Georgia & California: Two States, Two Different Ideologies on Energy Policy

Georgia & California:
Two States, Two Completely Different Ideologies on Energy Policy

(Full Op-ed is in The Hill )

California’s recent decision to mandate solar PV on all new home construction and Georgia’s commitment to completing construction of two new nuclear reactors at Plant Vogtle represent two completely opposite approaches to investing in zero-carbon energy resources. Solar and renewable advocates will no doubt applaud California for taking such unprecedented action to battle global climate change by way of its solar mandate and other renewable energy efforts. However, if California is applauded, Georgia certainly deserves applause for fighting that same battle, yet also making critical contributions to national security with new nuclear power construction at Vogtle.

This reflects the right of individual states to govern their energy policy under the auspices of their respective state leadership. It also reflects the reality that the U.S. remains locked in a battle of ideas among various states as to how the nation’s electric power sector should be organized in order to meet the multiple objectives of reliability, affordability, safety, carbon reduction and national security.

While this battle may be inevitable due to divergent ideologies across state lines, it is imprudent and altogether unnecessary for U.S. nuclear power to become a casualty in that battle because the prospect of an America without nuclear power not only calls into question whether the U.S. can meet low-carbon objectives reliably and affordably, it also represents national security risks with which America should never experiment.

…ilyh…

Advertisements

U.S. EIA Nuclear Power Outlook 2018, Vogtle and Georgia

The U.S. Energy Information Administration (U.S. EIA) just released its Nuclear Power Outlook 2018. Here are a few quick comments to highlight some of the conclusions of this report particularly as they relate to Georgia and the Vogtle construction project. I’ll preface this with a recap of my position on Vogtle.

In November of 2017, I had the privilege of testifying to the Georgia Public Service Commission on matters pertaining to the construction of Vogtle Units 3&4. For those who may not know, this is the only nuclear power project currently under construction in the U.S. My testimony (Summary Statement) focused on the non-monetized benefits of nuclear power that support a decision to move forward with the construction of these reactors. These benefits being: 1) Energy diversity for the state of Georgia; 2) Energy policy resiliency; and 3) National security. Some who testified in opposition to continuing with the Vogtle project pointed to solar and natural gas as better options than nuclear. In the interest of brevity, I’ll only briefly comment here on the natural gas option, since it’s included in the U.S. EIA Nuclear Outlook.

Figure 1. Trends in Georgia’s energy portfolio.

Georgia: Doing Its Part for Nuclear, Solar and National Security–While Keeping Rates Low

The U.S. Energy Information Administration recently released new data for 2017, so I compiled a few statistics for some of the top GDPs in the U.S. In particular, average residential rates since 1990 (Figure 1) and the energy portfolios for those states (Figure 2). Since my home state is Georgia and we’re working toward the completion of the only nuclear reactors under construction in the U.S., I have highlighted Georgia in green in Table 1.

As most in the U.S. may know, Georgia operates in a regulated market and, in my opinion, this provides fundamental benefits that deregulated markets can’t offer. One being the capacity to look out over the long-term and take into account the policy constraints that are likely to be imposed on the utility industry–in particular, carbon constraints. In addition, our existing coal fleet will eventually shut down and the Georgia PSC, along with Georgia Power, Oglethorpe Power and the MEAGs of Georgia, are working to position the state for a continuation of reliable, baseload power generation.  Consequently, we are in a position to leverage that long-term perspective in the construction of Vogtle Units 3&4, where this new generation capacity will be not only reliable baseload–it will also be zero-carbon.

Georgia has a good track record for reliability and low rates. Here, in Figure 1, the trends indicate that since 1990 Georgia has consistently ranked below the U.S. average in residential rates (cents/kWhr) and well below the rates in some of the deregulated markets to the north (e.g., New York, New Jersey, Massachusetts, Pennsylvania, Ohio, Michigan, Illinois and Maryland). This is not to imply causation–it is only an observation. I’ve also inserted a box indicating rates for February 2018.

