Re: Mook's quote about nuclear being a "low grade heat". Is it true?

From: daestrom (daestrom_at_NO_SPAM_HEREtwcny.rr.com)
Date: 06/25/04 

Date: Fri, 25 Jun 2004 17:21:01 GMT

"william mook" <william.mook@mokindustries.com> wrote in message
news:407c5321.0406241834.6e6114ca@posting.google.com...
> "daestrom" <daestrom@NO_SPAM_HEREtwcny.rr.com> wrote in message
news:<%ApCc.246578$hY.39892@twister.nyroc.rr.com>...
> > "william mook" <william.mook@mokindustries.com> wrote in message
> > news:407c5321.0406230609.b19f7d2@posting.google.com...
> > > The government gaurantees the cost of decommissioning because no one
> > > would even consider building a nuclear reactor. Any confirmation that
> > > the cost of decommissioning the government quotes has anything to do
> > > with real costs? Its the real costs that society must bear, whether
> > > its paid for by government (through taxes) or the market (through
> > > competitive pricing).
> >
> > Several plants *have* been decommissioned. And all with *private*
funds, no
> > govt. involvement. Lookup 'Big Rock Point', 'Maine Yankee', 'Yankee
Rowe'
> > for examples. These were/are being done from the funds set aside by the
> > owners, not govt. funds. So far, no decommissioned plant has run out
of
> > funds.
>
> Great. In all this information do you have an idea of what the cost
> is *per watt*??? This what we're talking about remember. I maintain
> that total life cycle cost of a nuclear power plant is around $5 per
> watt. Do you have a better figure. If so, what is it?
>
> >
> > The govt. does *not* 'guarantee the cost of decommissioning'. Where did
you
> > get a ridiculous idea like that.
>
> Please. Holster the dismissive tone. There's no need for it.

Sorry. But perhaps you could 'holster' phrases like, 'My bet is...', 'my
belief is...', 'clearly this is...', 'my sense is....' and 'I believe...'
These are just opinions and you supply no facts or references to support
them. Your latest post is riddled with such phrases trying to cast
aspersions on the nuclear industry's financial position.

>
> > The govt *does* require that the cost of
> > decommissioning be provided for by the licensee during the plant's
operating
> > life.
>
> Well, you seem to know a lot about all of this. So, what is the cost
> *per watt*?? You gave us a cost of something like 1/10th cent per kWh
> - which is per unit energy. This figure is suspect given the low
> utilization of nuclear energy. C'mon. What has the total life cycle
> cost expected to be for Seabrook? Divide by the number of watts and
> voila' - you've got the figure we seek. The dollars per watt. My bet
> is that its greater than $5 for all the reasons I've already stated.
> What do you believe it to be and why?

You keep asking for costs per watt. But the financing of *any* electric
power plant is not based on costs per watt, it is based on cost per
watt-hour. Plants don't sell 'watts', they sell energy. If you focus on
only the cost per watt, you do not take into consideration the capacity
factor or plant life. Both are key parameters in any financial decision.
With a nuclear plant's long life and high capacity factor compared to some
other forms of energy, it easily compensates for its higher capital costs.

One of the drawbacks with some forms of renewable is even with a low 'cost
per watt', with low capacity factors it isn't economical to operate them.
If a plant costs just $1.00 'per watt' to build and has zero fuel and O&M
costs, but only operates at 25% capacity factor over a 20 year life, then
the cost per kWh generated is already $0.05 /kWh (assuming an 8% interest
rate on the capital). Some other technology, such as a nuc can cost $2.25
per watt (with 8% interest on the capital) and have fuel & O&M costs of
$0.20 'per watt' (my earlier numbers of $173M/yr for an 850MWe plant). But
by operating at 95% capacity factor, over a 40 year life, then the cost per
kWh generated is $0.047/kWh. Less than the cheaper 'per watt' with no fuel
cost alternative.

