This letter to the editor was not printed by the Richmond Times Dispatch
Sadly, I will not be able to attend this year’s shareholders meeting for Dominion Resources on May 11th in Columbia SC. Were I there, I would be asking out-going CEO Tom Farrell some difficult questions about the proposed North Anna 3 reactor.
“The estimated cost of building the new reactor at North Anna is $19 billion. Dominion paid $192 million for the Kewaunee reactor in Wisconsin. You ran this reactor for 5 years and were not able to make it be profitable. Dominion closed Kewaunee in 2013. How can Dominion expect to run the North Anna plant profitably, if it is 100 times more expensive than one it has already closed for economic reasons?”
“Dominion has already put over $1 billion into the rate base for this project it claims to have not yet decided on, making this one of the most expensive non-decisions in history. Now Dominion wants to spend in 2016 over half a billion dollars (the cost of a very large solar array) to wait another year to decide on North Anna, while the clean energy regulations are being litigated. Why not invest this money is solar PV which could be generating cheaper electricity, without toxic radwaste, at a lower price, even factoring in the cost of batteries?”
The global investment for renewables new capacity exceeded investment in fossil fuels (including fracking) and nuclear combined in 2015. Is Dominion just unable to find capable people to tap into this clear emerging market? Dominion has a fairly small fraction of its capacity in high profile renewables.
Dominion is fundamentally failing to become a forward thinking utility and instead depends on its comfortable relationship with the state government to push off the costs of its mistakes (like North Anna 3) onto ratepayers and taxpayers. Wise investors would recognize that this is not a sustainable investment strategy.
Three different but related news events have happened in the last month and each in a different way bodes ill for the future of nuclear power.
In Japan, the district court has ordered the closure of two reactors at the Takahama complex. Reactor block 3 had recently restarted and block 4 was scheduled to be the fourth running reactor in a country which had over 50 reactors running before the March 11, 2011 earthquake and tsunami.
The surprise ruling cited the failure of the evacuation plan and lack of tsunami protection as the reasons the court agreed with the local plaintiffs. This is the first time a Japanese court has ever ruled against a reactor. And one of the very few times in any country that a court has stopped an operating reactor. It seriously endangers the Abe administration’s plan to return shuttered Japanese reactors to service, all of which were closed within a year of the Fukushima triple meltdown. Both people protesting nuclear power in Japan and the court ruling in their favor were nearly unthinkable before Fukushima.
In Europe, 30 northern European cities from Germany, Luxembourg and the Netherlands are petitioning for the closure of two Belgium reactors which have had a long series of technical problems. The petition includes two lawsuits, one against the plant operator and the other directing the European Commission to block the continued operation of the Tihange 2 and Doel 3 plants in Belgium. There has never been such an international effort to block nuclear inside the EU before. These plants have seen a disturbing recent increase in cracking and unsolved sabotage strikes.
In the United States, for the first time since Gallop started asking in 1994, a majority of US American’s oppose the use of nuclear power.
The work is not done. The US Congress and Japanese parliament are both in the pocket of their respective nuclear industries and continue, against the will of their populations, to support these failed technologies. But even more writing is on the wall. Nuclear power is dying and almost everyone knows it and wants it to die.
I hate anniversaries. They are another thing I need to remember and in some cases respond to and I would prefer a blissful, timeless ignorance of history. But as the saying goes, “Those who fail to learn the lessons of history …”
The triple meltdown following the March 11, 2011 earthquake and tsunami in Japan has left us a huge mess.
- Most of the 160K people displaced still can’t return home
- The half billion dollar ice wall to protect the reactors has failed
- Fukushima owner TEPCO continues to hide radiation leaks
- Over 150 million gallons of radioactive water has been captured but has no permanent home
- Over 2000 people have died prematurely because of the evacuation.
- Children from Fukushima have 20 to 50 times the thyroid cancer rate
- It will be decades before they get to the worst contamination, because so far all the robots which have tried to look at the cores have fried.
- Fukushima is the biggest civil liability case in world history.
But there are some good things which have come from the Fukushima accident as well.
- Mexico, Italy, Germany, Venezuela, Switzerland, Belgium, and the Netherlands have all decided against building any more reactors.
- The Nuclear Renaissance is basically dead
- Radiation around Fukushima has dropped by about half.
- TEPCO senior executives face criminal charges, though they likely won’t go to jail.
- The normally passive Japanese grew a popular resistance movement.
- Almost all the reactors in Japan are shut down and the courts just closed two more.
