Some Friendly Economics For The Nuclear Energy Booster Club
I would like to begin this brief exposition with a bizarre fairy tale that was confected by two well known energy experts, Amory Lovins and Joseph Romm, and published in Foreign Affairs (1992-93), which is the prestigious journal of the (United States) Council on Foreign Relations. It goes like this:
"For example, the Swedish State Power Board found that doubling electric efficiency, switching generators to natural gas and biomass fuels and relying upon the cleanest power plants would support a 54 per cent increase in real GNP from l987 to 2010 - while phasing out all nuclear power. Additionally, the heat and power sector's carbon dioxide output would fall by one-third, and the costs of electrical services by nearly $1 billion per year. Sweden is already among the world's most energy-efficient countries, even though it is cold, cloudy and heavily industrialized. Other countries should be able to do better.
I called that statement completely wrong the first time I saw it, while in my new energy economics textbook (2007) I suggest that it and similar contributions are misleading bunkum. For example, there are a number of questions that must be answered in detail before biomass can unambiguously be classified a large- scale fuel of choice for the near or distant future. As for renewables such as solar and wind, and probably hydrogen, they will undoubtedly increase in quality and quantity, but it will not be at the expense of nuclear.
As David Schlageter pointed out in the important forum EnergyPulse (2008), "Renewable energy sources only supplement the electric grid with intermittent power that rarely matches the daily electrical demand." He continues by saying that "In order for an electric system to remain stable, it needs large generators running 24/7 to create voltage stability. Wind and solar generation are not on-line when needed to meet energy demand, and therefore to help decrease system losses." In the promised land of wind energy, Denmark, voltage stability is attained by drawing on the energy resources of Sweden and Germany (and perhaps Norway). The Danes pay for the imported electricity, but not for the stability.
Every member of the nuclear booster club, to include myself, should make it his or her business to memorize the quotations in the previous paragraph, because they provide an excellent contradiction to the tiresome delusion that it is economically feasible to largely supplant nuclear energy with 'renewables'. They also suggest why - with electric demand on the verge of increasing faster than supply in many parts of the world - more nuclear capacity is now scheduled for introduction than at any time during the past 3 decades.
Deeper Meanings
For those readers who have been exposed to secondary school algebra, the above reference to things like voltage stability is superfluous. Sweden and Norway produce, on the average, the lowest cost electricity in the world. Norway, however, generates almost all its electricity with hydro, which is generally recognized as the lowest-cost power source, while Swedish electricity is produced in almost equal amounts by hydro and nuclear. As I show in a forthcoming paper (2008), with this as a background, elementary algebra indicates that the unit cost of Swedish nuclear power is equal to the unit cost of Norwegian (and Swedish) hydro. This is not a welcome conclusion for many pseudo-scholars.
But what about nuclear waste, which is repeatedly portrayed as a malicious and unavoidable cost of nuclear based electricity because, ostensibly, it will have to be locked up for hundreds of thousands of years? An argument that is sometimes presented however is that the costbenefit of no carbon-dioxide (CO2) emissions from nuclear facilities. For instance, the International Energy Agency has calculated that for France - the country with the largest production of nuclear energy (as a per cent of the total output of electric power) - the average person is responsible for 6.3 tonnes of carbon dioxide, which e.g. is one-third of the U.S. average. of disposing of nuclear waste is balanced by the
The cost-benefit trade-off mentioned just above is probably worth remembering, however I prefer for students (and anybody else) to inform me that France intends to treat its 'waste' as a potential fuel, and to explain why. (A similar strategy has been proposed in the UK by their energy minister.) For that reason a law has been passed in France stipulating that toxic waste is to be stored in such a way that it can be comparatively easily accessed and recycled if, at some point in the future, "new" technologies appear which will allow it to be used as a satisfactory input in the nuclear fuel cycle.
The latter provision is, as the reader might guess, partially intended to appease or possibly bewilder nuclear sceptics, because technology is already available for recycling this 'déchet', and in the event that the price of newly mined and processed uranium escalates, it would almost certainly be utilized without further debate. Of course, as noted by many comments to EnergyPulse, few persons who work with or near uranium believe that there will be a shortage of this commodity in the foreseeable future, even if the forthcoming nuclear revival eventually assumed the dimensions of a Manhattan Project.