Figure 1. Average residential rates for leading U.S. state GDPs. Rates for February, 2018 are inserted for most recent comparisons.

Georgia & California: Different States, Different Energy Strategies

 

Georgia and California:
Different States, Different Energy Strategies

The states of Georgia and California are headed in opposite directions on nuclear power. On December 21, 2017, the Georgia Public Service Commission (GA PSC) gave approval to Georgia Power Company to proceed with the construction of Plant Vogtle—the country’s lone nuclear power plant construction project. About one month later, on January 11, 2018, the California Public Utilities Commission voted to approve Pacific Gas and Electric Co.’s request to close the Diablo Canyon Power Plant, the state’s lone remaining nuclear power plant. CPUC Commissioner Liane M. Randolph was quoted as saying that the decision “moves California away from the era of nuclear power and toward the era of zero-carbon renewable energy.”

Each state has its own rationale for its energy policy decisions. California is approaching energy policy from a strong climate-centric perspective with its Governor Jerry being hailed as the “anti-Trump” of U.S. climate change action. California is convinced that high levels of renewable energy are possible, with legislation having already been proposed to pursue a 100% renewable energy policy—no fossil fuels and no nuclear power. It’s worth noting that of California’s total electricity consumption, about 68% is generated within state with the remaining 32% coming from out-of-state generation (Table 1). Georgia is taking a different approach with the construction of Plant Vogtle, a 2.2 GW nuclear power plant, along with a steady-paced, measured approach to the incorporation of solar power.

Georgia & NJ Governors Differ on Clean Nuclear Power

Georgia and New Jersey Governors Differ on
Clean Nuclear Power

New Jersey is in the middle of a legislative and energy policy conundrum as it faces the shutting down of its entire nuclear power fleet. On the other hand, Georgia is moving forward with additional nuclear capacity and the expansion of two new units at Plant Vogtle.

New Jersey’s power generation sector is 56.7% natural gas, 39.2% nuclear, 1.7% coal, 1.1% biomass and 0.9% solar. The state has three nuclear plants with one, Oyster Creek, already scheduled to close prematurely in 2019. As it stands now, New Jersey is also set to lose its other two nuclear plants, Hope Creek and Salem. If so, they will in effect lose 100% of their zero-carbon generation as well as the state’s most reliable baseload power.
A recent Brattle Study by Principals Mark P. Berkman and Dean M. Murphy, concluded that if the Hope Creek and Salem plants are shut down CO₂ emissions would increase by almost 14 million tons, New Jersey’s annual state GDP would be reduced by $809 million per year, 5800 jobs would be lost, state tax revenue would decrease by $37 million, and electricity rates would actually rise if these plants are shut down.

A recent bill was put forward in the New Jersey legislature to subsidize the nuclear plants by way of a surcharge to ratepayers of $30-$40 per year . It’s a wise move and is proving to be even wiser given the impact of current northeast weather conditions on energy resources. However, the bill recently hit a political snag and is now being held back until New Jersey’s Governor-elect Phil Murphy assumes office and has time to reconsider the bill in order to ensure the bill has provisions for clean energy investments imperative for the Murphy administration. According to Murphy spokesman Dan Byan, “Gov.-elect Murphy is committed to building a 100 percent clean energy economy in New Jersey by 2050, and he believes that our existing nuclear facilities remain a vital link to the future.”

New Jersey Senate President Steve Sweeney, who was championing the bill, was understandably upset at the political roadblock, as was Public Service Enterprise Group CEO Ralph Izzo who pointed out that this loss in nuclear capacity will not be made up by renewables.

It would be easy to point out that this is a consequence of deregulated electricity markets that cannot properly value the non-monetized benefits of nuclear power. However, a more glaring point is the difference in how Georgia Governor Nathan Deal and New Jersey Governor-elect Phil Murphy characterize nuclear power. Gov.-elect Murphy doesn’t seem to value nuclear power as a clean energy resource, otherwise he wouldn’t hold back a bill that would keep the Hope Creek and Salem nuclear plants running. Nor would he refer to nuclear as only a link to a 100% clean energy future built entirely on renewable energy, which appears to be his energy platform.

