Long-Term Scenarios for Coal, Nuclear Power, and Natural Gas
In May, Southern Company cancelled the nation’s major coal sequestration project. This action was followed by the shutdown of massive nuclear construction projects in South Carolina, announced in July. An August decision in by Duke Power to suspend plans for nuclear construction in Florida added another major jolt for energy planners.
On August 31, Southern Company announced that it would attempt to complete its Vogtle nuclear plants, on shaky ground due to large budget overruns and lengthy delays. But with the bankruptcy of the Westinghouse Electric Company – the firm that was supposed to build the new nuclear reactors – and the loss of the synergies and industry learning that would come from multiple projects, hopes for an American nuclear renaissance now appears in tatters.
In the short term, these turning points create considerable pain for power company shareholders, ratepayers, and senior executives whose investment strategies had admirable intentions but fell short of feasibility.
But there may be even more important ramifications that are longer-term. Two technologies long thought essential for sharply reducing carbon emissions from electric generation and, thereby, slowing climate change, now appear to have a diminished future, at least in this country.
If we want to learn from recent developments, we need to ask what went wrong, if prescient strategic planning could have produced more favorable results, and whether there are lessons for fuels like natural gas, currently on a hot streak but whose role in the coming decades is a topic of fervent debate.
In the early 1980s, I joined a delegation of state officials from around the country that inspected abandoned nuclear construction sites in the State of Washington. The Washington Public Power Supply System had started out to build five large, 1,200 megawatt reactors, but finished only one, after the projected costs for completion became unsustainable. The fiasco led to the largest municipal bond default up to that time and the irreverent acronym WHOOPS for the red-faced power organization.
As our group visited a giant 480-foot tall, concrete cooling tower for a plant never completed, we jokingly wondered what would anthropologists think if they unearthed it centuries later, like an ancient Mayan pyramid. Would they try to discern some ancient religious meaning to this massive human endeavor?
The epic failure in the Northwest resulted from vast overestimation of future demand for electricity and an equally vast underestimation of the challenges managing projects of such magnitude. For a long time, the incident became part of the rationale for delaying further attempts to build new nuclear plants.
In 1984, the Office of Technology Assessment issued a report, "Nuclear Power in an Age of Uncertainty" (for which I served as an advisor). The report focused on safety, an issue that the American industry addressed with admirable vigor after the accident at Three Mile Island. In subsequent years, concerns about safety resided as a barrier to the growth of the industry.
Less noticed, the OTA suggested smaller nuclear reactors as potential alternatives to the very large ones that had become the industry’s norm, despite the latter’s economies of scale in construction and operation. The report suggested that smaller reactors might prove appealing to utilities because they allowed more flexibility in planning for future demand, reduced the consequences of an outage on the overall grid, would limit the financial exposure of the utility to loss, and increase overall system reliability. In addition, more of the smaller plants could be fabricated in the factory rather than constructed in the field, potentially resulting in large cost savings if the market was large enough. Moreover, the construction times for small plants would probably be much less than for their larger counterparts.
In the 21st century, as the possibility of new nuclear construction reemerged, I suggested to several nuclear engineers that smaller nuclear plants might be the best option due to the historic problems of bringing large plants in on time and on budget and to the slow growth of electricity demand in the American market. The invariable response was that I did not understand nuclear power, particularly the economies of scale of the giant reactors.
In any case, the effort to revive nuclear construction in this country chose to rely once again on very large reactors. And again, electric companies could not manage costs or projected schedules for the projects. Some of the bugs could have been worked with the experience that comes with repetitive building. But it has been clear for a while that demand growth in the United States might not justify building a lot of these very large plants.
For the coal industry, a turning point came in the decade of the 1990s. West Virginia Sen. Robert Byrd reigned as chairman of the Senate Appropriations Committee and coal companies were getting government assistance meeting the requirements of the Clean Air Act. But coal companies failed to push proposals to beef up federal research and development on carbon sequestration, preferring a strategy of disputing scientific analysis of the likely impacts of fossil fuels on climate. If sequestration from coal was to become a viable alternative in the energy mix, supportive efforts probably needed to have begun much sooner than they did, though the costs still might have proven too high in a competitive market.
The fracking of oil and gas in shale formations, solar panels, and wind turbines, for their part, have followed their own trajectories in achieving current market success – government support tracing back to the 1970s for basic research and market incentives, long periods of apparent lack of progress, and private companies doing the fine tuning necessary to eventually make these technologies market competitive and achieve continuous improvements in efficiency and cost.
While foreign markets with rapid demand growth may offer opportunities for smaller nuclear reactors and coal generation with carbon sequestration, the push for them in the United States may have started too late to follow the paths to progress of fracking, solar, and wind.
Which brings us to the future of natural gas. Currently, the displacement of coal generation with gas is a win-win situation, reducing both overall costs and the emissions of greenhouse gases. Natural gas can become an even better fuel for the environment with improved controls of methane leakage, a relatively easy task with current technology. Some environmentalists believe that developments in storage will allow the creation of reliable electric grids with only intermittent generation (wind and solar), providing a path to very low emissions of greenhouse gases needed by mid-century. Another path with less risks is the creation of another leg to the stool, the creation of gas generation with carbon sequestration.
Eventually, the cries will come for these advanced gas plants. But given the time lags from science experiments to large demonstrations to market competitiveness, a crash effort needs to begin now. Even if solar, wind and storage technologies continue to achieve remarkable progress in the decades to come, a prudent strategy for maintaining a reliable electric grid with least risk should include an option to generate power from natural gas with only negligible emissions of greenhouse gases.