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

From: william mook (william.mook_at_mokindustries.com)
Date: 06/26/04 

Date: 26 Jun 2004 02:13:33 -0700

"daestrom" <daestrom@NO_SPAM_HEREtwcny.rr.com> wrote in message news:<1aZCc.121487$j24.101475@twister.nyroc.rr.com>...
> "william mook" <william.mook@mokindustries.com> wrote in message
> news:407c5321.0406241834.6e6114ca@posting.google.com...
> > "daestrom" <daestrom@NO_SPAM_HEREtwcny.rr.com> wrote in message
> news:<%ApCc.246578$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...'

None of these phrases called you ridiculous. You did. Clearly there
is a difference.

> These are just opinions and you supply no facts or references
> to support them.

I supplied several facts and references.

> Your latest post is riddled with such phrases trying to cast
> aspersions on the nuclear industry's financial position.

Nonsense.
 
> >
> > > 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.

Yes I do, and you keep avoiding it.

> But the financing of *any* electric
> power plant is not based on costs per watt, it is based on cost per
> watt-hour.

Yes it is and a major contribution to that cost per watt-hour is the
time value of money tied up in each watt. Hence, what is the cost per
watt of a nuclear power plant including all the capital cost in the
construction of the fuel processing plant to support it along with the
plant's construction cost, the cost of decommissioning the plant and
the costs of decommissioning the fuel processing plant to support each
watt?

> Plants don't sell 'watts', they sell energy.

That's right, and to obtain an accurate and complete accounting of
costs one must examine the time value of the money tied up in the
capital cost of the power plant as well as the capital cost tied up in
the fuel creation and disposal cycle. Since we're talking time value
of a fixed asset dollars per watt-hour clearly become dollars per
watt. So, what is the dollars per watt again?

> If you focus on
> only the cost per watt, you do not take into consideration the capacity
> factor or plant life.

Nonsense. I would suggest you read any analysis of present value and
net present value. Obviously you're hoping those who read your tripe
don't know about the time value of money.

> Both are key parameters in any financial decision.

Clearly this is all reduced to time value of money which in terms of a
power plant is given in dollars per watt - precisely because energy is
dollars per watt-hour. In all your harangue you've not given any
numbers whatever about total dollars per watt, nor refuted logically
my statements (which have been supported by analysis and references)
that $5 per watt or more is a reasonable figure.

> 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.

Rot. Its easiest to think of things in terms of payments needed to
support a fixed asset. Here, interest rate is important. Moreso than
time to repay and so forth. Consider $1,000 repaid at various
interest rates over various times;

Years 0.05 0.06 0.07 0.08 0.09 0.1
5 $230.97 $237.40 $243.89 $250.46 $257.09 $263.80
10 $129.50 $135.87 $142.38 $149.03 $155.82 $162.75
15 $96.34 $102.96 $109.79 $116.83 $124.06 $131.47
20 $80.24 $87.18 $94.39 $101.85 $109.55 $117.46
25 $70.95 $78.23 $85.81 $93.68 $101.81 $110.17
30 $65.05 $72.65 $80.59 $88.83 $97.34 $106.08
35 $61.07 $68.97 $77.23 $85.80 $94.64 $103.69
40 $58.28 $66.46 $75.01 $83.86 $92.96 $102.26

While its true that long terms of repayment do provide for lower
payments, the impact is not one to one. That is, a 30 year term is
not 1/2 a 15 year term. At high interest rates longer terms do more
to increase total cost than decrease it. Those annual costs for each
$1,000 tied up in capital equipment, in dollars per watt - add
significantly to the total cost per watt-hour.

Its easy to see how to convert one to the other. If each watt
operates so many hours over the course of a year and the payment
needed to support that watt over the year is so much, we easily come
up with a watt-hour.

Now, at this point people not familiar with finance ask, what if the
plant is paid for? What if the government or some philanthropist
didn't loan the money for the fixed capital. Then there is no payment
made for the capital tied up in this way - right?

No! This is the important point. That money that's tied up in the
capital, even if its fully paid in and not borrowed has a cost
associated with it. That's the time value of the money that's tied
up. Why? Beause that money could be put to some sort of use if it
weren't tied up and that use would create a return for the people who
owned the money before it was paid out for the nuclear plant. And
because its tied up in a nuclear plant, it can't earn that time value
- so by all rights, the nuclear plant (or whatever else its tied up
in) must be billed that time value.