On the other hand, Georgia Governor Nathan Deal applauded the recent Georgia Public Service Commission following its approval to move forward with Plant Vogtle. Gov. Deal’s statement: “I commend the Public Service Commission for its vision and foresight in approving continuation of the Plant Vogtle expansion while holding owners accountable to ratepayers. Investing in clean, sustainable energy infrastructure is a worthwhile endeavor that will have a positive economic impact as well.”

Elections have consequences, and New Jersey’s recent gubernatorial election just changed the conversation on nuclear power in New Jersey overnight. The story is quite different in Georgia where its governor understands that nuclear energy is clean energy and that science and engineering have not reserved the clean energy characterization for renewable energy only.

Two states–two completely different worldviews on nuclear power by the respective chief executives. In New Jersey, nuclear power is only a placeholder for an unproven 100% renewable energy future.

In Georgia, nuclear power is the future…and it’s a clean energy future.

The misleading narrative that renewable energy is the only clean energy is a disservice to the public and it needs to end—there’s simply too much at stake.

…ilyh…

UGA-Georgia Tech Professors Agree: Georgia PSC Made Right Decision on Vogtle

UGA-Georgia Tech Professors Agree:
Georgia PSC and GA Legislature Made the Right Decisions on Plant Vogtle

David Gattie, UGA Engineering Professor
Nolan Hertel, Georgia Institute of Technology Engineering Professor
[Full Article is in James Magazine (p. 12-13).]

Only one state in the U.S. is diversifying its energy portfolio by balancing out coal with natural gas, developing solar energy in a deliberate and economically feasible manner and expanding its zero-carbon nuclear power base. Only one state—the state of Georgia. And this can be attributed to the foresight of the Georgia Public Service Commission (GA PSC) in its December 2017 decision to move forward with the completion of Vogtle Units 3 & 4 as well as the Georgia Legislature and its passage of SB 31 in 2009, which saved ratepayers millions of dollars in interest charges that would have otherwise accumulated throughout the Vogtle construction phase.

I, along with my co-author, Professor Hertel, applaud both the GA PSC and the Georgia State Legislature for recognizing this as the energy policy issue it is, and handling it as such, rather than reacting to it as a market issue only. The non-monetized benefits of nuclear power, which includes national security, must be accounted for in order for the U.S. to sustain its nuclear power industry long-term. With the recent decision regarding Plant Vogtle, Georgia has served a critical role in helping the U.S. hold onto valuable ground in nuclear science, engineering and technology.

However, there’s still much more work to be done, and, hopefully, U.S. policymakers will take advantage of this reprieve and develop a comprehensive energy strategy that pragmatically and aggressively advances U.S. nuclear power domestically and abroad. And that must begin with extending the Production Tax Credit for nuclear–otherwise, we lose the ground that the Georgia PSC and State Legislature decisions are holding for us. Let’s not waste their efforts. Without the PTC, nuclear power in America remains in jeopardy.

For my own proposal on a strategic policy framework for advancing nuclear power, see my pre-publication version of a recently accepted article that will be published in the Jan-Feb issues of The Electricity Journal: Link here–> (Gattie 2017) Strategic Policy for US Nuclear Power [Pre-Publication Format] .

 

…ilyh…

 

GA PSC Holds Firm on Vogtle

GA PSC Holds Firm on Vogtle, Nuclear in Georgia: There’s Still a Lot of Work to Do in the U.S.

In a very difficult policy decision today, the Georgia Public Service Commission (GA PSC) decided to move forward with construction of Vogtle Units 3 & 4, thus retaining nuclear power in Georgia’s future as well as continuing with the only remaining nuclear project in America. For this decision, I want to thank the PSC for their long-term vision and for their recognition of the benefits that nuclear power will provide for generations of Georgians over the next 60-80 years; non-monetized benefits that can’t necessarily be captured in an economic analysis or financial spreadsheet.