There are occasionally long discussions of the cost of nuclear relative to the cost of renewables in the technical literature. An item that frequently appears is the capacity factors of windmills and solar generators. In simple terms, the capacity factor gives the amount of energy (in e.g. kWh) that is actually obtained, as compared to that made available if maximum output (= 'nameplate' capacity x time) were realized. It appears that in the U.S. wind generation works at maximum efficiency about one-third of the time, but this is confusing. With capacity factors between 0.25 and 0.35, the energy actually obtained as a percentage of maximum energy is less than one-half for many long periods.
It might also be useful to cite some figures for the cost of nuclear relative to gas and coal. The Economist (July 9, 2005) presents estimates from several sources for average electricity costs. For German utilities the Union Bank of Switzerland (UBS) gives 1.5 cents/kwh for nuclear, 3.1-3.8 cents for gas, and 3.8-4.4 cents for coal. Similarly, they give 1.7 cents/kwh for nuclear in the US, 2 cents for coal, and 5.7 cents for gas. The International Energy Agency (IEA), employing a discount rate of 5%, argues that nuclear is $21-31/Mwh, while gas ranges from $37-60/Mwh. Other sources (e.g. Massachusetts Institute of Technology (MIT) and Britain's Royal Institute of International Affairs) disagree, however I specifically make a practice of ignoring everything originating with the energy economists of MIT and the RIIA, especially the latter, and advise everyone reading this to do the same.
So much for cost, but what about price of nuclear electricity - especially to private enterprises and households? In the case of Sweden, the low cost of nuclear and hydro power, and fairly smart regulation, made it possible to provide electricity to the industrial sector at perhaps the lowest price in the world. This being the case, nothing is more offbeat than hearing about the "subsidies" paid the nuclear sector. Cheap electricity meant the establishment of new enterprises, and just as important the expansion of existing firms. The tax income generated by these activities, and used for things like health care and education, more than compensated taxpayers (in the aggregate) for any 'subsidies' that might have been dispensed by the government.
An antithetical situation may prevail for wind and biofuels. In Germany the energy law guarantees operators of windmills and producers of solar energy an above-market price for power for as long as 20 years. This is an explicit subsidy, although it may be both economically and politically optimal due to the reduction in greenhouse gas emissions. More important, inexpensive electricity for plug-in hybrids is made available.
A more complex subsidy involves the exploitation of biofuels. Research newly carried in the United States, and reported in the influential journal Science, claims that almost all biofuels used today result in more greenhouse gas emissions than conventional fuels if the pollution directly and indirectly caused by producing these 'green' fuels is taken into consideration. In addition, there would be a substantial loss of 'consumer surplus' throughout the world due to a likely increase in food costs. Some of the intricacies of this important issue have been examined on an elementary level by Clay Ogg (2008).
In these circumstances, it might be argued that France's total acceptance of nuclear power makes a great deal of sense. As noted in the Financial Times (October 6, 2006), nuclear power has provided "an abundance of cheaply-produced electricity, made the country a leader in nuclear technology worldwide and reduced its vulnerability to the fluctuations of the turbulent oil and gas markets." France can also supply some electricity to neighbouring countries, which helps counterbalance the short sighted and unthinking foolishness being promoted by the European Union's directors and its Energy Directorate.
Strange Behaviour
I'm a social scientist, Michael. That means I can't explain electricity, or anything like that, but if you want to know about people I'm your man.
--J.B. Handelsman in Cartoonbank.com (The New Yorker Collection, 1986)
My situation is somewhat different, Michael. I knew enough about electricity to work on power lines for the U.S. Army during a brief period, and later to design terminal installations for the U.S. Navy, but although I have taught social science (i.e. economics) in 14 universities, I am still unable to understand why so many people are willing to risk the economic futures of themselves and their families because of the drivel being put into circulation by persons with a psychotic hatred of technological excellence, although they are quite capable of enjoying its material advantages. Something to be aware of here is that the rich will never be without reliable and plentiful energy, regardless of its availability or lack thereof to the less fortunate. One of the reasons that they will never be without it is that they are fully aware of its importance.
Perhaps the clearest argument for nuclear power has been presented by Rhodes and Beller (2000), which is similar to the basic contention of this article. They say that "Because diversity and redundancy are important for safety and security, renewable energy sources ought to retain a place in the energy economy of the century to come." The meaning here is clear, especially if you add that we probably will never possess what is known in intermediate economic theory as the optimal amount of nuclear power. But they do state that "nuclear power should be central….Nuclear power is environmentally safe, practical and affordable. It is not the problem - it is one of the solutions."
