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Shuffling Titanic Deck Chairs – EdF plus Areva = Trouble

The big announcement in the nuclear world means almost nothing.  Electricity de France (EdF) is taking over Areva.   EdF runs Frances fleet of nuclear reactors.  Areva builds them.  But since there is only one reactor under construction in all of France and no solid plans for more (in fact the country is moving rapidly away from nuclear, cutting it national nuclear fraction by 33% in the next 10 years).  Areva instead tries to export them and builds them mostly in other countries.

The French state owns 85% of each

The French state owns 85% of each

But it does not try very successfully to complete them.  The flagship Areva nuclear power plant worldwide is the troubled Gen 3 European Pressurized Reactor.  There are 4 of them under construction globally.  2 in China, 1 in Finland and 1 in France.  They are all late, they are all over budget, hugely so in France and Finland.  Areva posting a US$5.3 billion dollar loss last year (which also resulted in S&P down grading it’s long term debt to junk bond status).  The reactor vessel head failed its structural test by the highly independent French nuclear regulator, further delaying and perhaps even jeopardizing the native project.

EdF is the largest nuclear operator in the world.  Areva is the largest nuclear construction company in the world.  And they are both in trouble (tho Areva more than EdF).  The reason it does not matter is both companies are 85% owned by the French government.  Think Titanic deck chairs.

Titanic

Could you move a little to the right?

EDF said the acquisition of a 51 to 75 percent stake in the reactor business would have a neutral impact on its 2018 cash flow and it would be completely protected from any risks related to Areva’s long-delayed Olkiluoto 3 reactor in Finland, where Areva’s customer TVO is claiming billions of euros in damages.

Oh, i don’t think this is going to be that easy.

Energy Futures – Riyadh, London and Austin

Different countries and cities select different energy solutions for myriad reasons and examining these can help us understand why different options are being selected.  There is news from various capitals around the world which i want to examine briefly.

Austin, Texas:  As reported in SafeEnergy.Org, the city of Austin has just locked in 600 MW of solar power for under $0.04/kwh.  Utilities have not been able to buy power at these prices since the 1960s, even without correcting for inflation (which makes it an even better deal).  They asked electricity suppliers for solar power specifically and got over 8000 MW of bids (this is the equivalent, after reducing for capacity factor, of 2 or 3 full size nuclear reactors).

A compelling combination

A compelling combination

Before you start harping on the intermittency (or as the nuclear boosters like to call it “unreliability”) of solar power, please get your facts straight.  It is no longer 2005.  Inexpensive utility scale battery technology, like those offered by Tesla Energy, is bringing the cost of storage in at around 2 US cents/kwh.  What this means for Austin and other cities with reasonable sunshine is that “base load” solar power is going to be cheaper than almost anything else.

In a reasonable world, this would mean the end of new nuclear power construction, because it is much slower to build, far more expensive and fraught with problems from waste handling, to proliferation issues, to liability nightmares, to decommissioning costs to lack of private investors.  Sadly, we live in nothing like a reasonable world.

London, England:  Austria is challenging the EUs approval of 108 billion British pound (US$166 billion) in subsidies for the UK’s plan to build two new nuclear reactors at Hinkley Point.   This legal challenge has been joined by a collection of German and other renewable energy providers.  Austria is objecting to both the price of power from these reactors being set at twice the current wholesale price for power for 35 years and insuring profits for the constructing company even in the event that the reactor is closed early.

hinkley-point-c

While it is unlikely the Austrian challenge alone will stop this ill advised project, it might be one of many factors which scuttles the deal.  The other reactors of this design in France and Finland are over a decade late in construction.  The French reactor had almost tripled in price, before this expensive failure was reported. The pressure vessel for Hinkley had already been forged, by the same plant which forged the pressure vessel for the French reactor which just failed its safety tests.  This one will now be used for destructive tests, adding more hundreds of millions in cost presumably to the French reactor company.

Riyadh, Saudi Arabia:  In the last few months Saudi Arabia has inked deals for new nuclear power plants with South Korea, France, China, Argentina and Russia.  The Saudis are hoping to build 16 reactors by 2032.  The French deal (which is really an agreement to investigate possibilities) has a price tag of US$12 billion on it.  Saudi Arabia seems to be living in the dream world in which they think they can build reactors for US$ 2 billion each.  The west is looking at prices 3 to 5 times this high.