However, this is no time to spike the ball or break into a home run trot because we’re not in the end zone and the ball hasn’t cleared the fence. In fact, this isn’t necessarily a victory—it’s only permission to move forward with two much-needed nuclear reactors under conditions that must be met as construction continues. While I’m confident Vogtle will be completed, this decision by the GA PSC doesn’t stem the tide of nuclear plant closures across the U.S.—it only holds ground rather than losing it.

Nuclear power in the U.S. remains in critical condition. In part because of the challenge of inexpensive natural gas, particularly in deregulated markets that cannot detect the non-monetized benefits of nuclear power. These being, fuel diversity, zero-emission baseload, policy resilience and nuclear as a hedge against future carbon regulations and fluctuating natural gas prices. Not to mention the critical contributions of civilian U.S. nuclear power to national security. Moreover, nuclear remains under assault by factions of environmental activists who, as well-intentioned as they may be, continue to promote the irrational belief that we can power this country, even the entire world, with intermittent renewable energy. While we need greater penetration of renewables, we cannot look to these resources to stand up an $18 trillion industrialized economy on their own—even if battery technology matures.

With this said, there remains monumental work ahead of us to advocate for nuclear power and the development of greater nuclear power capacity in the U.S. While I’m greatly relieved the GA PSC held firm and did what was needed rather than what was easy, their go-ahead for Vogtle is only one step. It’s a significant step, but only one step, nonetheless.

The GA PSC’s long-term energy policy vision for Georgia must not be wasted. It must be extended to the rest of the U.S. We still have a lot of work to do in the nuclear power space.

A few references for my position on nuclear:

Forbes: An America Without Nuclear Power

Forbes: U.S. National Security and a Call for American Primacy in Civilian Nuclear Power

The Hill: America is Sacrificing Its Leadership Role in Nuclear Energy

The Hill: Nuclear Power’s Resilience and Security Benefits are Priceless

Morning Consult: Nuclear Power in America Requires Political Resolve

Recently Accepted Manuscript (Pre-Publication Version): Strategic Policy Framework for Advancing U.S. Civilian Nuclear Power as a National Security Imperative

…ilyh…

 

 

A Strategic Policy Framework for Advancing U.S. Civilian Nuclear Power as a National Security Imperative

(This is an excerpt from my paper that will be published in The Electricity Journal. A pre-publication version is posted at this link. A couple of figures are also included below.
“The scope of the civilian nuclear power issue is global, but will require domestic U.S. policy decisions based on prudence, wisdom, sound judgement and foresight grounded in the realities of the world as it is and the geopolitics that govern the world as it is. As such, this is a geopolitically complex policy issue, not just an energy issue and not just a market issue. Therefore, the U.S. response should be globally comprehensive and strategic and not left to U.S. market forces alone—the national security implications simply are too great.”

---

While the debate will continue as to the role of nuclear power in the U.S. energy portfolio and how that role should be determined, the argument presented in this paper is that the national security implications of nuclear science, engineering and technology, and nuclear energy itself, are inexorable geopolitical realities of today’s global society. As such, not only should nuclear power be central to U.S. energy policy, U.S. primacy in the full cycle of civilian nuclear power should be established as an objective of U.S. national security strategy. However, national security is a non-monetized benefit of civilian nuclear power, therefore the role and ultimate fate of nuclear power must be a strategic policy decision and not simply a market outcome since markets alone cannot detect these non-monetized benefits.

