News in Depth: Deploying SMR Technology in Canada’s Northern Communities

In mid-April, 2015, Peter Lang, President of Dunedin Energy Systems Ltd, gave a presentation at the Nunavut Mining Symposium, arguing for a radical shift in the way we provide energy to remote communities and mining operations. Traditionally, northern communities have relied upon diesel generators that produce substantial pollution and require costly infrastructure for fuel transport to maintain energy production.

Lang suggests a new approach, one that utilizes new, small modular reactor (SMR) technology to produce energy from floating nuclear power ships. In this week’s News in Depth, we explore Lang’s idea and the potential opportunities and challenges that are ahead.

An Old Idea Given New Life

As Lang noted in his presentation, the idea of utilizing nuclear reactors in unique contexts is not new: small, self-contained nuclear reactors have been providing energy on military ships and submarines (103 in the US Navy alone), and ice-breakers for decades and have been deployed in northern Russian communities since the 1970s.

Lang’s Dunedin Energy believes that their SMART (Small Modular Adaptable Reactor Technology) system would provide a more sustainable and consistent energy source for remote communities in Canada. They describe the systems as a “nuclear battery”:

When the fuel in a nuclear battery is consumed, the entire reactor module (which contains the spent fuel) is removed and shipped to a processing facility for fuel recycling. A new, freshly fuelled reactor module is installed to replace it. The reactor module is a sealed unit and cannot be opened for any reason at the operating site.

In his presentation, Lang compares diesel and nuclear, using a 16MWe common production rate. Notably, the annual fuel logistics of diesel include moving and storing over 31 million litres of fuel and annual greenhouse gas emissions are estimated to be 85,000 tonnes. Compare those figures to the zero fuel logistics and greenhouse gas emissions of their nuclear SMART system. Lang also highlights the issue of carbon taxes, arguing that while diesel may cost up to $1.2 Million for a 16MWe plant, a nuclear SMART reactor would gain a credit of $1.2 Million.

The Challenges Ahead

The incredibly favourable comparison above belies some of the deeper challenges that SMR development may face in northern communities.

The first set of challenges relate to cost and public resistance. Dunedin presents two business cases – a full-ownership option and a “zero-capital cost” option wherein Dunedin handles the operation and logistics of deployment, operation, and decommissioning, and the customer pays approximately 29 cents/kW in return.

However, northern communities and mine operators may be tempted to continue to rely on diesel – owing to the current low price of oil and, in essence, because of the stickiness of the status quo. In addition, northern communities, including many Aboriginal groups, continue to be locked in debates over energy development, mining, and socio-economic development; introducing any new nuclear energy plan may provide more fodder for political debate. Dunedin appears to be aware of these challenges and addresses the regulatory and safety issues on their website. However, as we suggested in a piece on April 23, better public engagement and education would be required to quell any genuine fears or uncertainty that exist.

Lastly, northern communities may demand a clearer set of guidelines and regulations relating to decommissioning and remediation. Lang noted in his presentation that decommissioning funds would be held in escrow, effectively guaranteeing that even if a community or mine is bankrupt, that the money for cleanup and restoration is not subject to claims by creditors or other parties. Dunedin’s approach is unique – in that the whole reactor-in-a-ship concept allows for relatively easy site cleanup – but questions still remain. How much would be necessary for cleanup? What does full restoration look like?

In other words, this ambitious idea is not without issues. However, there appear to be tremendous economic and environmental arguments in favour of SMR development in northern and remote communities. These arguments carry over to other contexts – including Mexico, for example – and may one day translate to a new energy future for Canada’s North.

News in Depth: Germany’s Nuclear Phase Out

This week, German electric utitlity company RWE’s Chief Executive, Peter Terium, criticised the German government’s plans for imposing a levy on older fossil-fuelled power plants. Terium, in a shareholder meeting, argued that such a move to tax lignite based plants would lead to job losses and soaring electicity prices at a time when Germany is both trying to maintain economic growth and phase out its nuclear energy capacity by 2022.

This latest news follows a larger pattern of increasing German reliance on fossil-fuels as the country seeks to move away from nuclear – which once provided 25 percent of the country’s electricity – while also maintaining a energy-cost structure that allows Germany’s industrial base to remain competitive.

In this week’s News in Depth, we explore the story of Germany’s National Energy Transition Plan (Energiewende) and ask what lessons can be learned from a relatively rapid and unprecedented shift away from nuclear energy.

The Story So Far

As the World Nuclear Association’s fact-sheet points out, Germany first announced a plan to phase out nuclear energy in the wake of the 1998 federal elections. The plan was abandoned in 2009 following the election of a new government.