Your whole 'cost per watt' argument is flawed. We're talking about
producing *energy*, not power. (the newsgroup is sci.energy)

>
> > But the licensee does this by paying into a fund from its own pocket
> > and the rates charged. Not the govt. Some owners, using data from
actual
> > decommissionings has been lobbying the govt to reduce the amount of
funds
> > set aside for that purpose. They reason that current decommissioning
costs
> > aren't as high as the funds required by the govt and would like to use
some
> > of the excess funds for other purposes. The govt. has been resisting
this
> > as imprudent. I would tend to agree, but this lends credibility to the
> > belief that the funds are more than adequate.
>
> That's nice. But what's the dollars per watt for the total life cycle
> of a nuclear power plant? If its greater than $5 per watt you lose
> the argument - because that was my point from the outset.

Again with the 'per watt' argument. Look at it this way, a nuc is doing
well if it can get $40/MWhr on the open market. The companies operating
nucs are private, for-profit companies. They have to pay all the fees for
waste disposal, purchase fuel, pay O&M, pay off the bonds and banks, and pay
into decommissioning funds. They do this all and still pay a competitive
return to their investors. And this is in direct competition with coal.

And don't accuse them of accounting ala Enron, or govt assistance unless you
can provide some proof of such a claim. Even some of your own references
point out that renewable resources are getting govt assistance in the form
of state mandates for non-hydro renewables. But none of the reports mention
any federal assistance for nuclear.

>
> In all of your knowledge you seem to have lost track of the central
> issue. Which all the stuff you say above has nothing to do with.
>
> > >
> > > And, do you really think Seabrook cost only $250 million to build?
> >
> > Never said it did, you're the one that came up with that number using
your
> > references. Why are you attributing that to me?
>
> Because you are arguing against the $5 per watt figure. Please
> provide us with your reasoning. None of what you've said is germaine
> to this central issue.

Not germane?? I explained why I believe construction costs will be lower
than the most expensive plants built in the 80's. I supply information
about the 'recurring costs' of operating such a plant. I point out that the
supply side of the nuclear fuel cycle is fully funded by the price of the
fuel. I point out that the end-of-life costs are also being fully funded
from the plant's operating revenue.

I point out that *all* these costs are funded by private industry on a 'per
watt-hour' basis and you continue to drag up 'cost per watt' as if *that*
were the proper way to finance an *energy* source.

The 'cost per watt' is not germane. The cost per watt-hour is what matters.

>
> > I did not comment on it at
> > all.
>
> Wait a minute, do you accept that the cost of nuclear power is greater
> than $5 per watt? Then, we have no basis for a disagreement. If you
> believe nuclear power to cost less than this, please state the
> reasoning for this.
>
> > > And, the fuel supply infrastructure is fully paid for - and provides
> > > positive ROI to its owners - through the fees charged for fuel?
> >
> > The supply side, absolutely. GNF and other fuel vendors don't receive
money
> > from govt, and they aren't in the business for charity. Along with the
cost
> > of the fuel, most fuel vendors must also supply a detailed reload
analysis
> > that verifies the thermal limits and performance for the upcoming fuel
> > cycle. And 24/7 support for operating problems and optimum fuel
management.
>
> Its damned important to know if something is business-like and relying
> on government largesse for survival or if something is a real business
> relying on competitive marketplaces to survive. My sense is that
> nuclear fuels are government dependent throughout.

Do you have some information/reference to support such a *belief*?? You
would have to extend this belief to include other countries supporting their
commercial nuclear power programs as well. Do you believe all countries
with nuclear power plants have governments that are preferentially funding
nuclear over other forms of electric generation? Your 'sense' have betrayed
you in this.

> This is a good
> thing given the mischief one can get up to with nuclear materials.
> However, it doesn't help make nuclear more competitive economically.

The govt's role in the nuclear industry is regulatory. They make the rules
about controlling special nuclear material and the requirements to ensure
the health and safety of the public. But they do not provide any money to
fulfill those requirements. At least not since the earliest nuclear plants
in the early 60's were built. The NRC's slice of the federal budget is used
for inspection and review of plant design/operation. Nuclear doesn't even
get the tax breaks of 'big oil' for depleted resources.