It should be recognized as a triumph of money over politics.  And that in fact nuclear power is secondary, what Riyadh really wants is nuclear weapons, and they are unapologetic about it.  Especially in the case of Russia, Saudi Arabia is making a deal with a political opponent (on support for Iran and Syria particularly) so that it can have access to weapons fabrication technology.  Saudi Arabia (unlike Iran) is making no effort to hide it’s nuclear weapons ambitions, in fact it is celebrating them in what they call the “nuclear defense doctrine“.  There is already talk of an accelerated Middle Eastern arms race between Saudi Arabia and Iran.  What could go wrong?

Want to be part of our club?

Want to be part of our club?

And since there is no sun in Iran or Saudi Arabia, there is clearly no alternative to nuclear power.

France cuts nuclear to 50% by 2025

If you talk with nuclear boosters, they are most likely to tell you about two countries: France and China.  When praising France, they will talk about the ambitious coordinated effort to switch their electricity generating profile after the 1973 Arab oil embargo, when the country moved from basically no nuclear power to having over 75% of its generating capacity coming from nuclear in less than 20 years. It was something of an engineering marvel.

What you won’t hear them talking about is the new national energy policy adopted on July 22 after 150 hours of parliamentary debate.  This new policy mimics French PM Hollande’s campaign promise to cut nuclear power to 50% of its generating total by the year 2025.  France will replace nuclear mostly with renewables.

France will need to triple its wind and solar generation by 2025 (Hydro is currently 13%)

France will need to triple its wind and solar generation by 2025 (Hydro is currently 13%)

What does it mean for clean energy campaigners worldwide that the world’s leading builder of nuclear power plants, the country with the largest fraction of nuclear generation and the biggest nuclear construction and operating companies in the world, gets a pink slip?  This new national policy also quadruples the price of carbon emissions.  It means the real world of new nuclear power construction is dying and Europe, unlike the US, seeing the writing on the wall.

This is huge.  Champagne corks are popping in energy campaigning offices around the world.

The US mainstream media has no interest in this story.    The only coverage in the US of this story (24 hours after the vote) is Bloomberg News and the Montana Standard.  Instead, just as we are foolishly debating whether human induced climate change is real in this country, we are still focusing on the bright future of nuclear power.

Just like the US, France has not long term nuclear waste storage solutions despite spending decades and finding a solution and failing completely.

Just like the US, France doesn’t have long term nuclear waste storage solutions despite spending decades and finding a solution and failing completely.

Turkey Point > Small Reactors – Going where the fight is

I track the nuclear reactor news; it’s an old habit that i can’t seem to kick.  There is a lot of digital ink spent on small modular reactors (SMRs).  Bill Gates is funding them! Department of Energy has millions for research for SMRs! Virginia will lead the Renaissance with SMRs.  This must be a happening thing right?
Bill Gates
Actually, it is not.  If you care about the future of clean energy in this country, you are not going to put in a bunch of time fighting Small Reactors.  That fight is over.  The nuke boosters lost again.  Same old reason, nuclear power (especially from inefficient sized reactors) is crazy expensive and the market will select anything else that is cheaper, or in some cases no carbon foot print and cheaper.

Shouldn’t we do more research?  Well, the Navy has for 60 years and can’t get small (non-modular) reactor costs down to anything reasonable in either aircraft carriers or submarines.  They do them anyway, because these are cost plus rather than market driven projects, but don’t look for cities or utilities, which have to watch bottom lines, to follow the military in energy investment strategy.

We can just build them like this and pay 10X the market rate

We can just build them like this and pay 10X the market rate

If over half a century of well funded research and significant motivation on the part of the military does not convince you that economical SMRs are not imminent, then let me up the ante.  Westinghouse Nuclear, the largest nuclear construction company in the US, has dropped SMRs. This means the second best nuclear marketing team in the world thinks they can’t sell these.  