I would like to begin this brief exposition with a bizarre fairy tale that was confected by two well known energy experts, Amory Lovins and Joseph Romm, and published in Foreign Affairs (1992-93), which is the prestigious journal of the (United States) Council on Foreign Relations. It goes like this:
"For example, the Swedish State Power Board found that doubling electric efficiency, switching generators to natural gas and biomass fuels and relying upon the cleanest power plants would support a 54 per cent increase in real GNP from l987 to 2010 - while phasing out all nuclear power. Additionally, the heat and power sector's carbon dioxide output would fall by one-third, and the costs of electrical services by nearly $1 billion per year. Sweden is already among the world's most energy-efficient countries, even though it is cold, cloudy and heavily industrialized. Other countries should be able to do better.
I called that statement completely wrong the first time I saw it, while in my new energy economics textbook (2007) I suggest that it and similar contributions are misleading bunkum. For example, there are a number of questions that must be answered in detail before biomass can unambiguously be classified a large- scale fuel of choice for the near or distant future. As for renewables such as solar and wind, and probably hydrogen, they will undoubtedly increase in quality and quantity, but it will not be at the expense of nuclear.
As David Schlageter pointed out in the important forum EnergyPulse (2008), "Renewable energy sources only supplement the electric grid with intermittent power that rarely matches the daily electrical demand." He continues by saying that "In order for an electric system to remain stable, it needs large generators running 24/7 to create voltage stability. Wind and solar generation are not on-line when needed to meet energy demand, and therefore to help decrease system losses." In the promised land of wind energy, Denmark, voltage stability is attained by drawing on the energy resources of Sweden and Germany (and perhaps Norway). The Danes pay for the imported electricity, but not for the stability.
Every member of the nuclear booster club, to include myself, should make it his or her business to memorize the quotations in the previous paragraph, because they provide an excellent contradiction to the tiresome delusion that it is economically feasible to largely supplant nuclear energy with 'renewables'. They also suggest why - with electric demand on the verge of increasing faster than supply in many parts of the world - more nuclear capacity is now scheduled for introduction than at any time during the past 3 decades.
Deeper Meanings
For those readers who have been exposed to secondary school algebra, the above reference to things like voltage stability is superfluous. Sweden and Norway produce, on the average, the lowest cost electricity in the world. Norway, however, generates almost all its electricity with hydro, which is generally recognized as the lowest-cost power source, while Swedish electricity is produced in almost equal amounts by hydro and nuclear. As I show in a forthcoming paper (2008), with this as a background, elementary algebra indicates that the unit cost of Swedish nuclear power is equal to the unit cost of Norwegian (and Swedish) hydro. This is not a welcome conclusion for many pseudo-scholars.
But what about nuclear waste, which is repeatedly portrayed as a malicious and unavoidable cost of nuclear based electricity because, ostensibly, it will have to be locked up for hundreds of thousands of years? An argument that is sometimes presented however is that the costbenefit of no carbon-dioxide (CO2) emissions from nuclear facilities. For instance, the International Energy Agency has calculated that for France - the country with the largest production of nuclear energy (as a per cent of the total output of electric power) - the average person is responsible for 6.3 tonnes of carbon dioxide, which e.g. is one-third of the U.S. average. of disposing of nuclear waste is balanced by the
The cost-benefit trade-off mentioned just above is probably worth remembering, however I prefer for students (and anybody else) to inform me that France intends to treat its 'waste' as a potential fuel, and to explain why. (A similar strategy has been proposed in the UK by their energy minister.) For that reason a law has been passed in France stipulating that toxic waste is to be stored in such a way that it can be comparatively easily accessed and recycled if, at some point in the future, "new" technologies appear which will allow it to be used as a satisfactory input in the nuclear fuel cycle.
The latter provision is, as the reader might guess, partially intended to appease or possibly bewilder nuclear sceptics, because technology is already available for recycling this 'déchet', and in the event that the price of newly mined and processed uranium escalates, it would almost certainly be utilized without further debate. Of course, as noted by many comments to EnergyPulse, few persons who work with or near uranium believe that there will be a shortage of this commodity in the foreseeable future, even if the forthcoming nuclear revival eventually assumed the dimensions of a Manhattan Project.