> 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.

Well, capacity factor is just another way of saying how many hours per
year do you operate the power plant. Consider, that at $5 per watt
$1,000 would buy 200 watts of capacity. Using a time value of money
is 8% and the life cycle of the plant is 30 years then the payment
needed to support that is $88.83 per year. Now, if that 200 watt
capacity operates 1,000 hours per year that would be 200,000
watt-hours for $88.83 or $0.44 per kWh. Precisely the thing you're
asking for - See how price per watt is important?

If utilization or what you call capacity factor goes up to 8,000 hours
per year, this cost is 1/8th the figure just computed - or $0.055 per
kWh. (Close to the 6 cents per kWh I've been talking about)

Yes, it is true that a plant that operates a long time and utilization
rate are mitigating factors. But, clearly the most important or prime
factor is cost per watt!

Consider this... I have a solar plant that can produce electricity at
$0.30 per watt. In Ohio we receive only 1,200 hours of sunlight per
year. Now, at $0.30 per watt $1,000 buys 3,333 watts of capacity.
Multiplied by 1,200 hours this obtains 4,000 kWh of energy in the
course of a year. The $88.83 in payments that are needed to support
this $1,000 are divided by the 4,000 kWh figure to obtain $0.022 per
kWh. Plainly very low cost POWER capacity has in important influence
on the cost per kWh - which is a unit of energy.
 

> 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).

Well lessee... $1,000 would buy 1,000 watts at $1.00 per watt. 25%
capacity means that it operates only 25% of the time or at 250 watts
all of the time - same thing. So, since there are 8,766 hours in a
year (including leap year) this comes out to be 2,191.5 kWh per year.
$1,000 financed over 25 years at 8% yeilds an annual payment of
$93.68. So, dividing $93.68 by 2,191.5 obtains $0.0474 per kWh -
close to the $0.05 you quote.

> 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.

You've left out some figures I've asked you to provide the capital
costs of decommissioning the plant, the fuel supply, and the capital
cost of the fuel supply... and so forth. But, lets use the technique
I've described - which shows the importance of capital costs and why
I'm asking for them - in terms of dollars per watt - and see what we
come up with...

Well, the 40 year rate at 8% is $83.86 per year - not much different
than the 30 year rate. Utilization is important. So, 95% of 8,766
hours per year is 8,327.7 hours - which by the way no nuclear plant
has ever achieved. Anyone that claims that is omitting scheduled
maintenance from their figures. But, lets set that little white lie
aside and continue... Okay at $2.25 per watt this means that $1,000
buys 444.4 watts of capacity. This capacity when operated at 8,327.7
hours per year produces 3,701.2 kWh per year. Dividing this figure
into the payment obtains a cost per energy of --- $0.0226

Um, you're off by a factor of two I think. But that's just the
capital contribution. The recurring contribution of the nuclear plant
is $0.018 according to sources I've quoted (which you said I didn't
provide ;p) adding that in obtains $0.0406 - still a little low... so
there are some other things in the figure you gave assuming it is
right - and you gave that figure without a complete explanation of
where it came from - something I've done with my figures yet you claim
I'm just making stuff up. Ha!

> Your whole 'cost per watt' argument is flawed.

How can it be flawed when as in the example above when you gave all
the figures (no hidden recurring costs you didn't explain) I came up
with precisely the figure you did? Clearly you know the importance of
capital costs but wish to fool readers here into believing they're not
important and in fact that I'm a damnable fool for harping on it.
Now,why would someone who knows precisely what I'm talking about seek
to fool people in this way? Obviously something larger is afoot.

> We're talking about
> producing *energy*, not power. (the newsgroup is sci.energy)

Precisely right. That's why we integrate power over time to obtain
energy and take the time value of money tied up in power plants to
figure out its impact on the cost of energy. This explains precisely
the importance of the cost per watt figure of power plants to the
ultimate cost of energy produced by those power plants. Of course in
addition to the contribution fixed capital costs make toward the cost
of producing energy there are the recurring costs of producing energy
as well - fuel and maintenance for example.

> >
> > > 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.

Precisely.

> Look at it this way, a nuc is doing
> well if it can get $40/MWhr on the open market.

Yes.

> 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.

