuclear power plants are built any more is when the vendors bring the financing.

“Commercial banks will not finance it; development banks won’t finance it. Not only are these very large loans, but nobody knows what the plant will cost in the end. The only options for financing are through government subsidies or when the vendor brings its own backing,” the report’s lead writer, energy analyst Mycle Schneider, said in an interview.

Of the 67 reactors under construction, eight have been under construction for more than 20 years and 49 have encountered construction delays, most of them significant, says the report.

Who bears the risk of cost and time overruns? With international experience indicating that cost overruns are between 50% and 200%, the Treasury would need to assume at least a 100% overrun. How this risk is managed will depend on contracting arrangements. While vendors insist there are models in which the vendor takes all the risk, this has not persuaded Treasury officials.

Apart from the fact that nuclear vendors usually want governments to share the construction risk, the undertaking to purchase the power they produce is irrevocable. The key way in which vendors have tried to mitigate risk is through the agreed feed-in tariff. In the example of the Hinkley Point power plant under construction in the UK, the guaranteed tariff will be £92.50/MWh, more than double Eskom’s average electricity price and much more expensive than other base-load options considered in SA’s electricity plan, the Integrated Resource Plan (IRP). It is also roughly twice the current bulk level price in the UK, says Mr Schneider, and “by the time the reactors are scheduled to generate power in 2023, the price will reach a staggering £121/MWh”.

Rosatom’s Turkey project, where construction has not begun, involves a 15-year power purchase agreement, with a guaranteed tariff of $123.5/MWh rising to $153.3/MWh if necessary to ensure payback of the project. The higher limit is 50% higher than the wholesale price for electricity in Turkey in 2010…………http://www.bdlive.co.za/business/energy/2014/09/15/news-analysis-a-nuclear-tale-that-sounds-too-good-to-be-true

September 16, 2014 Posted by | 2 WORLD, business and costs | 1 Comment

USA’s Dept of Energy handing out funds to universities for nuclear education

ISU awarded nuclear research grant http://www.localnews8.com/news/isu-awarded-nuclear-research-grant/28065212 Kaitlin Loukides Sep 15, 2014 POCATELLO, Idaho –
Idaho State University could soon give schools such as M.I.T a run for its money, after the U.S. Department of Energy’s Nuclear Energy University Program awarded ISU more than $600,000 in grant money this week.
Out of that, $400,000 will go toward the Dept. of Nuclear Engineering, where students and faculty will research ways to create benchmarks future nuclear designers around the world can measure the accuracy of their own models.

nuclear-teacher

In layman’s terms: these guys will use this money to do a bunch of research way over most people’s heads in order to set a new standard everyone else in the world will use to make sure their nuclear computer models are on-par.

ISU nuclear science associate professor Dr. Chad Pope said these grants are extremely difficult to obtain since ISU is competing for that funding against every other university in the nation.

He said this research will not only help the nuclear world, but will also benefit local communities who will reap the benefits of ISU’s industry-changing research.

We’re already on the map, and this keeps us there,” Pope said. “It helps us push the science forward and become preeminent in this field. It’s great for the university, it’s great for the community, and it will really help us establish ourselves as a prominent science university.”

Pope said the close connections ISU has with the INL and the Argonne National Laboratory in Chicago could have also helped the department get recognized for this grant.

The money will span over a three-year time period, and once the research is complete, it’s expected to become published in the International Handbook of Evaluated Reactor Physics.

September 16, 2014 Posted by | marketing, USA | Leave a comment

Nuclear disaster was just missed 7 times during the cold War

7 close calls in the nuclear age The Cold War could have turned mighty hot on more than one occasion

By Floss Books, 15 Sept 14, Mental FlossHere’s a formula for fun: Arm two superpowers to the teeth with thousands of nuclear warheads. Make sure they are deeply hostile and suspicious of each other. Now, cut off diplomatic communication, stir in about 50 smaller countries with their own agendas on each side, and you’ve got yourself a Cold War!

1. SUEZ CRISIS…..

2. SAC-NORAD COMMUNICATION FAILURE……

3. U2 SPY PLANE ACCIDENTALLY VIOLATES SOVIET AIRSPACE…..
4. WHEN CAMPING, MAKE SURE TO HIDE YOUR NUCLEAR WEAPONS……
5. A TERRIFYING CRASH……

6. COMP FEAR…..
7. COMP FEAR, PART 2…… http://theweek.com/article/index/267815/7-close-calls-in-the-nuclear-age

September 16, 2014 Posted by | general | Leave a comment

Children with birth defects – Britain’s nuclear veterans still wait for compensation

Nuclear test veterans STILL waiting on £25million compensation fund as David Cameron suns himself   BNTVA Recognition Campaign 15 Sept 14

A NEW STUDY REVEALS SHOCKING FIGURES ABOUT THE FATE OF THE CHILDREN OF BRITISH SERVICEMEN EXPOSED TO THE NUCLEAR WEAPONS TEST
Shocking research has exposed the devastating toll Britain’s nuclear tests have inflicted on unsuspecting servicemen in the danger zone. Children born to the 22,000 British troops sent to witness blasts in the South Pacific had 16 TIMES the normal rate of birth defects and the men’s partners suffered 50 PER CENT more ­miscarriages and stillbirths, a new study reveals.
The news comes five months after Prime Minister David Cameron promised to consider setting up a £25million fund for survivors and families.
…….Now a study for the British Nuclear Test Veterans’ Association has revealed the appalling toll on their health and the legacy of damage passed to future generations.
The research showed 36 per cent of veterans report birth defects in their ­children, against a national average of 2.2 per cent.
The figure is nearly 20 per cent for their grandchildren and 13 per cent for great-grandchildren.
MP John Baron, who met the PM for the association, said: “Given the veterans’ unique service, we owe them.”………http://ntvrecognition.blogspot.com.au/2014/09/nuclear-test-veterans-still-waiting-on.html