>
> The whole point is that if we're paying $5 per watt or more for
> nuclear power, even if the fuel were free (as in a solar collector)
> we're going to pay to much for the resulting energy.
>

The price 'per watt' and the 'cost of energy' are *not* a direct conversion.
The lifetime and capacity factor go into it as well. Do the math for even
$5.00 per watt on a plant that operates for 60 years (a few nuclear plant
licenses *have* been extended to this length). Then the total O&M, fuel and
capital costs rises to just $0.073 / kWh (adding less than 3 cents/kWh over
the $2.25 plant's cost of $0.047/kWh)

One of the reasons that coal is such a cheap sources of electricity (besides
the obviously low fuel costs) is that many coal plants are over 50 years
old. One pair of units not far from me was placed in service in 1923. Talk
about your time-value of money, that plant definitely was worth its price.
But nucs cannot operate beyond their license (although some have had
extensions).

> > The disposal side is currently being funded by fees collected from every
> > licensee in the country. Whether those fees will be adequate probably
will
> > depend on how wasteful the federal govt. is and how much it takes trying
to
> > make the long-term storage safer than any other man made proposition in
> > history. At the rate the federal govt. is dragging its feet (it had
> > 'promised' the industry it would be accepting fuel by now), who can say?
>
> So, you're tacitly admitting we don't know what the real costs are,
> but you are willing to blame government inefficiency for those costs
> when they come due.

If it goes anything like the decommissioning funds of those plants already
shutdown, we will most likely find it *over* funded. The excesses in
decommissioning funds would suggest that the govt mandated fees are
conservatively high (which is a good thing). Why do you believe they will
be insufficient?

>
> This isn't a useful attitude or argument. What are the real costs
> associated with nuclear power. I believe $5 per watt to be low - but
> I'm giving nuclear all the benefits of doubt.

But you haven't supplied any reason for your belief.

> The real costs may be
> double this. In any event, be the costs $5 or $10 per watt - they're
> too high to compete with fossil fuels at their current prices. Which
> is why nuclear isn't more widely used today.

In the electricity sector, they compete directly today. In fact the energy
produced by nuclear has *risen* despite no plant construction being started
since TMI. With all the fees and costs they currently pay, they still
provide a healthy return to investors. Nuclear is the second largest sector
of electric generation in the US behind coal at about 20% of all electric
production. 43% of Illinois' electricity comes from nuclear. Not widely
used??

>
> > So an additional cost many plants are now funding from their operating
> > revenue is licensing and construction of interim dry-cask storage of
spent
> > fuel on site. This is a cost that was never in the plans, but its cost
is
> > being absorbed by the licensee as a normal part of doing business.
>
>
> Again, you seem to know a lot of minutiae about how things work in the
> nuclear industry. At the same time you seem to be ignorant of the
> core economic issues. Lets simplify it. Take all the costs
> associated with the operation of a nuclear power plant over its life.
> Now, divide those costs by the rate at which it produces power.
> Adjust for the time value of money, and arrive at a present cost per
> watt... you'll get a number greater than $5.
>

'rate at which it produces power'??? Phrases like that lead one to believe
it is you that are ignorant of the core issues. Surely you mean 'rate at
which it produces energy'. But then you would see the 'costs per watt'
argument for what it is. A red herring.

Well, we probably will never agree on this. I maintain that the 'per watt'
cost is not the proper measure of a plant's economic viability. The cost
'per watt-hour' is (bankers and investors that fund all new plants seem to
agree). I've provided you with some numbers about the cost per kWh of a
typical nuc. All you've done is state that you 'believe' the cost 'per
watt' is greater than $5. Belief is a wonderful thing.

> > >
> > > Obviously none of this is true. I stand by my $5 per watt as being
> > > more accurate than the prices quoted thus far. Sorry.
> >
> > Obviously, you don't know how nuclear fuel is funded.
>
> Clearly you don't know how much things cost - which is what we're
> talking about.
>
> > Nor do you realize
> > that decommissioning is funded by the owner, and *has* already taken
place
> > at several plants.
>
> Nonsense. You said yourself you had no idea of what the real costs
> would be but would be perfectly willing to blame government largesse
> for any shortfalls. Typical.

