Monday, July 17, 2017

A Rumination on Energy Costs


So Eli returns from vacation with a report from Ethon who has taken up Twitter on the economics of energy sources.  To put it simply, nuclear and hydro are very long term investments, efficiency, wind and solar are investments and fossil fuels are an addiction.

The first thing to understand is that each of these is subsidized.  The second is that proponents of each of these thinks all the others are subsidized and their favorite is not.  That's another post.

The cost of fossil fuels is pretty much the cost of the coal, oil and gas, although, of course, there are infrastructure costs, but a reasonable estimate (and Eli is the most reasonable bunny you could ever meet, as a colleague just wrote, reasonably insane perhaps, but reasonable nonetheless) .  To be more exact the cost of the fuel is about 70% of the total cost and a portion of the capital cost is the infrastructure to move the fossil fuel to its final resting place before it goes up in smoke (e.g. pipelines, railroads, ships, etc).

The competition, efficiency, nuclear, hydro, solar and wind are capital intensive.  For practical purposes, efficiency is 100% capital, an upfront cost.  At least in theory people weigh the cost of money vs. the money they save, and that depends on the interest rate.  That's theory.  As a practical matter people and businesses are very reluctant to invest even with payback periods of a year or two.

That explains the role of regulations and subsidies, to get people to do what they rationally should do but irrationally won't.  Good examples of this are, for example, power companies paying or subsidizing compact fluorescent bulbs so they didn't have to build more power plants, or building code insulation requirements, or fleet mileage, etc.  Each of these can be played but each of these has a rational effect.

Nuclear, hydro, wind solar are the opposite of fossil fuels with about 70% up front capital cost and 30% operating costs (close enough).

Nuclear to start, comes in large lumps and has a long time between when you issue the bonds to build, spend the money to build and the plant comes on line and starts trading electrons for cash to pay the bonds.  This can only be done by governments, or with guarantees from the government.  The most successful example is France, which took a political decision in the 1960s/70s to go nuclear for electrical generation and provided the resources to do so to EDF which is 85% government owned.

Big hydro is pretty much the same story with the add on that the lake behind the dam covers a lot of ground which requires eminent domain seizures.

So it is pretty clear that nuclear/hydro build out is best suited to places with strong, stable (gotta last more than a decade, let's not talk about the proliferation risk) and well funded central governments, China, France, Russia, maybe India.  The US could do it, but the  free market folk and the NIMBYs would never allow it. (Caveat:  Folk have been talking about small nukes for almost as long as fusion.  Eli is a show me bunny)

Wind and solar are distributed.  The generating facilities are small and inexpensive, Eli could even affords some rooftop solar, and even industrial strength wind and solar are cheap as compared to hydro and nuclear, well within the reach of your local source of electrons.  But, of course, the wind don't always blow and the sun is on a fixed schedule.

However, a big enough network can bring power from where the wind is blowing, the sun shining and there are work arounds like thermal/hydro storage.  Still, as the Bunny agreed in 2006

In a Science Policy Forum article entitled "A Road Map to US Decarbonization", (available in part in the Energy Bulletin) Reuel Shinnar and Francesco Citro point out that while nuclear is well suited to support baseload electricity generation, solar is ideal for handling peak demand, being most available, when most needed, during the hot days.
Moreover, we still have a decade or two where baseload could be handles by gas turbines which have spin up times under 30 minutes, and for those times when there is excess wind/solar, why free markets were made for bunnies who know an opportunity when they sniff it

oh yeah, Russell has a special on offer over at Real Climate



15 comments:

Ed Darrell said...

There's been some new nuclear plant construction in the U.S. recently. Are things changing, or is that a fluke? Maybe too early to tell.

Four new reactors (as opposed to 33 shuttered plants). https://en.wikipedia.org/wiki/Nuclear_power_in_the_United_States#Signs_of_a_revival

Fernando Leanme said...

The Road map to decarbonization is baloney. I would not quote such dopey work if you want to have some credibility.

Furthermore, given the fact that countries such as Congo have low wind and solar potential but have enormous hydro potential, I suggest you study the subject a bit more.

Canman said...

It looks to me like solar is hitting a low ceiling:

https://pbs.twimg.com/media/DDHFGDyUIAAbJOI.jpg

https://twitter.com/KeithAPickering/status/878700140319698944/photo/1

Toby Joyce said...

Ah, yes, Fernando, the Congo has a strong, stable national government and is in an excellent position in invest in massive infrastructure projects.

Small solar projects on an "spreading inkspot" basis may be better propositions where the central institutions have to grow outwards, if they can at all. It may be a fact of life in developing countries on the edge of becoming failed states.

KAP said...

Generally pretty good, Eli, but I would add a few points to consider.