However, on May 30, 2011, Angela Merkel’s government announced a new plan to phase out nuclear energy by 2022, in response to widespread public protests following the Fukushima-Daichi crisis in Japan. The plan, estimated to cost almost 1 trillion euros, was announced by then Environmental Minister Norbert Rottgen. The initial plan was that:

the seven oldest reactors – which were taken offline for a safety review immediately after the Japanese crisis – would never be used again. An eighth plant – the Kruemmel facility in northern Germany… would also be shut down for good. Six others would go offline by 2021 at the latest and the three newest plants by 2022.

At the time of the announcement, the plan was citicized by other political parties and industry leaders. Renate Künast, the co-floor leader of the Green Party, expressed doubt as to the government’s level of prepardness to make the switch to renewables – leading to concerns that such a move would be a step back in terms of cutting carbon emmissions. In addition, Daimler CEO Dieter Zetsche suggested that the plan presented a “number of risks” to Germany’s manufacturing sectore.

Fast forward to 2014, when Robert Wilson, writing for the Energy Collective, points out that Germany’s nuclear phase is out leading to more coal burning. As he argues, the energy transition is not necessarily a positive one in terms of cutting carbon emissions; between “2011 and 2015 Germany will open 10.7 GW of new coal fired power stations.” These new plants, as he points out, are not directly tied to the 2011 announcement, but they are a result of Germany’s first foray into nuclear phase out in the late 1990s and early 2000s.

The Story Today, and Tomorrow

Wilson’s point, then, is that Germany’s growing reliance on coal is real, but it is not simply a result of the 2011 phase out plan. For some time, Germany has been moving away from nuclear. Thus, the move is not purely ideological or politically driven. However, it is also not, in light of the tariff and emmissions issues, a totally practical decision. The question remains, can Germany succesfully pull off a relatively rapid phase out while maintaining a strong and cost-effective energy system to support its manufacturing sector? Can it also do so while cutting carbon emmissions?

Raimund Bleishwitz, a professor at Univeristy College London, is cited in Scientific American as framing the issue in two ways: 1) external competition, and 2) internal burden sharing. Bleishwitz’s taxonomy, which highlights the tensions inherent in a large scale energy transition, is a useful tool for thinking about energy development more broadly.

While nuclear energy’s future in Germany is uncertain today, it’s clear that many other countries, especially developing nations, are looking to nuclear energy to develop a more robust, consistent, and flexible energy supply for their growing economies. Germany provides a counter-example to these efforts, remininding us that energy needs, market dynamics, and political climates change over time. We must remain open to these changes, and be ready to anticipate what may come next.

News in Depth: The Debate over Florida Power and Light’s Turkey Point Expansion Plan

Starting April 22, residents of Florida’s Miami-Dade county have had the opportunity to attend public consultation meetings hosted by the US Nuclear Regulatory Commission to discuss the Florida Power and Light’s (FPL) plan to add two new nuclear reactors at its Turkey Point plant.

For this week’s News in Depth feature article, we explore various components of the debate around FPL’s Turkey Point plans and reflect on what lessons industry officials and regulators can learn from the consultation process.

The Turkey Point Story

According to FPL, Turkey Point Nuclear Plant is located 24 miles south of Miami, on Florida’s Atlantic Coast. Currently, there are two nuclear power units which have been in operation since the early 1970s. Westinghouse supplied the Pressurized Water Reactors (PWRs) and the turbine generators.

FPL now seeks to obtain a combined license (COL) for two Westinghouse Advanced Passive 1000 PWRs, to be called Turkey Point Units 6 and 7. The original application was tendered in June 2009, and FPL hopes to have the new reactors online by 2022.

FPL operates two nuclear plants in Florida, St. Lucie and Turkey Point. Progress Energy Florida operates a 5 unit plant in Crystal River, on Florida’s west coast, and has proposed another plant in Levy County. Nuclear plants in Florida have been met with skepticism by many, as the general public seeks to understand the safety risks in the event of hurricanes or flooding.

In the Turkey Point debate, critics have asked if the plant is prepared to resist the rising sea levels which have reeked havoc in Miami’s barrier islands. In response, FPL has highlighted that the current plant is 20 feet (6 m) above sea level, enough to withstand severe flooding associated with up to Category 5 hurricanes. In addition, the new reactors would be built at an even higher 26 feet, to take into account rising sea levels.

However, what is perhaps more interesting is not just how FPL is responding to criticism, but how it is using the story of its history and current practices to work with and educate the public.

Public Communication and Consultation: What can we learn?

FPL has used many of the standard, and expected, methods to communicate their rationale behind building these new reactors. On its website and in the press, they have emphasized the economic advantage of their operations, zero-carbon emissions, and the extensive research and safety preparation that goes into the plant.