September 16, 2014 Posted by | children, UK | Leave a comment

“De-coupling” – de-linking profits from sales in the energy utilities

dollar-2SINK THE ‘FLOATING NUKES’ WITH CLEAN ENERGY, EFFICIENT USE http://www.njspotlight.com/stories/14/09/14/opinion-sink-the-floating-nukes-with-clean-energy-efficient-use/  | SEPTEMBER 15, 2014

Decoupling sales from volume can help utilities embrace energy efficiency and solar power, while ambitious targets can give them a reason to do so In 1976 I was a rookie attorney with the newly formed Department of the Public Advocate — later abolished by Republican governors Christy Whitman in 1991 and (after brief resurrection under Gov. Jim McGreevey) by Chris Christie in 2008.

One of my first cases was to oppose plans by the state’s electric utilities to encircle New Jersey with a flotilla of “floating nuclear plants” anchored on barges along the coast, including two within sight of Atlantic City and another in Bayonne Harbor.

While these plans may seem absurd in hindsight, at the time many state officials praised the idea of barge-mounted nukes as the only way to meet ever-rising consumer electric needs without polluting New Jersey’s degraded air quality.

In response, we petitioned the state Public Utility Commission — now called the Board of Public Utilities (BPU) — for an order compelling those utilities to invest enough in energy conservation to reduce demand for power, which would eliminate the need for the floating nukes or, for that matter, many land-based power plants, thereby saving ratepayers billions of dollars while also protecting the environment.

Needless to say, the utilities opposed the idea of saving energy on the customer side of the meter as the better way of meeting ratepayer needs, an idea I had picked up from a small band of alternative energy innovators, such as Amory Lovins (author of “Soft Energy Paths”). I can recall the utility witnesses in the PUC hearings testifying that conservation has the effect of “penalizing” utilities and their shareholders. Conserve more, earn less summarized their positions.

And here’s the rub, they were right. This is because traditional rate-base/rate of return regulation — going back to Woodrow Wilson’s era — ties utilities’ profits to the amount of power sold from a fixed set of capital investments (rate base) in power plants, power lines, and other hard assets.

In other words, “the financial health of most gas and electric utilities was tied directly to retail sales because their fixed costs are recovered through charges based on how much people use,” as summarized in a blog by an attorney for the Natural Resources Defense Council (NRDC), one of the premier environmental organizations in the nation.

As a result, utilities could not be blamed for promoting increased sales, even as they paid lip service to saving energy. And they could not be blamed for pushing ever-more-ambitious capital construction programs, such as the ill-fated floating nukes project, which eventually were canceled largely due to mounting technical problems and soaring cost overruns.

Fast-forward to 2014: After all these years there is now a practical way of delinking profits from sales volume and rewarding utilities for investing their dollars — called “patient capital” by PSE&G’s visionary president, Ralph Izzo — in “energy efficiency and renewable energy, notably solar photovoltaic systems.”

“Decoupling” is the name for the process of ending the historic linkage between electric and gas sales volume and the ability of the utility to earn profits on its capital investments in the infrastructure — power plants, wires, poles, substations, and the like. (Note: a decade ago, New Jersey’s electric utilities split off their power generation function into standalone “nonutility” companies that compete for contracts to sell to consumers and deliver through utility power lines.)

As it turns out decoupling is remarkably simple to implement: To de-link profits from sales or “throughput,” the utilities would be allowed to earn a given level of revenues set by the BPU based on the number of customers served, regardless of actual sales to those customers. And if profits fall short of targets set by the BPU or if the utilities over-earn in a given period, the BPU would hold a “true-up” proceeding to reset rates and revenues up or down.

Now for the big question: What is the likely impact on consumers of decoupling revenues from sales? Not much. According to another NRDC report, “25 states had adopted some form of decoupling for at least one electric or natural gas utility by the end of 2012, and the rate impacts for consumers have been ‘small to minuscule.” Moreover in nearly 40 percent of the true-up cases the NRDC studied, the ratepayers received refunds as part of periodic true-ups.

The beauty of decoupling is that it “helps keep the utilities’ profits ‘whole’ while their customers are saving energy,” as the NRDC report summarizes. That’s because there is no longer an economic incentive for utilities to boost power sales and oppose effective energy efficiency and renewable energy programs that would cut into those sales. In fact, with decoupling, utilities will have an incentive to get into the energy-efficiency and renewable energy business, by dispatching crews to install home insulation and building solar projects that could reduce electric power sales.

But “a decoupling mechanism alone” is not enough; “it only removes the utilities’ disincentive to support energy efficiency and solar energy,” according to the Solar Energy Industries Association (SEIA) in a recent posting. “To be most effective in promoting [energy-efficiency and renewable-energy] policies, decoupling should be linked with specific targets and also create rewards for utilities for achieving environmental targets beyond their mandates,” SEIA concludes.

In short, there is a pressing need to couple decoupling reforms with vibrantly pro-energy-efficiency and pro-renewable-energy policies such as those contained in the proposed “Renewable Energy Transition Act” (RETA), which sets enforceable targets and timetables for using energy efficiency and renewable energy to meet 80 percent of New Jersey’s power generation needs by 2050.

With this two-pronged approach — decoupling revenues from sales volume and setting ambitious targets for saving energy and developing solar power — New Jersey can show the nation how to curtail global warming by reducing the pollution emanating from fossil-fuel power plants. It’s also a kind of insurance policy protecting us against the perceived need to build risky power plants like the failed floating nukes efforts of yesteryear.

September 16, 2014 Posted by | business and costs, USA | Leave a comment