First, you can add long-distance power lines to the list of projects that are nearly impossible to build for NIMBY reasons. Every local jurisdiction they cross wants to have its own say, and its own veto of the route.

Next, while it's true that every energy source is subsidized, the level of subsidy varies wildly (by orders of magnitude). That's particularly true when you consider the full effects of taxation. Most subsidies are tax breaks, but the paid taxes are not considered in subsidy calculations, only the unpaid taxes. Since a subsidy is in effect a negative tax, some have argued that a more realistic method of computing subsidy would be the net effect on revenue. If we were to do that, the old techs (fossil, hydro, nuclear) would almost certainly be net inputs to the treasury (taxes paid > subsidies) while the newer techs (wind and solar) would be net losses (taxes paid < subsidies).

Finally, small nukes do exist today and have been run successfully for decades in the nuclear Navy. By law those designs are classified and cannot be commercialized. That in spite of the fact that it would be easy to do so, and could eliminate millions of tons of CO2 produced by burning dirty bunker fuel in the merchant fleet. So there's another law standing in the way of a fossil-free future.

@canman A better version of that can be found here: https://farm5.staticflickr.com/4317/35194970753_8aa15788c4.jpg

EliRabett said...

What Toby said. Putting a large hydro dam up in the Congo or worse a nuke is really not on.

As to small nukes, military ship power plants may be small but they are not exactly fail safe nor optimized for cost or simple operation. There are some designs moving towards licensing but with thorium reactors they are, at least to date, fusion. Still this is a point that can be debated.

KAP said...

Congo (the big country) is already 99% hydro on its grid, and you don't need a dam; Livingston "Falls" (actually a long series of rapids) is perhaps the world's most ideal place for run-of-river hydro, and is massively untapped. The river's flow has very little seasonal variation. So Congo will likely stay hydro for the foreseeable future.

The small reactors on Navy subs and ships are simple enough to operate that high school grads are taught how to do it routinely. Nothing built by man is "fail safe" but the Navy has operated shipboard reactors by the dozens for 62 years without a serious mishap. It's also interesting to note that large aircraft carriers are powered by multiple copies of the smaller sub-type reactors to make training and supply chain issues easier.

EliRabett said...

Canman, Keith Pickering is one of the nukes over everything types Ethon is pecking at.

EliRabett said...

Not all is well with the Inga dams http://foreignpolicy.com/2015/05/08/the-river-that-swallows-all-dams-congo-river-inga-dam/

Russell Seitz / Bright Water said...

Ethon should do a flyover of flyover country Chernobyl and Japan, and report back with a little dimensional analysis based on contemporary casualty figures .

I'm not sure I know wether nukes have proven , to date , better or worse than :

Appalachian mountain coal mines
Powder River megastripping
Frakking in general
Models of Nukes Future

Zero point Nine cheers for the immanent opening of Yucca Mountain Repository

Ken Fabian said...

The ongoing amnesty on the climate costs enjoyed by fossil fuels is perhaps the biggest "subsidy" of all - plus they get other support/subsidy/tax exemptions etc besides! Whatever price we put on emissions will be uncertain and disputed but at a "modest" $40 a ton of CO2 that adds $112 to the cost of each ton of black coal burned - rather than current $50-60 per ton it would cost >$160 per ton. No assessment of relative costs that includes the externalities could make coal or other fossil fuels look cheap ever again.

Steve Bloom said...

KAP, the multiple small nukes were only the Enterprise, which is no more.

The sub reactors are small in part due to a trick involving 80% enrichment; IOW U a bomb can be made from. Let them proliferate, eh?

Not simpler to operate than a commercial reactor, BTW.

Bunnies have their ideas.

Canman said...

I'd like to recommend giving some more billions to billionaires. Lets help Bill Gates and Paul Allen get an example of the traveling wave reactor up and running.

John ONeill said...


'The sub reactors are small in part due to a trick involving 80% enrichment; IOW U a bomb can be made from.' US Navy reactors use highly enriched uranium not to make them compact, but so they last the life of the vessel ( ~ 30 years ) without refuelling. This makes the construction of the pressure hulls, and the logistics, a lot simpler. French submarines all run on low-enriched uranium, and need refuelling after ' only ' ten years. I think a commercial power reactor could manage that kind of interval, and access would be much easier.

Steve Bloom said...

Interesting about the sub core lifetimes; that appears to be relatively recent. Note carrier reactors, huge by comparison, still need refueling every 25 years or so.

I'm not sure what your source is re the HEU not being in part to increase power density to allow smaller size, but obviously size is a critical consideration for everything on a sub. Regardless, hopefully we can agree that it would be an exceptional act of stupidity to power civilian reactors with HEU.