All five reactors under construction in the US currently are Westinghouse designs.  Westinghouse’s reason for ditching SMRs, “There are no customers”

To be clear, just because these reactors that make no economic sense will not stop a few of them from being built.  But there will be no commercial contracts for these reactors, no orders from other countries, no merchant reactors operating in the US.  In terms of the dangerous part of the fight, this is not where the action is.
nuclear_hazardous_investment
The fight that matters and that we totally can win is the campaign against new reactors in the US.  And there are proposals for new ones, especially Turkey Point blocks 6 and 7.  Below is a letter i wrote to a Florida green group on the topic:
I am interested in working with you providing information and strategy suggestions for the campaign to block the Blocks 6 and 7 at Turkey Point.

First the good news (for fighting TP6&7, not for the citizens of FL or the environment):

These reactors are early in their licensing stage, so there is plenty of time to slow down/bog down the approval process and or kill the proposal outright. Specifically, we have until July 17 to get comments into the NRC.

The reactors use a tremendous amount of water in an area which likely can’t handle it, even if local sewage treatment water is heavily used.  The existing reactors are not able to stay cool despite huge quantities of water being used.

The site is located both near parks and at a very low water level that will flood in the event of hurricanes and otherwise rising waters.

The key is cheap, reliable storage - Tesla Utility Scale Batteries

The key is cheap, reliable storage – Tesla Utility Scale Batteries

Solar PV augmented with new Tesla Electric utility scale batteries trumps TP6&7 financially today.  And the longer we drag out the discussion, the more true this becomes. The most recently ordered (but not yet confirmed) nuclear reactor, Hinkley 3, is more expensive than either Solar PV or onshore wind in the UK, twice as much.

All of the 5 reactors under construction in the US are both late and over-budget.  As has been every other reactor built in the US of the last 70 reactors in a row. FLP will almost certainly blow its proposed budget for this pair of new reactors.

Now the bad news:

Florida has Construction Work in Process (CWIP) which allow utilities to charge rate payers for expensive project failures.  This was central to the new reactor in SC and Georgia being approved, when they can not get similar projects thru in states without CWIP.

The nuclear utility has tremendous political power and are generally able to get both the FL Public Utility Commission and the FL State Legislature to give them everything they want.    This said, it is still worth talking with state activists to see if there had ever been a successful campaign to lobby the PUC.  Certainly, loud enough campaigning can influence the legislature, though they are screamed at with some regularity and bought off far more often.  The nuclear utilities in Florida have made a most fascinating argument against solar power: it helps rich people get richer.  Because of the high up front costs of roof top solar PV, only rich people can afford it, so, since we want a grid funded by everyone, the rich should be prohibited from profiting from their capital and everyone should pay for the grid. To be clear, the reason utilities build nuclear power plants is that they have a bunch of money (or credit) now and want to buy this incredibly expensive thing, that only they can buy and then make lots of money off (by not paying for waste, insurance, terrorist risks, etc).   So the incredibly rich FL utilities have convinced the sunshine state that solar power is bad here, because it will give the rich more money.

Instead of Reactors, let's do this in the Sunshine State.

Instead of Reactors, let’s do this in the Sunshine State.

The Solutions Project has 50 plans, one for each state, on how to get to 100% renewable energy in the US by 2050.  Not one plan uses nuclear reactors.

Finland Cancels Its Last Reactor

I read about reactors everyday.  It is a trillion dollar industry worldwide, with over 30 countries with operating reactors.  The stories are often contradictory and there is incredible national and international politics at play. (For example, Russian incursions into the Ukraine have damaged its nuclear export business because it depends on component vendors from countries which now have trade embargoes up against it).

importantly, this does not include over 40 reactors

Importantly, this does not include over 40 reactors “temporarily” closed in Japan after Fukushima.

One of the most important nuclear countries in the world is tiny Finland. In 2003, Finland became the first country in Europe in 15 years to order a new reactor.  They ordered a French reactor, the first European Pressurized Reactor (or EPR) from Areva.  This was supposed to be a model for new nuclear construction worldwide and because they were taking a chance with an untried technology, they negotiated a fixed price for the reactor and pre-sold the electricity based on this fix price.