Now you mix up two different costs. Keep them straight. Decommissioning of
plants *has* already taken place. And the funds set aside for it have been
adequate.

If you go back and read my earlier statements, you will see it is the *fuel
waste disposal* that has not taken place and so its funding level is not
proven. Two different items. I'm somewhat cynical about the waste disposal
myself since it is govt run and far behind schedule. But so far your fears
(or mine) have *not* been proven true.

>
> > Yet you provide no basis for your number of $5 per watt?
>
> Sure. Take the real costs of a plant like Seabrook. Divide that by
> the capacity. Divide again by the utilization rate over its life.
> And voila' you end up with a number greater than $5 per watt.

A ridiculous exercise, but fine. Assume Seabrook costs $5B and it's
capacity is 1167MWe. Further assume the lifetime capacity factor is 90%.
($5.0e9 / 1.167e9) / .90 => $4.76 'per watt'. Nine Mile Point II cost
something on the order of $6.2B and has a rated output of 1205 MWe ($6.2e9
/ 1.205e9) / .90 => $5.72 'per watt'. Well, you got me there. One of the
poorest managed, most expensive plants *ever* built came in at over $5 per
watt. Not like any other industry hasn't had such a poor example to chose
from.

Even at 8% interest, Seabrook is only $0.05/kWhr. Refinance the debt at 4%
and it drops to $0.03/kWhr.

>
> NOT taken into account are the *CAPITAL* costs associated with the
> production of fuels required to sustain this plant over its life, and
> the *FIXED* costs associated with decommissioning the plant and
> disposing of the spent fuel over its life.

You simply refuse to believe that the price of fuel, sold by a private
manufacturer without govt assistance doesn't include all the costs of that
manufacturer's business. Do you believe fuel manufacturers don't pay the
costs associated with their capital investments from their sales revenue?
Or do you believe they receive govt assistance to manufacture fuel for use
both domestically and abroad? GNF supplies fuel for many plants in other
countries as well as here in the US. Is the govt assisting in those foreign
sales somehow? Evidence to support any such belief??

The only cost in the nuc plant life cycle that hasn't been proven in today's
market is the disposal of spent fuel. But estimates of those costs are
currently being paid. All other costs in the life cycle of the plant and
production of fuel have already been proven in today's market.

>
> Add these in and I have no doubt the cost PER WATT - is around $10.
>
> > You started with the operating costs with....
> >
> > >>>> The recurring costs of nuclear power plants - the cost for fuel and
> > >>>> maintenance - is 1.8 cents per kWh.
> >
> > I supplied numbers for a typical plant that support this price of
'recurring
> > costs'. The O&M and fuel costs can easily run in the 2 to 5 cents per
kWh
> > range, depending on how well the plant is run. A top performing 1100
MWe
> > plant I know of has an annual fuel cost of $28M, and O&M cost of $98M
and a
> > capacity factor of 96%. That's a 'recurring cost' of 1.36 cents / kWh.
>
> I think you've missed a few things that the DOE report didn't. But
> these recurring costs say nothing about the cost of capital needed to
> sustain a given level of power. DOE says these are something like
> $0.20 per watt. I think this is woefully underestimated, for the
> reasons already stated. If you think the $0.20 per watt is right on -
> then you need to show me a specific example of where these costs were
> achieved. That's all. The mechanics of funding don't answer that -
> and I think you know this.
>
>
>
> > I've also provided the costs paid into the federal fuel disposal project
on
> > an annual basis.
>
> Great. But what is the total capital cost per watt for a nuclear
> power plant. That's what we're talking about. Given the time value
> of money, this adds far more to the cost of nuclear energy than the
> recurring costs.
>

True it adds to the cost of the energy produced. As I've already shown,
with a construction cost of $2.25 per watt, it adds about $0.19/watt/yr (at
8%). And that works out to about $0.02/kWhr.

But you keep flip-flopping between the 'cost of energy' and the cost per
watt. Stick with the cost per energy.

