New nuclear in South Carolina

Print

I have already written about my visit to America to see shale gas operations in Pennsylvania. While we were in the US, we also went to visit the South Carolina Electricity and Gas Company. They’re building two new Westinghouse AP1000 nuclear reactors.

We looked around the site, and were impressed by the scale of the project. It’s awesome, practically epic, like Ben Hur with hard hats. One of the world’s largest cranes. Acres and acres of steel fabrication, pipes, wires, heavy equipment, concrete components. And a structure that would put a cathedral to shame, at least in size terms.

The Westinghouse pitch for the AP 1000 is impressive — I suspect it may be a better deal than the Areva design going in to Hinkley Point. The Areva design seems to be having scheduling and cost over-run problems at Flammanville (France) and Olkiluoto (Finland).

Westinghouse claim to have massively simplified their design, with far fewer components. They have also designed-in a range of passive fail-safe mechanisms. For example, in the event of a catastrophic loss of internal and external electricity supply (as occurred at Fukushima), the AP1000 uses gravity and convection to deliver cooling for several days, allowing an orderly shut-down. They have also managed to modularise many of the components, which (they claim) leads to shorter construction times and lower costs.

Nonetheless, I wonder if the company that pressed the button to set this project in train would have done so had they known what the price of gas in America would be today. While nuclear remains a low-cost option over the lifetime of the plant, it would be hard-pressed to compete with gas at today’s prices. This is a real problem for the nuclear industry. Capital markets, bankers and hedge funds think in short or medium-term time scales. But today’s new nuclear plants are designed for a sixty-year life, with talk of possible extensions to eighty years. No one knows what regulatory structures will be in place in sixty years (or indeed in sixty months). No one knows what the price of gas will be in 2093 — though I expect rather lower than the wilder expectations of the Peak-Oil doom-mongers. And no one knows what new technologies will be available by the end of the century. Perhaps nuclear fusion.

As I have written elsewhere, I think there are real problems in finding commercial funding for new nuclear, given the high capital costs, the long time horizon and the regulatory uncertainty. Maybe government guarantees are the only way — though I have serious doubts about the Hinkley Point model.

One area we discussed with regulators and industry representatives in Washington may offer a way forward.  Several US companies are looking at Small Modular Reactors (SMRs). Whereas the AP1000 is around 1100 MW, these SMRs might be around 300 MW.

At the SONE AGM recently, I mentioned the interest in SMRs.  A member commenting from the floor dismissed the idea, arguing that only a traditional full-size reactor could deliver the required economies of scale. Smaller reactors would inevitably be more expensive. They were worth it only in special applications (Rolls Royce makes small reactors for nuclear submarines, for example).

There was a different view in Washington. If SMRs can be manufactured on a modular system in factories, to be assembled on-site, the initial capital cost could be dramatically reduced. Type-approval (which is expensive) could be amortised over many units. And smaller reactors would fit into the grid in a more flexible way. Each major city or industrial complex could have its own nuclear generation.

Given the low cost of gas, is there still a case for nuclear power? Well, if you take the Al Gore view of climate alarmism, nuclear is effectively emission-free in operation. I don’t take that view. But I believe that simple prudence requires a mix of generating technologies. UKIP believes we should rely primarily on coal, gas and nuclear. The price of uranium seems likely to be more stable than the price of gas over the long-term. And while fuel may be 60% of the cost of electricity from gas, the corresponding figure for nuclear is only around 5%. So nuclear is far less susceptible to fuel price fluctuations.

We hope that the UK will be self-sufficient in gas for decades to come as we develop shale. But we don’t know that it will be. Facing this uncertainty, we need to ensure that nuclear continues to play a key rôle in power generation. It’s currently below 20%. I’d like to see it at 30%. How best to finance it will be an on-going debate.

This entry was posted in Uncategorized. Bookmark the permalink.

19 Responses to New nuclear in South Carolina

  1. silverminer says:

    I totally agree that modular reactors are the way to go. Get Rolls Royce in touch with this guy:-

    We could use the jobs.

  2. Neil Craig says:

    The overwhelming factor in nuclear costs is government regulation. The arguments whether the economy of scale of building reactors large exceeds the economies of scale of mass producing lots of small ones (I incline slightly to the former) is much less important than which is going to have lower regulatory costs. On that SMRs probably win easily. SMRs being manufactured off site and easily moveable are like motor cars while large reactors built in place are like houses – the latter are entirely subject to the whims of government whereas for the former, if government increases regulation they can just be sold to countries like Yemen that want the power and aren’t going to be idiots. At least 3/4 of the cost of housing is government regulation which is why they are far more expensive and far less advanced than cars, though they weren’t a century ago before the regulations came in.

