Saturday, October 27, 2018

Conversations With Exelon

Eli sat in on an interesting conversation last week at the Brookings Institution involving Chris Crane the Exelon CEO.  Exelon is a large electricity generator and supplier in the US with over $30 billion in revenue and a large fleet of nuclear plants as well as natural gas and oil but not much coal.  Crane's first words were

The impacts of climate change are irrefutable
Bunnies can view the video if they have an hour or so.  IEHO it is worth it.

Eli visited the Brookings Bunny and live tweeted the discussion into the ether where it vanished.but  the talk is worth listening to because it goes considerably beyond the usual.

What the utilities have is a century long record of outages and service calls many of which they can increasingly trace back to climate change (as well as various critters with sharp teeth chewing on wires and such).  It would be worth asking if they would share these, or already have, much in the spirit of the US Navy, with urging from Al Gore, making public the records of undersea observations of the Arctic ice pack.

Crane, of course, favors market driven choices with elimination of all subsidies but emphasizes the Golden triangle of safety, reliability and cost.  The first two are key going into the future because saving costs today leaves business, and generators subject to enormous procrastination penalties if generation and distribution are not hardened to deal with a 1.5 C world, let alone a 2 C one.  It's the nature of Golden triangles that you mostly get to pick two of three or at best trade off current costs against future disasters.  

He sees efficiency as the least expensive renewable energy cost, but as interestingly, does not foresee future nuclear plant builds because of the cost and time. Natural gas is too cheap to afford building new ones.  Between the lines you can sense that he is not a real believer in modular nuclear.  He would be pleasantly surprised, but mostly is not betting Exelon's bottom $30 billion on it either.  As Eli has been pointing out this means that the ONLY way of building lots of conventional nuclear plants is for governments to do it (Russia and China) or finance it (France) to absorb the up front capital costs and long build times.  The government could lease the plants back to operators for annual payments to finance continuing new construction.  One of the few new technologies Crane is optimistic about is  using high pressure hydrogen to cover the times when renewables are not producing.  Eli would point out that for some applications heat from burning the hydrogen could be used directly and yes Crane knows about embrittlement.  He is a very sharp cookie.

Perhaps the most interesting take away is how Exelon views carbon capture, not as a way of reducing carbon in the atmosphere, but as an enabling technology for expanded natural gas generation.  Eli sees the sense of this because natural gas after scrubbing is a clean fuel with essentially a single component, methane, whose combustion produces a stream of almost 100% carbon dioxide and water vapor.  The two components are relatively easy to physically separate which makes carbon capture easier, and the CO2 could at least in principle be re-injected into the natural gas wells.  

As far as the political side of the coin Crane sees customer and state demand for zero emissions and federal resistance.  He sees no point in trying to make believe that coal or oil is coming back to appease folk in WV, TX and various luckwarmer and denier think tanks.  The current US government may be bypassed, if for no other reason that utilities are state regulated.  While the prospects for a national carbon tax (much better than regulating emissions in his opinion) are grim, state or regional ones could happen.  

As an operator of utilities he sees that the climate is changing and this has already become a huge cost.  Exelon in the immediate future will close its older and expensive to operate nuclear generating plants, but closing all of them is dumb.  Germany has shown that the major effect of that is to increase the burning of dirt, aka lignite.  Clearly, according to Crane, the US has lost its base for building new nuclear plants which absent a new capital allocation mechanism will not improve, leaving the capacity for new nuclear builds worldwide mostly for China, Russia and Japan who have the technology.  

Which brought the conversation to what will be needed to go carbon free, or at least carbon less.  Networks and resistance to network expansion are keys.  New England is hanging by a thread in winter because loss of a single natural gas pipeline would put them in deficit but there is considerable resistance to new ones.  Expanding the electrical distribution network faces the same issues.  Grid reliability requires network expansion both for fuel and electrons.  If nuclear is not benefited for emissions reduction as renewable energy is then fossil fuel use will increase. 

Utilities in the US have to allocate capital in a 30 year time frame.  Rebuilding the network for two way flows  (e.g. for rooftop solar) will be expensive and, if it is to be done start soon.  Simpler technologies like smart meters can make a contribution and have a surprising to Eli benefit of immediately notifying operators of outages and speeding up response before troubles spread and the carrots in the fridge go bad.

As such things go worth a listen to understand climate change issues from the point of view of the utilities.

Note:  Edited to spell Exelon the way the SEC prefers it.


Jan Galkowski said...

No doubt natural gas is in principle the cleanest fossil fuel out there to burn. But, as for most, there are complications.

Upstream acquisition emissions might be the worst, but New England's resistance to more pipes isn't only NIMBY but a reaction to the leakage in its existing distribution system. The proposed pipes are transmission lines, new, of course, but these would feed the leaky existing. Comprehensive review is available at

Moore, C. W., Zielinska, B., Pétron, G., & Jackson, R. B. (2014). Air Impacts of Increased Natural Gas Acquisition, Processing, and Use: A Critical Review. Environmental Science & Technology, 48(15), 8349–8359. doi:10.1021/es4053472

Having lived in the Ithaca region for 30 years, the other export of Marcellus Shale natural gas is apparently Radon, something which upstate New York homes are acquainted with. To what degree this is a Deal with the Demon remains to be assessed, but there are particulars at:

Mitchell, A. L., Griffin, W. M., & Casman, E. A. (2016). Lung Cancer Risk from Radon in Marcellus Shale Gas in Northeast U.S. Homes. Risk Analysis, 36(11), 2105–2119. doi:10.1111/risa.12570

To what degree Crane's claim that New England is hanging by a thread in winter because loss of a single natural gas pipeline would put them in deficit is in fact correct depends upon to whom you speak. Massachusetts DPU and Beacon Hill aren't acting like that's not actually an emergency, because there's no big push to diversify away from natural gas. Indeed, the culprits planning this seem to throw impediments in the way.