They have also relied on community specific examples, including most notably their efforts to improve the habitat for the once-endangered American crocodile and their support for wetland recovery programs.

The public consulation process – like the one happening right now at Turkey Point – provides a unique opportunity for the nuclear industry to have an honest, down-to-earth conversation with the public about energy, safety, and the environment. In addition, a more human conversation also allows regulators to get a better sense of the public’s views and concerns. In the future, the focus should not only be on the technical details, but on the realistic compromises we must make to meet our energy needs. That includes talking about everything from transmission lines to crocodiles, depending, of course, on the context.

News in Depth: Global Nuclear Growth in Context

This week, in an article for The Energy Collective, Jesse Jenkins, a writer and current PhD student in Engineering Systems at MIT, aimed at putting the growth of renewable energy in perspective. The article provides more than just an overview of renewable energy however, it also provides some interesting context for discussion of the future of nuclear power.

A year in review: thinking about energy capacity worldwide

Before thinking about what comes next in our energy future, it’s important to have some context. In his article, Jenkins provides a succinct summary of the progress made in the last full calendar year:

The world added 103 gigawatts (GW) of renewable power capacity in 2014… That figure excludes large hydropower projects… and is dominated by wind and solar, which saw growth of 49 GW and 46 GM respectively. More importantly, the share of renewable electricity… in the global electricity mix ticked upwards from 8.5 percent in 2013 to 9.1 percent in 2014.

As is noted, that figure is close to the 10.5 percent of global electricity supplied by nuclear power.

Global_Electricity_Market_Shares_1980-2014

(Image Source: The Energy Collective)

A link to the International Energy Agency’s (IAE) World Energy Outlook 2014 Factsheet is also provided. The factsheet highlights some additional key points:

  • 434 operating commercial reactors worldwide at the end of 2013 (capacity: 392 GW)
  • Nuclear power has avoided the release of an estimated 56 Gt of CO2 emissions since 1971
  • Almost 200 of the 434 reactors operating at the of 2013 are to be retired before 2040

Finally, Jenkins articulates two visions for future growth in renewables. In the first scenario, growth is linear at about 100GW per year. In the second, growth compounds at a 10 percent per year rate. As he notes, neither scenario is perfect, but they “bracket the realm of most likely outcomes.”

What’s next for nuclear power and renewables?

The IAE’s factsheet provides an apt summary of the challenge ahead for the nuclear energy sector, “the industry will need to manage an unprecedented rate of decommissioning, while also building substantial new capacity for those reactors that are replaced.” It is clear that the next few decades will be filled with difficult problems: how do we handle the decommissioning of so many reactors, how do we balance short and long term cost economic and political concerns, and how do we safely and steadily grow nuclear capacity, especially in the so-called BRIC countries?

From a review of conference topics and recent news articles, it’s clear that the industry is well aware of these challenges and is making positive strides. As we’ve highlighted here at Future of Nuclear, companies are continuing to develop new, smaller reactors that can be deployed in both industrialized and developing markets. In addition, governments continue to explore how to safely deal with radioactive waste. In all, the challenges are great but not insurmountable.

This, finally, brings us back to the topic of renewables. As highlighted earlier, there is no single panacea for our energy needs or a clear idea of what the future will bring. Powering a diverse world takes a diverse set of solutions. As Mr. Jenkins points out in his article, the best way to ensure that low-carbon sources continue to grow is to not put all of our eggs in one basket. What is needed is a toolkit of locally relevant and sustainable technologies that can respond to the growing need for reliable, safe, and clean energy worldwide. That is the industries’ north star. The trick, as it were, is to keeps steering towards it.

News in Depth: Japan’s Shift Towards Fossil Fuels Raises New Questions about Emissions and Nuclear Investment

Introduction

The Wall Street Journal recently reported on Japan’s increasing investment in coal, oil, and natural gas as the country strains to produce enough electricity following the idling of all nuclear plants in the aftermath of the Fukushima disaster in March of 2011.

Japan’s embrace of fossil fuels has a number of implications, most notably the pressure on emissions standards and on medium and long term investments in nuclear and renewable energy sources more broadly. In this week’s News in Depth feature, we explore Japan’s recent moves with respect to fossil fuels and the impact those moves have on emissions and strategies for energy infrastructure investment.

The Low Price of Oil and it’s Impact on Japan’s Energy Sector

As of writing, Oil is priced at ($53.44 for Brent Crude), reflecting a downward trend that began in 2014.

Crude Oil 6 Month Price Trend

Goldman Sachs analysts suggest that we may see the price of U.S. crude drop as far as $40 a barrel in the near-term, as inventories begin to rise.