It was supposed to cost 3 billion Euros.  It was supposed to be completed in 2009.  Originally, nuclear giant Siemens joined Areva in the contract to build this reactor, but the project went so badly in 2009 they dropped out.  Now it is at least 9 years late in completion and it will be over 8.5 billion Euros, almost 300% over budget.  Even with this project getting further delayed, ambitious nuclear Finland decided in 2010 to start the process for  the construction of a 6th and 7th reactors. The Finnish government had given the nuclear utility TVP until end of June to finalize its building permit request.

This week TVO, the Finnish nuclear utility with the option to build these new reactors, scrapped their plans.  This little reported story is actually very bad news for the global nuclear industry.  Finland is a rich, technologically advanced country and it leaving the fold of countries which might build new reactors is another nail in the coffin of this dangerous industry.

The official reason for scrapping these proposed new reactors is that they have no confidence in the completion of the EPR which is under construction.  Let’s hope the Brits who are thinking about building two of this design reactors are paying attention.

And if the facts don’t hit hard enough, perhaps this powerful subtitled Japanese video will.

Perfect Private Public Moment

It was Prague in 1991.  The debate about the Soviet designed and partially built Temelin reactors being completed by Western firms was in full debate in the Czech Republic.

The reactor was across the street from a graveyard

The reactor was across the street from a graveyard

The representatives from the power utility were debating my young boss, Honza Beranek.  It was a table full of true believers.  The technocrats were convinced they were right and Honza knew better.

There were over 200 people in the room including half a dozen English speakers.  The government thought this was sufficiently important to pay for simultaneous translation into English for the event.  And the translator was good.  Very good.

As the debate went on, the moderator lost control of the speakers (this happens surprisingly often in the East) and our translator tried valiantly to keep up.  He donned different voices for the different speakers so he did not have to keep telling you which one he was becoming and losing time by identifying the transition.

Then on stage, all hell broke out.  Honza was arguing with the PR guy from the reactor, and they were both really going at it.  Increasingly they did not let the other finish their comment and interrupted them.  In response the translator spoke faster and switched voices more.

Finally, the moderator stopped the discussion.  At this point the half dozen people who had listened to this amazing translator broke out in applause.  It was one of the most amazing linguistic fetes any of us had ever experienced.  Of course the rest of the audience was completely baffled, for they thought they had experienced everything and we were just getting poor translations.

Our Own Private Language

As I watched Tom Farrell, CEO and Chair of Dominion Resources at the May 6th  shareholders meeting I had one recurrent thought:

I was supposed to be him.

Tom Ferral

Farrell – my alter ego:  “Let me explain to you how this really works”

We have the same class background, the same white privilege, attended similar fancy schools.  We are both propagandists, we are both storytellers.  I was being groomed to be a captain of industry who would stand in front of a room containing many angry shareholders and I would be cordial and friendly and respectful and ultimately dismissive of any of their substantive concerns.  Just as he was with me.

And as I explored this fantasy world in which I was running a nuclear utility, GPaul pointed out in that world I would need to like ties, and have a monogamous wife who also liked ties.  And I would have a lot of money and influence.  I would give evasive sound bite answers to the media and smile slyly when they tried to nail me down with a follow up, simply pointing to the another reporter and saying, “Next question please.”

And I would not trade places.

I was talking with Emilia and she was laughing at the idea of me being monogamous and wearing ties.  She repeated her appreciation that I did not make that choice and ended up “on our side.”  I said I got lucky and fell in love with a witch. She is dismissive of my explanation, saying instead that we make our own luck.

this label is held very differently

This label is held very differently

Tom Farrell recognized me in the brunch before the shareholders meeting.  He asked why I was not at last years shareholders meeting.  I did not have the heart to tell him I missed the last three.

Security was tighter than it had ever been.  Cell phones were not allowed into the meeting.  There were multiple checks before you could get into the meeting space.  They made it seem like it was a big deal for them to permit you to come to this meeting which they are legally required to have and the fact that we technically owned the company somehow seemed lost.

Though I did get this convenient cell phone extra battery.  Which in a comic irony broke immediately.