> > But now lets talk about capital costs per watt of capacity (since you
keep
> > bringing up construction costs, claiming $5 per watt).
>
> Yes.
>
> > Some nuc plants have been re-sold for as little as ~$250M.
>
> More confusion and confabulation. Typical disinformation technique.
> Look, what something costs new and what something costs used are two
> different things. A new rolls royce might cost over $320,000. A
> wrecked used Rolls Royce might be had for as little as $3,200. What
> is the real cost of the car? Clearly the new price is the replacement
> cost of the car.
>
> > But as I said
> > before, this left some of the true costs of construction 'stranded' with
the
> > original utilities and their public utility commissions to deal with.
>
> Yes. And all this obscures the core issue. If we were to rely
> totally on nuclear power - the real cost of doing so is what we'd have
> to pay. So, its important to know those costs absent the obsfucation
> you are attempting to lay on us.
>
> > You site the Seabrook plant, one of the most expensive nuclear plants
built.
>
> Yes. That's because its one of the newest. Don't you think new
> construction would be more in line with the newest plant built? Of
> course it would.

No. Haven't you been reading anything I've said about the costs of new
construction? Seabrook fell into a very unlucky time frame. After
construction was started, many design requirements were changed due to the
TMI accident. Much of the construction costs had to be paid twice. And
although they had a *construction* permit, they did not have an *operating*
permit. So they spent considerable time (years) in public meetings fighting
with the liberal government in MA (less than 10 miles away) to get an
emergency plan approved so they could begin *operating*. The delays in
getting an operating license caused much of the large cost overruns. And
what were the interest rates like in the '80's and early '90's???

Since Seabrook, the licensing process has changed. It is much more
streamlined. Construction would not even begin today unless the plant had
an *operating* license. There is no particular reason to believe large
amounts of a new plant will have to be torn out and rebuilt after building
it the first time. The NRC has 'pre-approved' several plant designs to make
the engineering and licensing costs much lower/faster.

>
> > Do you have some reason to believe all new construction would
> > be as expensive as Seabrook or higher?
>
> Yes. Because they would be built today, not in 1970.
>
> > I pointed out that any new construction should cost less than in the
'80's
> > and gave my reasoning (changes in licensing, pre-approved plant designs,
no
> > need to tear out and rework after being half built). One internal study
> > that I've been privy to suggests the capital costs could be around $2 to
> > $2.50 per watt (that's about $2.5B for an 1100 MWe unit).
>
> A study made to promote investment in nuclear power is not an unbiased
> analysis is it.

Gee, if it was 'to promote investment in nuclear power', then why do you
suppose it recommended *against* such construction? If it *were* biased,
don't you think it would have recommended *for* building?

> Further, this is just the CONSTRUCTION COST. There
> are plenty of costs that are stranded to use your terminology.

No financial study, including the one I mentioned, looks at 'just the
construction cost'. The study looked at the entire life of the plant from
the first spade-full of dirt to the return to 'green field' conditions. It
included the cost to purchase fuel from private manufacturers, the payments
to fund the federal waste disposal site, decommissing funds and all the
other operating costs. It concluded that the current price to build is too
high to compete with fossil. But it concluded that if the construction cost
aspect could be lowered by ~$0.75 per watt, then it would be competitive.

The term 'stranded' refers to costs that regulated utilities are not able to
recoup when forced by legislation to sell off their generation facilities as
part of deregulation. It applies to any facility (coal/nuc/hydro/whatever)
that is forced to be sold for less than 'book value'. Since some state
legislatures passed laws requiring the sale regardless of price, utilities
have petitioned their public utility commissions for relief from such
losses. Not all the costs have been allowed and many have been 'eaten' by
the utility and its shareholders.

>
> Show me a plant that has been recently built anywhere for this price?
> That's all I ask.
> Despite your vast knowledge about the machinations
> of nuclear power funding you seem to be devoid of any real data
> regarding total cost per watt. Clearly this is so because the entire
> industry has been set up to avoid those costs by shunting them over to
> the government.

Unfounded accusations with no evidence. You should do better.