- The Japanese breeder reactor program is dead.
- The biggest nuclear deal ever may get stopped because of financial risk.
- Germany and Japan are proving nukes can be phased out by renewables
- Far more investment is going into new renewables than new nuclear
- Consciousness shift: Fukushima was a tragedy, but not an accident.
There are still many lessons to be learned from Fukushima, but perhaps the biggest is that despite the tremendous damage of this technology and the totally failed economics, we need to keep fighting it.
The second largest coal company in the US has just filed for bankruptcy. Environmentalists are celebrating the potential closing of some of the ugliest proposed coal projects in the country. But as Greenpeace points out, often chapter 11 bankruptcy gives bonuses to CEOs while cutting worker pensions.
The largest earthquake in Canada‘s history was likely induced by fracking. The Alberta government responded by immediately closing down the fracking operation. The company can not resume operations until they can demonstrate the technology is safe, that could be a long time coming.
The Tennessee Valley Authority (the only utility in the country which could “go it alone” with the construction of nuclear power plants in recent decades) has decided to cancel two reactor projects in Alabama. These are some of the last new commercial reactor projects in the US, bringing to a sputtering halt the much touted Nuclear Renaissance.
The biggest news however is about investment trends in 2015. Petroleum prices are the lowest in a decade (except for a brief period immediately after the 2008 crash). There has been a “dash for gas”, fracking gas in particular. Because renewables investments are structurally linked to fossil fuel prices, we would expect the investment market for new renewables capacity to have stalled in 2015. But if had we assumed this, we would be wrong.
Despite a big drop in European renewables investment, globally new clean energy investment exceeded all fossils fuels new capacity combined. Over 121 GW of renewables capacity came on line in 2015 at a price tag of $329 billion. Also interesting is that emerging economies accounted for more than half of the worlds renewables investments for the first time ever.
And what does the future hold? Business as usual (as forecasted by Bloomberg) looks like this:
For an excellent short video on the diversified energy future of 2016
People occasionally send me things they would like me to blog about. Edmund sent me some fascinating articles about the Kurdish feminist fighters in Turkey and Iraq, who have pushed back all manner of foes including ISIL. I’ve yet to do the research on this complex story to present it well.
GPaul recently dropped two articles on me which he thought were worthy of note and, while I agree with him, it might be for different reasons.
The first is about a new IMF study, which shows fossil fuel industry “subsidies” exceed $5 trillion per year. For comparison purposes, this is about 1/4 of the entire national product of the US. It is also slightly more than all the countries of the world spend together on health care.
The conventional radical thinking here would be: End the fossil subsidies and the market will take us to a renewable future.
But this is hardly new news. There have been all manner of studies of direct and indirect fossil fuel subsidies, including by the IMF which released a report with similar findings in May of this year. What is news, is who did it and how they did it.
The IMF, usually with its partner the World Bank, has been involved for decades in making global infrastructure investments. This generally means support of the fossil fuel industry (fortunately not nuclear reactors). What this report represents is a departure from the IMF’s traditional lending scheme. It is, in essence, an admission of a mistake.
IMF: “We used to fund fossil fuel infrastructure projects. Now we recognize that direct and indirect subsidies to this sector are creating tremendous climate damage.
The other thing which is interesting about the IMF study is that it includes health effects of the fossil fuel industry as part of its estimated costs. On one level, this is hardly surprising. Good economists and analysts attempt to be robust in their cost accounting. And this includes “externalities”.
In economics, an externality is the cost or benefit that affects a party who did not choose to incur that cost or benefit. – Wikipedia
If your next door neighbor plays just your type of music, that is a positive externality. If your up river neighbor pours poison into the river, when you drink it, you will die. This is a negative externality.
Industrial capitalism is all about manipulating the externalities. Your coal mine is dirty? Move it to a place with no environmental controls. Your sweatshop is killing workers? Be sure to locate it in a country which won’t make you liable for that problem. What capitalism thrives on is the notion at negative externalities can be ignored. “We don’t have to pay for these problems we create, therefore we can give greater value to our shareholders.”
The IMF is saying, “When we are looking at the economic effects of fossil fuels we need to consider the externalities, including human health.” This is a rare assault on the very foundations of capitalism. This is an economic model the IMF is sworn to protect and advance.
The second article is about Uruguay going 100% renewable. This is lovely, we want lots of places to do this. But Uruguay is not the first country to propose such a shift. Iceland did it in 1998. Albania and Paraguay are doing it using their ample hydropower resources. What make this story exciting is how the Uruguayans did it. They did it much the same way the Germans did.