The policy framework presented here leverages U.S. industrial innovation in the nuclear power sector along with strategic U.S. diplomacy in an effort to align U.S. energy policy with the global reality that nuclear technology is being deployed and leveraged as a geopolitical tool by competing nations. While nations such as China and Russia are regularly referenced in this paper with respect to their nuclear ambitions, the national security threat isn’t limited to China and Russia expanding their civilian nuclear capacity or that they’re developing advanced nuclear technologies. The threat is that the U.S. is lagging these competing powers in the single most energy dense dual-purpose energy resource on Earth and, in the process, creating the risk of America becoming marginalized in the stewardship of the global nuclear cycle. Therefore, with respect to nuclear science, engineering and technology, the institutional knowledge gap between the U.S. and some nations is widening.

Moreover, U.S. engagement in emerging economies by way of nuclear power has much to offer in the way of reliable, low-carbon electricity for economic development. But, perhaps more importantly, it establishes a U.S. geopolitical presence in these regions while sustaining U.S. influence and stewardship in the global nuclear fuel cycle and supply chain.

In the end, the issue remains: How does the U.S. maintain energy security and reliability within its power grid, reduce the threat of global climate change, counter the national security risks of rising global powers seeking to assume America’s leadership role in nuclear science, engineering and technology, and ultimately conclude in a world free of nuclear weapons? The scope of this question is global, but will require domestic U.S. policy decisions based on prudence, wisdom, sound judgement and foresight grounded in the realities of the world as it is and the geopolitics that govern the world as it is. As such, this is a geopolitically complex policy issue, not just an energy issue and not just a market issue. Therefore, the U.S. response should be globally comprehensive and strategic and not left to U.S. market forces alone—the national security implications simply are too great.

Figure 2. Nuclear reactors in operation, under construction, planned or proposed in the U.S., China, Russia and India. [Data Source: World Nuclear Association]

Figure 3. Trajectory of nuclear generation and nuclear capacity in the U.S. and China through 2056. (Data sources: U.S. Energy Information Administration and World Nuclear Association)

 

 

 

…ilyh…

The Non-Monetized Benefits of Nuclear Power: The Case for Vogtle

(Full op-ed is in The Hill)

The state of Georgia remains in the throes of a debate that will have long-term impacts on the state’s electric power sector, its economy and, very likely, the long-term prospects for nuclear power in America. That debate being whether or not to continue with the construction of Vogtle Units 3 & 4.

Reservations about moving forward with the Vogtle project rest predominantly on financial arguments related to cost overruns. This was conveyed by the Georgia Public Service Commission Public Interest Advocacy Staff (the PSC Staff) in their report recently submitted to the Georgia Public Service Commission (GA PSC). While the financials of Vogtle shouldn’t be lightly regarded, a cost analysis alone fails to convey the full benefits of nuclear power.

There are other benefits…non-monetized benefits such as resource diversity, policy resilience and national security. Benefits that are arguably the most important benefits of nuclear power. And these benefits must be accounted for in the decision on whether or not to go forward with Vogtle.  More broadly, they also must be accounted for in our national debate on the future of nuclear power in America.

While financial analyses are certainly necessary, financials alone cannot account for the non-monetized benefits of nuclear power. However, PSC commissioners can. That’s why the Vogtle decision is a policy decision, not just a monetizable market decision. The same holds true for nuclear power in the U.S. We need comprehensive policy that sustains and expands nuclear power in the U.S.

For full op-ed in The Hill, click this link.

…ilyh…

Energy and Climate: Where Do We Focus Our Efforts?

I recently posted a commentary in The Hill explaining why the U.S. could do better than the Clean Power Plan (CPP). As always, I try and implore others to look at the bigger picture and see global climate change as the global issue it actually is and not just a U.S. issue only. In addition, I try and emphasize that without nuclear power we can’t meet future global energy demands and global carbon objectives simultaneously. While regulatory efforts focus on curbing emissions from the U.S. electric power sector, data trends continue to point to the east and to emerging economies as to where we must focus our attention; not to curb their energy consumption, but to engage with them in technologies that will help them meet their economic objectives.

Figure 1. Total CO2 emissions for world’s top 15 GDPs