Nuclear Power Costs SOAR and Kill New U.S. Plant Projects

Today, the Wall Street Journal reports a decision by utility Scana Corp. to abandon construction of the V.C. Summer Nuclear Station. It was one of only two projects under construction in the U.S., the other similar one being owned by Southern Company and now under review for a new "cost to complete" calculation.

The V.C. Summer plant was initially supposed to cost $11 BILLION DOLLARS, when proposed in 2008. 

That estimate had gone to $15 BILLION DOLLARS as of this year. 

Now, after it drove Westinghouse into bankruptcy, the cost is estimated at OVER $25 BILLION DOLLARS.  227% of the original cost.

And, with a track record like that, who knows how much it would actually cost by the time it started generating power.

The Business Risk of New Coal Plants in Japan

Chinese coal plant

Japan is one of the few major OECD countries where there are plans to build lots of new coal power plants. Of course, these plants will largely replace older, dirtier and less efficient coal plants. But still, they will lock Japan into coal-fired power for the next 50+ years, just as many other advanced countries are not building ANY new coal plants, and are shutting down the existing ones as quickly as practical ... and much faster than anticipated only a few years ago.

Japan's Renewable Energy Institute ("REI", not to be confused with REI Corporation, the famous outdoor goods cooperative based in Seattle) has released a Japanese language report entitled, roughly translated, "The Business Risk of Building New Coal Plants in Japan".

The article points out, in some careful detail, what I have been arguing based on rest-of-world knowledge and seat-of-the-pants common sense these past few years: a new coal plant planned in 2017 will be a big money-loser, and may even be a stranded asset shortly after completion.

According to REI, the government already has plans showing that utilization for coal fired power will fall from 80% in 2015 to 69% in 2026. Assuming for 2030 that (1) nuclear restarts result in 10% of Japan's power supply coming from nuclear power (only half of the governments 20-22% target), (2) that solar PV ends up somewhere around 82GW--much lower than likely or possible, and (3) the various coal plants now under development/construction are completed, REI's report indicates that:

• the facility utilization rate of coal-fired power plants will decline considerably below 69%, should be about 56%.

• Coal-fired facility utilization rate will be 62% if the restart of nuclear power plants does not proceed and nuclear is limited to 5% of the electricity supply amount.
• But if energy efficiency has improved resulting in a 5% decline in demand for electricity, coal utilization will be around 49%.

• The new coal plants are all planned around an unrealistic assumption of 70% facility utilization and 40 year operation, which is not feasible. The investments will be unprofitable.

Moreover, coal power production will face stiffer and stiffer headwinds, as many major users (including, recently, some Japanese companies) are adopting 100% renewable targets, and the Paris Agreement has led Japan to adopt, in March 2017, a "long-term low carbon vision" of the country, under which 90% of energy supply is covered by low-carbon power supply in 2050. That vision is not consistent with 40 years of continuing use of coal fired power.

The report (in Japanese) is available here. 
A summary (try Google Translate on it) is available here.

Update: An English summary is NOW available here.
And the full report will be translated into English, so check back here soon.

Trump Cannot Bring Back Coal

It cannot be said often enough. Coal is not coming back in the U.S.

First cheap gas, now wind, and eventually solar, will taken it all the way to zero in coming years.

Here is an article from Bloomberg on the theme.

And Bloomberg does not even show solar "on the radar screen". That is changing very rapidly.

BNEF Publishes Predictions for 2017

You can find BNEF Advisory Board Chair Michael Liebreich and Chief Editor Angus McCrone's ten predictions for 2017 this link.

A few highlights (quoting from the report):

• "Super-low-cost renewable power – what we are now calling “base-cost renewables” – is going to force a revolution in the way power grids are designed, and the way they are regulated.

• The old rules were all about locking in cheap base-load power, generally from coal or hydro plants, then supplementing it with more expensive capacity, generally gas, to meet the peaks. The new way of doing things will be about locking in as much locally-available base-cost renewable power as possible, and then supplementing it with more expensive flexible capacity from demand response, storage and gas, and then importing the remaining needs from neighbouring grids.

• New nuclear plants will remain the political bauble they currently are, unless next-generation nuclear can prove it can deliver fail-safe designs at affordable cost. Demand will be suppressed by energy efficiency and self-generation, and augmented by electrified transport and heat.

• Putting super-cheap, “base-cost” renewable power at the heart of the world’s grids in this way will require a revolution in the way the electricity system is regulated.

Nonetheless global markets in renewable energy will slow in 2017, because of (1) cost/price reductions, (2) China slowdown, and (3) Japan:

• The third reason is Japan, where the runaway solar boom of recent years has turned to the predicted bust, and few utility-scale plants are likely to be given grid permits from now on. Instead, rooftop solar will become the main game, but its best years lie some way in the future, not in 2017.

As for cost and price -- BNEF predicts another 25% drop in module prices and 10% overall system cost drop, this year!

Just imagine the headline "nuclear power system cost to fall another 10% in 2017"?  Pretty hard to imagine. All we get is "if you pay $100 billion now to develop it, the next generation should be cheaper and safer ... no guarantees though folks", and not a really good track record of delivering on time and under budget. Meanwhile, the nuclear sector seems to have much bigger, and almost as numerous, corporate financial disasters as the solar PV sector.

Japan's plans are a bit underwhelming, and will likely continue to be so until the electricity sector deregulation is implemented down the road.  But at least as a result of the feed-in tariff, Japan has a base of domestic AND foreign participants in the electricity sector who will play a role in pushing the energy transition going forward. And its manufacturers will see the incredible global business opportunities they will have IF they can incubate successfully in the domestic market.

The U.S. is likely to backslide significantly at the Federal level, but that is a topic for another day.

US cedes leadership on climate change

This NY Times article spells it out. The Obama Administration quickly restored America's position in the world as a leader of a community of nations. The Trump Administration trashed that during the transition and the Inaugural address, with climate change one of many areas where we may have a bumpy road ahead.

Meanwhile China already seized the mantle this week at the World Economic Forum ... with India perhaps not far behind.