You do it by looking at green energy generation as an economic problem rather than a technical problem. The hardware is out there and key to getting it installed is protecting investors. Like Germany did with its Energiewende policy. Germany protected investors in renewables by making sure they did not lose out when electricity prices fluctuated. Uruguay followed suit and the world got better.
“What we’ve learned is that renewables is just a financial business,” Uruguay’s Méndez says. “The construction and maintenance costs are low, so as long as you give investors a secure environment, it is a very attractive.”
The results? Uruguay has cut its carbon footprint without government subsidies or higher consumer costs. Renewables provide 94.5% of the country’s current electricity and inflation adjusted electricity prices for it are lower than in the ten years ago.
The US could do this as well, if the fossil and nuclear bound utilities did not control the state legislatures.
On Wednesday Oct 21, the British Prime Minister Cameron will sign a complex financing deal with the Chinese President Xi for the new Hinkley Point C nuclear reactor complex. This will be one of the most expensive contracts of any type ever signed anywhere. Bloomberg claims this is the most expensive nuclear project ever. It will cost more than the British Olympic Games, the new second terminal at London Heathrow airport and Crossrail (the 40 station expansion to the London light rail system) combined.
How expensive is it? Well, the construction costs (including financing) alone are 24.5 billion British Pounds (US$37.8 billion). The total capital costs for these two reactors will be at least 34 billion BPS (US$52.5 billion). But the price tag is only the beginning of this deal’s problems.
To understand how terrible an investment this is, review the other attempts to build reactors of the same design. Most recently engineered commercial reactors are typically about 1000 MWe, this French designed system bucks this trend and theoretically produces over 1,600 MWe. But bigger is not always better. This design is called European Pressurized Reactor or EPR for short. There are two reactors of the same French design under construction elsewhere in Europe, one at Olkiluoto, Finland and the other at Flamanville, France.
The Finnish reactor was started first and is now 9 years late in completion and has almost tripled in cost. Originally, this project was a joint venture between EdF/Areva and the Germans company Siemens. The project has gone so poorly that Siemens, the largest nuclear engineering company in the world at the time, dropped out of the project and was promptly sued by the Finns for 2.5 billion Euros (US$2.8 billion). In May of this year, the very pro-nuclear Finns also decided to cancel the second reactor of this type after so many problems with the one under construction. There are also several lawsuits between the French nuclear construction firm, EdF and the Finnish utility.
The French state owned nuclear construction company, Areva, took over 4.5 billion Euros (US$5.1 billion) in losses for the Finnish reactor. Areva’s stock has lost 85% of its value since 2007. This combined with other losses on EPR construction were large enough to force Areva to cut thousands of jobs and ultimately be merged into the French state owned EdF to avoid bankruptcy.
The experience in France at the Flamanville with this same reactor design is even worse. As we have come to expect, this reactor is also years late and over triple its original budget. The Italian utility ENEL was forced out of this project when the Italians voted overwhelmingly in 2011, after Fukushima, to not be involved in nuclear power projects.
Recent revelations of fabrication flaws in the pressure vessel have put completion of the Flamanville EPR project in question (delays and overruns, no matter how severe, almost never stop reactor projects). This 425 ton pressure vessel literally holds the nuclear reaction and the French nuclear inspectorate (the equivalent of the US NRC, but it actually checks for safety) found a “very serious fault“. The pressure vessel has a metallurgical flaw owing to large areas of excess carbon in the steel causing structural weaknesses. If further tests by the French nuclear inspectorate do not come up with different results, the French nuclear construction firm, EdF, will have two choices: replace the already installed pressure vessel or scrap the entire project.
Originally, despite there being no signed contact, the pressure vessel for the first of the two Hinkley Point C reactors had been fabricated by the same company that forged the failed Flamanville pressure vessel (which is a subsidiary of Areva). Upon finding high carbon concentrations, EdF pulled back the Hinkley pressure vessel to conduct destructive tests on it which are required by the French nuclear inspectorate. At a cost of hundreds of millions of dollars to EdF. But it gets worse.
EdF and Areva installed the pressure vessel at Flamanville in October of 2013, without testing it and then spent a year building the plant around the pressure vessel. In October of 2014 they performed tests and found these problems and then informed ASN (the French nuclear Inspectorate) about them in Dec 2014. EdF/Areva put the pressure vessel inside the Framanville reactor knowing that it might not pass tests, assuming they could convince the French inspectorate that it was okay. They were basically gambling the functionality of the plant and the safety of the local inhabitants on their political power to push this project through. Is that the type of company you want to be working with? It gets worse.