>
> > The study came to
> > the conclusion that with current (at the time) NG prices and gas-turbine
> > technology, a nuc wouldn't be competitive unless its price was in the
$1.25
> > to $1.50 per watt range. But the study was four years ago, and we all
know
> > that NG prices have risen. But since the bulk of the study is
proprietary,
> > you can't read it so you will either have to take my word for it, or
just
> > chose to ignore the possibilities.
> >
>
> The point is as the cost of energy rises the profitability of industry
> falls and with it, the standard of living of an industrial people.
> The goal of industrial engineering should be to raise living standards
> by lowering the cost of energy. Nuclear might be capable of achieving
> this, but this won't happen as long as we favor complex machinations -
> like the ones you describe above - that hide real costs from decision
> makers.
>
> > With a life capacity factor of 90%, a $2.25 per watt plant funded at 8%
> > would have an annual amortized capitcal cost of $0.19 per watt and
generate
> > 7.884 kWh per watt. That makes the capital costs about 2.4 cents / kWh.
>
>
> Agreed. Add this to the 1.8 cents per kWh and yhou get 4.2 cents /
> kWh - very close to the 6.0 cents per kWh I've come up with. Since
> the values you mention don't take other costs into account - and are
> optimistic on other grounds - I think my figure is to be preferred.
> But, this is what we're arguing about. 4.2 vs 6.0 cents per kWh.
>
>
> > This doesn't count additional capital expenditures of any sort over the
> > years though. Some of the existing plants have charged off large
> > maintenance/improvement items as capital projects. Some of those
> > expenditures have resulted in increased output, others were just
necessary
> > to stay operating.
>
> Yes. Maintenance costs add to the total cost. But I was giving
> nuclear power a break in my comments - and looking at the importance
> of capital costs.

Most maintenance costs are already funded in the ~2 cents per kWh. The 'M'
in 'O&M'. Only extraordinary capital additions need be considered here.

>
> > A PWR's S/G replacement can run $30M to $50M, but not
> > all plants have needed this sort of maintenance. Some capital
expenditures
> > have resulted in increasing plant output by as much as 20%.
>
> Sure. But they still add to the cost.
>
> > Capital costs of only 20 cents per watt?? None of your references sited
> > earlier seem to support your interpretation.
>
> More nonsense. The DOE references I site said $0.20 per watt is the
> capital cost - I refused to believe it.

Here is your original list... show me where it states $0.20 per watt...

> http://eia.doe.gov/cneaf/nuclear/page/uran_enrich_fuel/convert.html
>
> http://www.eia.doe.gov/cneaf/electricity/chg_str_fuel/html/fig08.html
>
> http://tonto.eia.doe.gov/FTPROOT/service/oiaf9501.pdf
>

<snip>
> > The only web site of the three
> > that even discusses costs with actual amounts is...
> >
> > http://tonto.eia.doe.gov/FTPROOT/service/oiaf9501.pdf
>
>
> A better resource is;
>
> http://www.eia.doe.gov/oiaf/aeo/electricity.html
>

Interesting. Although NG generation is expected to surpass nuclear, it also
expects that nuclear generation will increase (due to power up-rates and
improvements in capacity factor). Increasing nuclear generation would seem
counter to '

Figure 72 shows a chart of predicted new plant costs. It does not explain
if this is just construction or if it includes other costs. Looking at the
accompanying data, they predict nuclear capital costs of 46.15 mills per kWh
in 2010. At $0.04615 / kWh, and if the plant runs at 90% capacity factor
that is $0.35/watt/yr. For 40 years at 8%, that would mean a present value
capital cost of $4.34 'per watt'. The capital costs listed for wind are
almost as high when calculated properly on a kWh basis (35.93 mills per kWh
in 2010 and 44.34 mills per kWh in 2025). (they don't mention what capacity
factor or lifetime they assume for wind) Of course wind is much cheaper
'per watt', but it has a much lower expected life-time energy production.
This is the flaw in your 'cost per watt' fixation. Again, plants don't sell
'watts' they sell 'watt-hours'.

But it doesn't say anything about capital costs of $0.20 per watt either.
Where *did* you find such a figure? If you're going to accuse the DOE
and/or the nuclear industry of hiding costs or ridiculous claims, it would
be nice to be able to read the statements for myself.

daestrom

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