And there are other things affecting pricing, too, such as the fact that natural gas gets expensive in winter anyway, due to use for heating, and failures of some plants. ISO-NE fumbled badly over Labor Day, underestimating electricity demand and having to call upon a big natural gas plant to supplement. Except that the natural gas plant fell over, and did not come online, necessitating the purchase of highly expensive electricity from out of state.

The grid in Massachusetts, like the gas network, has many weaknesses. In the southeastern and metrowest suburbs of Boston, the reliability of supply in winter is so poor, nearly anyone of any means has installed emergency backup propane generators. (Some towns were without for 3 weeks in recent years. So they don't take Cries of Wolf about natural gas pinching supply in deep winter too seriously.) Trees need trimming and such, as well as modern upgrades on the distribution, but the utilities won't until DPU makes it sufficiently profitable for them to do so.

Unknown said...

Hey Bunny! Glad you enjoyed your trip to Brookings last week. Here’s a carrot: there’s no “c” in “Exelon!” Loved your post, just always on the lookout – would love it if you could make the correction.

Robin Gray, Exelon Communications

EliRabett said...


Although one always has to remain a bit cynical, almost all of what Crane said rings true at least at the level of a good passing grade, and some of it was interestingly surprising in the Eli had not thought of that sense. Listening to Crane was refreshing in that sense. Within the constraints a utility CEO works under he was exceedingly straightforward and intelligent.

Exelon is one of the few large utilities that has moved away from coal and anything that moves it away from oil too is progress. Clearly they understand that in today's financial environment new nuclear is impractical. Carbon capture for gas may be a way forward.

Yes, we really do need infrastructure week to replace a whole lot of leaking pipes and more. Burying some electric lines would also help. On the other hand, having tasted Beijing air in the 1990s, Eli really can't get too excited about the Chinese replacing their open air coal zone heating with more efficient units.


Having tasted food from coal briquette fired woks in China in the 1980's, I agree that a Great Culinarinian Cultural Revolution is called for.

Jan Galkowski said...

Thanks Eli and Russell.

That said, Russell, I don't particularly enjoy gas-fired meats either, particularly hotdogs.

Of course, I seldom eat meats these days, although indulging myself once a month with trout, and I will occasionally eat scallops and clams.

Anyway, things have turned severe, it seems.

L. Resplandy, R. F. Keeling, et el have some bad news for radiative forcing and sensitivity discussions. Moody and Dennis have a popular piece on it in the Washington Post.

Mike Dombroski said...

If you don't like nuclear power, you need to refute these guys -- good luck:

Mike Dombroski said...

He says he has high hopes for pressurized hydrogen storage. I wonder if he's looked at conversion efficiencies -- using excess electricity to make H2, then pressurizing it, and then burning it for where the water falls off the duck curve's back. I wonder if he can get back 20%. This sounds like it'd be better for nuclear than renewables! Imagine how many extra solar and wind farms would be needed to cover the 60 to 80 percent incapacity factors.

Unknown said...

It is almost two years since Brian convinced me that Trump would not be able to bring the coal industry back by the end of his first term:

Darn that Trump.....65,000 mining jobs have been created since he took office. He did not even need half of his first term. What an overachiever!

Somehow we need to stop this kind of thing so that those miners can go back to being dependent on food stamps and other government handouts.

Unknown said...

My previous comment on coal mining jobs popped up as "Anonymous". This is the Gallopingcamel with greetings for the faithful here and especially Russell Seitz.

Amazing what happens when regulations and taxes are slashed. Now we need to see huge reductions in government spending. At the very least close the Department of Education and the EPA. Authority over these activities belongs to the states or to the people..........not the federal government.

The IRS is part of the Treasury so it is a legitimate federal function under the constitution. However given the simplification of the tax code it must be downsized by at least 50%. Sell your H&R Block shares. We can retrain all those accountants to create wealth rather than re-distribute it. There should be plenty of manufacturing or mining jobs opening up.

Jan Galkowski said...

This is an evidence-based blog. The social convention here is to post reference s to assertions, particularly ones which might be controversial.

If you don't, expect your comments to be igoref. If you did that at my blog your comments would be deleted.

Barton Paul Levenson said...

I hope everybody votes tomorrow.

Barton Paul Levenson said...

Voted this morning. Straight D ticket, of course.

EliRabett said...


While individual outcomes were disappointing for Dems, overall a good result pending the 2020 redistricting. Obama's big mistake was not campaigning like crazy in 2010 when the Republicans took over state houses and legislatures to they could gerrymander. Expect big changes in WI, MN, MI, NC and more

EliRabett said...

Notice how the camel says mining jobs.

About 2000 COAL mining jobs were added since Trump took office as of August

Mike Dombroski said...

That is a good video. At around 50 minutes in he talks about how nuclear plants weathered the polar vortex with ease as coal piles froze up and gas lines were disrupted.