    However for SMRs to work there has to be a country willing to allow the building of the factory and earn 10s, perhaps 100s of billions in the way Boeing’s massive factories gave them & the US west coast an enormous edge in aircraft construction for generations.

  3. cosmic says:

    As I understand it, we have to have to have new base load generating capacity coming on line in the next few years. Because of the constraints imposed by EU legislation, but particularly because of the CCA, this pretty much has to be nuclear. For various reasons, some genuine to do with cost uncertainties, others to do with the fact that government policy has deliberately locked us into an extremely weak negotiating position, the costs are guaranteed and extremely high. Given durrent circumstances, we are pretty much trapped into things like Hinkley C.

    Regarding shale gas, there’s no real knowledge of the potential because exploration has been impeded for political reasons, and it looks as it the weight of the EU is being invoked to impede it completely. At present it’s just a potential and even with full government support, it would take some years to develop. Even then, the potential may be much less than some expect, it’s yet to be ascertained.

    Talking about energy policy and the sticking plasters being applied within current energy policy and constraints brought about by the EU, is like talking about the best way to run a 100 yard sprint with a ball and chain round your ankle; the best solution is to cut it off.

  4. Chris says:

    Westinghouse was owned by the British government through BNFL. Gordon Brown, sold it to the Japanese and British Energy to the French.

    Since Sizewell B, the last nuclear reactor built in 1995, the British nuclear industry has been in decline. Entirely due to the incompetence of both Labour and Tory leaders.

  5. Me_Again says:

    “… think there are real problems in finding commercial funding for new nuclear,……”
    Well it would be a good use of taxpayer money for a change.

    Set up a ‘mutual’ called BritNuke. Let it borrow the total cost from the Gov.
    Over the lifetime of the plant let it repay said loan which comes at very low interest rates.
    Let it provide electricity AT COST.
    Benefits: Industry gets a boost because of cheaper energy.
    Householders get cheaper energy
    Downside: At least 6 energy companies would have profit warnings for a few quarters before they got lean or out of business [won’t need handkerchiefs in my house]

    Part 2
    Part of the setup condition would be nuclear apprenticeships to grow our own engineers again.
    BritNuke is so successful that a second plant is now planned.

    The British government picks up the gauntlet and commissions Aldermaston to begin research on Thorium based reactors.

    ALL of this paid for by NOT giving 12bn in foreign aid.
    by NOT paying 50+ million per day to the EU.

    Power is a strategic asset and should not be in the hands of organizations which are not under government oversight.

    SORTED.

  6. Eric Worrall says:

    Government subsidies for what should be a commercial activity always represent the triumph of beauty over sense.

    I love nuclear power, and I think that it could be made a lot more cost effective by removing some of the red tape, at least for passive safe systems.

    But I would never dream of subsidising it. Every penny of subsidy for an unprofitable substitute for an economic activity is a lost job in the private sector, wasted effort which diminishes the quality of life for everyone – even when the subsidised activity is as beautiful as nuclear power.

    If we want more private investment in nuclear power, the government should do is what it should always do to help business – get out of the way.

    • Me_Again says:

      Well Eric, widen your thoughts to include ‘Mutuals’ No subsidies but no shareholders and profit margins either.
      I don’t agree with subsidies either.

      • Eric Worrall says:

        If people want to pool together to form a mutual, I don’t see why anyone should stand in their way. Its their money.

        The bit where I start objecting is when politicians find reasons to take my money without my permission, because they think they understand my needs better than I do.

      • Me_Again says:

        Yes, I’d rather direct my money towards things that benefit UK citizens first.
        But Mutuals would cut the costs for everyone.
        Only die-in-the-wool globalists could think otherwise. We have building societies as an example a slightly different model is John Lewis but mutuals remove from a ‘strategic’ asset, the profit motive.
        We are supposed to be a first world nation, well we should deploy facilities that would be expected of a first world nation. I include cheap mass transport in that too.
        Only by moving from nationalised to privatised do you get the profit motive in there. Take out the profit and the shares, go mutualised well the benefits of a good worker/management model which fully incentivises the workers and management, are cost reductions. Lower production costs mean cheaper output prices which mean more competitive industry and fewer people in the fuel poverty syndrome.