Dominion swag for shareholders

Dominion swag for shareholders

I watch Tom Farrell do his thing.  He presented a carefully selected subset of the available data, focusing on the areas where his company had done well.  I’ve been to enough of these presentations to know that there are always some metrics left out.  And it is important to admit that by many classical measures Dominion is a quite well run company.  Which means that workers and customers are getting taken advantage of to make sure that shareholders do well.

But then a strange thing happened.  As the hour and a half long presentation about how safe and profitable the company continued, i noticed something that very few other people in the room noticed.  There was not a single mention of the North Anna 3 reactor project.  As part of my complex question to Farrel at the end I inquired about this:

“You just spoke for an hour and a half about Dominion and you did not once mention the North Anna 3 project, which is without doubt the most expensive and likely riskiest project our company might embark on in the next few years.  Why is that?”

Farrell of course had his pat answer.  “I did not mention North Anna 3 because we have not yet made a decision about this project.  We are still awaiting the EPAs carbon ruling before we decide if we are going to go forward with it.”

Not on our fault lineAnd for almost everyone in the meeting, this likely seemed a completely reasonable answer.  But in our private unspoken conversation, it had a completely different meaning.  This is my 7th shareholders meeting.  North Anna 3 has been mentioned in every proceeding meeting, not just in passing, but in some depth.  This at least $10 billion and more likely $20 billion project is not getting mentioned, because Dominion is walking away from it.

At every previous meeting I had attended, Dominion had also not made a decision about going forward with this project.  But this not “making a decision about it” is not free.  To not make a decision about this reactor has already cost Dominion over half a billion dollars, which is more than most power generating stations cost in their entirety.  And normally investors would like to see some return for that amount of money.  Dominion, however, has decided to call these wasted funds “research” and pass them on to the rate payers.  Sadly the bought off Virginia legislature quickly agreed to this theft.  This research will never have any value to the customers who are paying for it.  But it is just too close to the time when they we will be forced to pay for it to announce that they were not planning on building the reactor at all.

Our private conversation has other parts as well.  I said, “Four years ago you said Japan would start building reactors again domestically, yet today we see all 50 reactors in the country are either melted down, marked for decommissioning or not in service.  Are you still confident Japan will build more reactors?”

Farrell replied, “Japan has paid a high price for these reactors being closed.  And yes i am confident in the next year, some of these closed reactors will come back online.”

Japan is not forgetting Fukushima

Japan is not forgetting Fukushima

Again, if you were not paying close attention, you would have just believed the story tellers version of reality.  But if you look closer, you will see he is not answering my question at all.  I was asking about new construction, which is decades off in Japan, if it ever happens at all.  Fukushima was and is a huge crisis.  While the US has mostly blissfully moved on, Japan is looking at record numbers of childhood thyroid cancers and 100K people who can’t return home.  Farrell was wrong 4 years ago when he promised new domestic construction of reactors, and he knows it.  But instead of admitting that, he answers a different question.  Just like slick politicians do

Farrell and i have sparred like this for years.  This is our own private language.  I generally don’t cut in and ask follow up questions.  But i am not quite comfortable just letting him get away.  I ask the one question there is not a good answer for.

“While there are many uncertainties around building a new reactor, we do know one thing for sure.  Credit agencies have promised that if utilities begin new nuclear construction their companies rating will be down graded.  And for all the new reactor projects in the US we have seen this happen.  How is Dominion going to avoid this fate, if it does decide to build North Anna 3?”

Farre;; talks about all companies being different.  About how SCANA which started construction in 2013 and is already behind schedule and over a billion dollars over budget.  They got down graded because they are so small and the two reactors are such a large part of the portfolio.   Farrell speaks non-specifically of how Southern Company (which also got down graded after they started their reactor construction in 2013 and is the same size as Dominion)  got down graded for other reasons.

But Farrell knows, we both know, that nuclear construction companies have an absolutely terrible time controlling costs.  He even hints at this when he is complaining about a recent off shore wind project Dominion was considering.  “They could not cap the costs,” he said. “We can’t pursue projects which have uncapped costs.”

In our own private language Farrell is finally telling me what i want to hear.  North Anna 3 is dead and we just are not talking about it anymore.

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