While we continue to forecast a strong demand recovery in 2015, we believe that sequentially weaker activity, the end of winter and the end of potential restocking demand, will lead to a sequential deceleration in demand-growth as we enter the spring.

These prices, in addition to low coal and natural gas prices, have had a major impact on Japan as it seeks to fill the capacity void left by its 48 idled nuclear plants. Japan brought 14 new gas and coal-fired power plants online by the end of 2014 alone. It’s also been reported that by the end of 2025, Japan hopes to have a total capacity of over 13GW of new coal generation.

Reactions to this shift towards oil, coal, and gas have been mixed. There are clear political and economic advantages to Japan’s diversification. Perhaps most importantly, reliance on the cheaper fossil fuels will help Japan ease it’s energy import bill. In the first half of 2014, Japan’s trade gap reached 4.8 trillion yen. Moves to these cheaper energy sources are projected to lower that deficit and to ease pressure on and lower costs for Japan’s economy and manufacturing sector.

However, with Japan being the world’s fifth-biggest emitter of carbon dioxide, concerns have been raised about its increasing reliance of fossil fuels. Aaron Sheldrick, reporting for the Japan Times, writes that Japan is seeing increasing pressure from other countries, including China and the US, to meet it’s emission targets.

Balancing Short Term and Long Term Energy Investments

While the situation in Japan reflects many unique factors, including the Fukushima disaster and the public distrust of nuclear energy, it also provides a number of interesting angles of analysis. There is the broader phenomena of cheap oil and fossil fuels. However, the concerns highlighted above, including climate change and the regulation of carbon emissions, highlight the importance of keeping a longer term view on energy infrastructure investment. Moreover, it is important to consider the balance of an interest in highly elastic and less capital intensive energy sources, such as fossil fuels, with an interest in longer term infrastructure investments, such as nuclear, that pollute less and provide for greater supply certainty for growing economies.

For more on these issues, listen to The Bulletin with UBS podcast by Monocle, which this weeks focuses on global investment strategies in the oil sector. For further reference and cost comparisons between different energy sources, see also The Economics of Nuclear Power.

The Future of Nuclear Power and The Long View

Below is a comment from Future of NuclearChair Henry Vehovec on his opening remarks and in response to post-event press coverage:

“The day after Wednesday’s Future of Nuclear 2013 Conference in Toronto the Premier Kathleen Wynne and the Province of Ontario announced that new build nuclear reactors would not be pursued at this time. Articles in the press cited pricing pressure from cheap shale gas, a decline in energy demand, and increased resistance to nuclear power in the post-Fukushima world as reasons for the decision. Although there has been a recent decline in nuclear power in the global energy mix it would be premature to dismiss nuclear in the longer term.

Henry Vehovec, Chair, Future of Nuclear

Henry Vehovec, Chair, Future of Nuclear

The global mix of major energy sources evolves over decades and plays out in time frames of a century or more. The first oil well was drilled in Pennsylvania in 1859, however, it wasn’t until the development of the Model-T Ford fifty years later that oil truly took off as a major global energy source. Similarly, civilian nuclear energy started about fifty years ago and the industry now needs game changing innovation if it is to compete with shale gas and address concerns of radioactive waste, safety and proliferation.

Are there any such game changing innovations on the horizon? At the Future of Nuclear Conference we heard about several nuclear technologies that hold the paradigm shifting potential to compete with shale gas.  New nuclear technologies that are on the drawing board can burn spent fuel, are incapable of meltdown, and do not produce fissile material. We heard about fusion from General Fusion, thorium and molten salt reactors (MSR) from Terrestrial Energy, small modular reactors (SMR) from Babcock and Wilcox, portable reactors, travelling reactors, floating reactors and more. These technologies have attracted investors such as Jeff Bezos and Bill Gates as well as some of the wealthiest sovereign funds. The only problem with most of these technologies is that they require at least a decade to develop and would cost several billion dollars to produce their first prototype let alone a commercially available product. In this era of short term pressures for quarterly results in business and governments that rarely think beyond the horizon of a 4-year election term it is difficult to find jurisdictions that plan decades into the future as is required when considering energy infrastructure.

China, India, Russia and UAE are examples of countries that are taking an appropriate long view to energy planning. Not coincidentally, these are also among the countries that are proceeding aggressively with their plans to build nuclear power capabilities. China alone has 29 reactors currently under construction. Although some jurisdictions in the west do not have local demand to support new reactors it would certainly make sense to stay engaged with the industry and act as a supplier to international markets where possible. As a commodity, shale gas will not be cheap and plentiful forever.”