        Why isn’t it done? Simple, the money grubbing troughers won’t allow it.

      • Eric Worrall says:

        I worked for a mutual a long time ago – the management team were robbing the mutual policy holders blind.

        There was an important IT project (my speciality is IT contracting), and an external audit was being conducted of all IT projects.

        The contract manager heard, he said “I can’t be here when the auditors arrive. They know me”.

        A senior IT manager said “what do you mean?”

        The contract manager said “They know me – if they see me on this project, or find out I’m associated with it, they will take this project apart”.

        It never occurred to the mutual executives to question *why* the auditors would have such an issue with this guy being on the project – they immediately started conspiring about how to hide his presence on the project.

        At the time I was a low level contractor supplied by a different agency – it was only chance I happened to be nearby when they had this conversation, but they simply didn’t care that I and half the room overheard them.

        After all, the head of IT was scheduled to go on a Masters Golf Week with the outsource company which supplied the dodgy IT manager, at which the signing of a $600 million outsource agreement was to be discussed (back in the mid 90s), and everyone else on the exec team knew they were in line for some wedge as well.

        If you think being a mutual protects people somehow from the profit motive, I can say from personal experience that you are wrong.

      • Me_Again says:

        Well knock my barnacles off sideways with a ballpeen hammer another IT contractor……….
        So you have a bad experience with a ‘mutual’ [we’ll skip the convenience of that] and so you tar the whole idea with the bad brush? You were just a contractor so get real, you knew nothing of what went on.
        Jees that’s lame. Can’t you argue the point? Poor implementation isn’t an argument against a concept, just against people
        Ps I got my first MCSE back in 2000, I’ve re-qualified twice since but I have to say I ain’t doing it again. Virtualization has screwed my head on backwards -perhaps I’m a virtual me, within a virtual me, which is in a machine which is virtual too.

      • Eric Worrall says:

        Who says it was a bad experience? I’ve seen plenty of similar shenanigans in private companies, and public sector organisations. The experience happened as I described, at a mutual – you can believe or not, I don’t really care.

        My point is not that mutuals are necessarily worse than private companies or public sector companies, my point is they are no better. In all cases stakeholders are to some extent at the mercy of clever insiders milking the system.

      • Me_Again says:

        You can say that about any organisation in the world from the UN to the local council, from microsoft to British Petroleum.

    • Chris says:

      Some parts of the economy require government assistance. There’s this myth that the private sector can do everything. Make no mistake, we are all paying for the new reactors at Hinkley Point through a near doubling of the current electricty prices.

      How do you think France got to be producing 70% of its electricity by nuclear? Government.

      • Eric Worrall says:

        Why do you think producing 70% of electricity by nuclear is a good thing, if French people have to pay more for their electricity?

        I’m a fan of nuclear power, and would really like the government to make an effort to cut red tape for commissioning of new nuclear power stations – but people shouldn’t be forced to pay more for nuclear power, when there are cheaper alternatives, such as shale gas.

        If you have lots of money, a few pounds more on your electricity bill might not seem a big deal, but for poor people it makes a huge difference to their quality of life.

      • Neil Craig says:

        What makes you say the French electricity costs more. Since France is selling power to keep the lights on in Belguim, Germany, Italy and the UK that seems unlikely?

      • Eric Worrall says:

        Fair point, for all I know French electricity is subsidised by robbing the grandkids.

        But if French nuclear power is so cheap, why does it need government support? It should be a model they could be shouting to the world.

  7. Patryk says:

    Good Evening, Roger. I haven’t been here for a long time so I apologise for posting off topic. I know you’re not on Facebook so I thought I’d just paste what kind of things UKIP supporters post.
    “Robert East “Vicki Markiewicz, CRI’s deputy director………”…

    Where do you think HER priorities lie?
    7 · 6 hours ago
    Rick Graham how dyou pronounce her name??
    3 · 4 hours ago
    Ron Lake Who cares, dont need to pronounce her name, just throw her off a boat outside the 12 mile limit, job done”

    Doesn’t UKIP have an FB moderator to moderate posts or do you agree with throwing people off a boat for having Polish sounding names?

  8. Me_Again says:

    Anyone who uses facebook is a fool.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s