A Critical Role for Nuclear Power
Georgia Tech recently convened an an Energy, Policy and Innovation Conference that was well-attended by some highly respected individuals in the energy sector. Among them were former Senator Sam Nunn, former Secretary of Energy Ernest Moniz, and Southern Company Chairman/President/CEO Tom Fanning.
I sat in on the discussions reported in this EnergyWire article article, and they were indeed debated vigorously all day. It was interesting to see the dichotomy between academicians and industry professionals, which I generally contend is problematic in energy issues as the theoretical proposals from the academic space often hit the brick wall of reality in the practitioner space. However, setting that aside for the moment, I wanted to comment on a few things mentioned in this very good article by Kristi Swartz.
First, Southern Company COO, Kim Greene, issued a broad challenge, calling on state commissions to mandate that their utilities allocate 1% of their budgets to R&D in an effort to stimulate innovation in the power sector. Greene’s challenge isn’t hollow as Southern Company is currently in the middle of a major, first-of-its-kind carbon capture and storage project as well as the first nuclear construction project in the U.S. in over 30 years. If the U.S. and the world are to have any hope of reducing carbon emissions at the global scale, these technologies must be developed and deployed. This is an opinion shared by many, including one of the participants in this conference, Ernest Moniz. However, without a commitment from U.S. utilities this will be difficult given the insufficiencies inherent to deregulated markets as they chase the next marginal profit rather than the next reliable, low-carbon power generation technology that can be deployed globally.
Second, and speaking of deregulated markets, this is the elephant in the room. Nuclear power, which I regularly argue is the optimal energy resource for meeting the dual constraints of carbon reduction and reliability, will never be deployed in the current deregulated market structure. In fact, these markets are losing existing nuclear capacity as we speak because they’re driven by short-term profits with little-to-no capacity for comprehensive, integrated resource planning, and their market structure simply cannot accommodate long-term capital investments for major projects such as nuclear power. Instead, these markets will naturally trend toward lower priced natural gas along with whatever renewables can be integrated into their portfolios without completely compromising reliability. Building new nuclear capacity simply isn’t possible. With this said, Southern Company CEO Tom Fanning is stating the obvious when he says that in these markets “there are no long-term price signals that permit long-term capital formation.” Fanning’s statement that deregulated markets chasing away nuclear was one of the “biggest strategic mistakes that the U.S. can make in energy policy”, seems evident. Perhaps I’m missing something, but these seem to be facts, rather than just strong opinions. The only expansion of nuclear in the U.S. is in regulated markets, and even this is nowhere near as much nuclear development as we need in the U.S.
With respect to meeting carbon reductions in the long-term, the Intergovernmental Panel on Climate Change has said that nuclear power will be needed to moderate climate impacts, and the International Energy Agency has said there is no climate friendly scenario in the long run without carbon capture and storage. If utilities don’t step forward and invest in the development and deployment of these technologies, who will? Will it be the deregulated markets that can’t see much further than 3-5 years down the road? Will it be venture capitalists? Or, will it be the federal government, which doesn’t exactly have the best track record on choosing energy resources (see the Power Plant and Industrial Fuel Use Act, which shifted power plants from natural gas to coal, and the Congressional decision to abandon the successful Experimental Fast Breeder Reactor in 1994). Yet, when a utility takes steps to develop two technologies that are clearly needed and are in the best interest of current and future generations, both in the U.S. and globally, the focus is on the missteps and stumbles. Never mind that one of these developments represents a first-of-its-kind technology (CCS) and the other (nuclear) is coming out of a 30-year politically induced coma. The mistakes made in these initial developments cannot be glossed over nor dismissed offhand, and I trust that Southern Company is doing its due diligence to make corrections for future developments. However, the world needs these technologies to be successful because wind, water and solar will not scale up to reliably meet the low-carbon global energy demands of billions of people and trillions of dollars in economic activity.
Kim Greene makes an appropriate challenge to utilities, and Tom Fanning is making factual, albeit painful-to-hear, statements about deregulated markets and nuclear power. With this said, the regulated market may very well be the last best chance for the U.S. to develop and deploy the most critical technologies needed for meeting our energy, economic and climate needs today and well into the future. Thank goodness someone is working on them.