If the Flamanville reactor is not complete by 2020, the finance guarantees for Hinkley Point C will collapse. When negotiations for Hinkley Point C financing started, they were contingent on the Flamanville EPR being completed to prove the concept works. The Ecologist Magazine writes:
The finance guarantees [for Hinkley Point C] have been approved by the European Commission – but subject to a number of important conditions. These include a so-called ‘Base Case Condition’ (BCC) relating to the Flamanville EPR. Namely, that if the Flamanville reactor is not complete and operational by the end of 2020, the guarantees become invalid and bond holders must be repaid out of shareholder equity.
The most recent EdF estimate for the completion of the Flamanville EPR is the 4th quarter of 2018. This estimate assumes there will be no delays for testing the defective pressure vessel and no need for replacement or any corrective action. This seems a fanciful assumption.
There are also two EPR reactors under construction in China at Taishan which are further along than Flamanville. Their pressure vessels were forged at the same Areva subsidiary that messed up Flamanvilles. The Chinese safety authority has done tests, but is not releasing the results.
The Chinese nuclear safety authority might be the worst in the world. After some months after the Fukushima triple meltdown, the Chinese nuclear regulator made a passing comment that there were “problems in 14 areas which needed to be resolved” and that some would take 3 years to resolve. He did not mention which reactors had problems. No reporters present asked any questions, it would be disrespectful. There has been no subsequent public follow up. This was in 2012, years before these pressure vessel problems were discovered by the French. Subsequent to this, I have only found one news report mentioning the Chinese nuclear regulators. This was the French nuclear inspectorate complaining that the Chinese regulator was both overwhelmed and non-responsive. The city of Taishan has 1 million people and is less than 100 miles from Hong Kong. But wait, it gets worse.
Finding financing for Hinkley Point C has been challenging. Centrica, owner of British Gas, was an initial investor. In 2013, it decided it could no longer throw good money after bad and took a £200m write-off rather than commit to a 20% stake. History may well show they got off cheap.
The negotiating team of British and Chinese bureaucrats are wrestling over how much of the project China will pay for. The British want China to pay for at least 40% of the entire project. The Chinese were thinking numbers more like 30%. But the Chinese want more than interest for their loan. They also want a guarantee that they will be able to build a 1000 MWe Chinese designed reactor in the UK, to boot strap their reactor export business. This is in clear violation of the EU subsidy rules, but everyone is looking the other way.
Senior UK military officials are quite concerned that deeply involving China in the British nuclear infrastructure represents a national security risk. The Prime Minister’s office dismisses such concerns.
But wait, it gets even worse. Because of the inevitable delays with Hinkley Point C (including the Austrian lawsuit challenging the entire project) the UK will miss its clean energy target by years. And PM Osborne has already made clear there is no money for a “Both/And” solution of increased nuclear and renewables. From a recent Guardian article:
Osborne has trashed the prospects for renewables here in the UK, has consigned to history our zero-carbon agenda for the built environment, has ridiculed the importance of energy efficiency, and, in the process, has guaranteed that we have literally no chance whatsoever of achieving our statutory targets under the Climate Change Act.
It is worth pointing out that there is not a single functioning EPR reactor operating anywhere in the world. All four that are under construction (Flamanville unit 3, Olkiluoto unit 3 and Taishan units 1 & 2) are both years delayed in completion and billions over budget.
But perhaps the worst aspect of this entire fiasco is that this terrible deal locks the UK into paying a guaranteed price for electricity (14 US cents/kwh) which is over twice the current wholesale price of electricity in England (just under 7 US cents/kwh) at a time when the price for renewables in that country have been steadily decreasing for years. The UK Solar Trade Association says they can match this output at half the cost. Independent energy experts estimate 6 times the capacity could be supplied by wind for the same price.
It is no exaggeration to say, this might just be the worst deal ever.
Update Oct 23rd 2015: Now that it is possible to read some portions of the agreement, we find, unsurprisingly, that the long standing promise the governments have made that there will be “No public subsidies” for the Hinkley Point C reactors, is a lie. Buried in fine print of the new paper for this deal is the sentence “The government confirms that it is not continuing the ‘no public subsidy policy’ of the previous administration.” We can expect more lying and more public costs for this terrible deal in the future.