There are occasionally long discussions of the cost of nuclear relative to the cost of renewables in the technical literature. An item that frequently appears is the capacity factors of windmills and solar generators. In simple terms, the capacity factor gives the amount of energy (in e.g. kWh) that is actually obtained, as compared to that made available if maximum output (= 'nameplate' capacity x time) were realized. It appears that in the U.S. wind generation works at maximum efficiency about one-third of the time, but this is confusing. With capacity factors between 0.25 and 0.35, the energy actually obtained as a percentage of maximum energy is less than one-half for many long periods.
It might also be useful to cite some figures for the cost of nuclear relative to gas and coal. The Economist (July 9, 2005) presents estimates from several sources for average electricity costs. For German utilities the Union Bank of Switzerland (UBS) gives 1.5 cents/kwh for nuclear, 3.1-3.8 cents for gas, and 3.8-4.4 cents for coal. Similarly, they give 1.7 cents/kwh for nuclear in the US, 2 cents for coal, and 5.7 cents for gas. The International Energy Agency (IEA), employing a discount rate of 5%, argues that nuclear is $21-31/Mwh, while gas ranges from $37-60/Mwh. Other sources (e.g. Massachusetts Institute of Technology (MIT) and Britain's Royal Institute of International Affairs) disagree, however I specifically make a practice of ignoring everything originating with the energy economists of MIT and the RIIA, especially the latter, and advise everyone reading this to do the same.
So much for cost, but what about price of nuclear electricity - especially to private enterprises and households? In the case of Sweden, the low cost of nuclear and hydro power, and fairly smart regulation, made it possible to provide electricity to the industrial sector at perhaps the lowest price in the world. This being the case, nothing is more offbeat than hearing about the "subsidies" paid the nuclear sector. Cheap electricity meant the establishment of new enterprises, and just as important the expansion of existing firms. The tax income generated by these activities, and used for things like health care and education, more than compensated taxpayers (in the aggregate) for any 'subsidies' that might have been dispensed by the government.
An antithetical situation may prevail for wind and biofuels. In Germany the energy law guarantees operators of windmills and producers of solar energy an above-market price for power for as long as 20 years. This is an explicit subsidy, although it may be both economically and politically optimal due to the reduction in greenhouse gas emissions. More important, inexpensive electricity for plug-in hybrids is made available.
A more complex subsidy involves the exploitation of biofuels. Research newly carried in the United States, and reported in the influential journal Science, claims that almost all biofuels used today result in more greenhouse gas emissions than conventional fuels if the pollution directly and indirectly caused by producing these 'green' fuels is taken into consideration. In addition, there would be a substantial loss of 'consumer surplus' throughout the world due to a likely increase in food costs. Some of the intricacies of this important issue have been examined on an elementary level by Clay Ogg (2008).
In these circumstances, it might be argued that France's total acceptance of nuclear power makes a great deal of sense. As noted in the Financial Times (October 6, 2006), nuclear power has provided "an abundance of cheaply-produced electricity, made the country a leader in nuclear technology worldwide and reduced its vulnerability to the fluctuations of the turbulent oil and gas markets." France can also supply some electricity to neighbouring countries, which helps counterbalance the short sighted and unthinking foolishness being promoted by the European Union's directors and its Energy Directorate.
Strange Behaviour
I'm a social scientist, Michael. That means I can't explain electricity, or anything like that, but if you want to know about people I'm your man.
--J.B. Handelsman in Cartoonbank.com (The New Yorker Collection, 1986)
My situation is somewhat different, Michael. I knew enough about electricity to work on power lines for the U.S. Army during a brief period, and later to design terminal installations for the U.S. Navy, but although I have taught social science (i.e. economics) in 14 universities, I am still unable to understand why so many people are willing to risk the economic futures of themselves and their families because of the drivel being put into circulation by persons with a psychotic hatred of technological excellence, although they are quite capable of enjoying its material advantages. Something to be aware of here is that the rich will never be without reliable and plentiful energy, regardless of its availability or lack thereof to the less fortunate. One of the reasons that they will never be without it is that they are fully aware of its importance.
Perhaps the clearest argument for nuclear power has been presented by Rhodes and Beller (2000), which is similar to the basic contention of this article. They say that "Because diversity and redundancy are important for safety and security, renewable energy sources ought to retain a place in the energy economy of the century to come." The meaning here is clear, especially if you add that we probably will never possess what is known in intermediate economic theory as the optimal amount of nuclear power. But they do state that "nuclear power should be central….Nuclear power is environmentally safe, practical and affordable. It is not the problem - it is one of the solutions."