Really? Care to back up this totally theoretical construct (provided
without reference to anything but your own gut) with facts? Why not
take a look at New England Power? They own interests in several
TOTALLY INACTIVE nuclear power plants. What sort of return do you
think they get from the power produced by totally inactive power
plants??? The answer is zero. Then why retain these holdings? What
do they get? They get to feed at the government trough that rewards
them for holding on to nuclear power plants- even though they are
totally inactive.

Doesn't this suggest that the economics of the nuclear industry are
skewed by government handouts? Of course it does.
  
> And this is in direct competition with coal.

We would all be richer if the government didn't try to interfere with
something as important as energy. I have no beef against the
government trying to spread costs of nuclear weapons development by
leaning on the energy industry. I have no beef with the government
subsidizing nuclear energy in order to maintain a tight grip on a
strategically important technology. I have no beef with the
government keeping nuclear secrets. I do have a beef with the
government routinely lying to business and the public about the true
costs of these things. That's because it misdirects investment
capital and makes us all substantially poorer. The costs are
tremendous.

> And don't accuse them of accounting ala Enron, or govt assistance unless you
> can provide some proof of such a claim.

Well, now you're just making stuff up out of whole cloth and
attributing it to me. That's just plain nasty.

> 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.

Now, you're trying to change the argument from your totally failed
attempt to lie to us about the unimportance of cost per watt to the
cost of energy.

> But none of the reports mention
> any federal assistance for nuclear.

I didn't cite those reports for this reason. Clearly that companies
like New England Power fight over and own assets like totally inactive
nuclear power plants suggests there is some sort of government subsidy
for doing so.

http://biz.yahoo.com/ic/115/115636.html

> >
> > 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??

That's right because throughout you haven't given us a number that
you've backed up with any documentation. You mention $2.25 per watt
for the construction costs. Fine. What about the other costs per
watt? Clearly such costs are important determinants of the cost of
energy from a power plant.

> I explained why I believe construction costs will be lower
> than the most expensive plants built in the 80's.

Not really.

> I supply information
> about the 'recurring costs' of operating such a plant.

Yes. These costs are extraordinarily low - and subsidized by the
government who seeks to control the flow of nuclear materials.

> I point out that the
> supply side of the nuclear fuel cycle is fully funded by the price of the
> fuel.

You say that sure, but its not true. Even so, I agree, these costs are
low -especially compared to the contribution fixed capital costs make
to the total cost picture of nuclear power.

> I point out that the end-of-life costs are also being fully funded
> from the plant's operating revenue.

Theoretically yes.

> 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.

You make vast claims about how private industry works. Looking at the
10k reports of publicly traded companies, looking at the pattern of
capital acquisitions of utilities - both publicly traded and not - its
clear that companies are holding on to assets that are inactive. Now,
why would a profit making entity acquire and hold an inactive power
plant? Clearly because there is profit in it. But, if the power
plant is totally inactive, where does that profit come from? Plainly
it comes from some sort of government payout to the owners of that
asset. It can come from no other source. This suggests that all your
commentary while logically knitted together from what we believe about
business - is unadulterated bull***.
 
> The 'cost per watt' is not germane.

You know this is a lie - how else could you have computed the capital
cost of a solar plant so accurately?

> The cost per watt-hour is what matters.

Precisely right, and this includes the recurring costs as well as the
contribution of the fixed capital costs. You know this and are just
trying to fool us into believing something that's not true.

>
> >
> > > 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*??

??? Utilities that pay for the privelige of owning totally inactive
nuclear power plants isn't reference enough?

> You
> would have to extend this belief to include other countries supporting their
> commercial nuclear power programs as well.

Why?

> Do you believe all countries
> with nuclear power plants have governments that are preferentially funding
> nuclear over other forms of electric generation?

Yes.

> Your 'sense' have betrayed
> you in this.

Why do you believe 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.

The government's role in nuclear industry is as the creator - first of
nuclear weapons, then as the promoter of commercialization of the
technology. Then there was 'Atoms for Peace' and then the rush to
contain proliferation. We've never gotten a straight answer from the
government about its role in any of this, and you haven't given us a
straight answer to what should be a really simple question. In fact
you've gone out of your way to confuse and confabulate this issue
apparently with the full knowledge of its importance. Why?

> They make the rules
> about controlling special nuclear material and the requirements to ensure
> the health and safety of the public.

Absolutely, this is an important and proper role of government. While
such regulatory oversight contributes partly to the high cost of
nuclear power - the cost per watt is still understated - and we can
see now why that cost per watt is so important to figuring out the
true cost of a watt-hour.

> But they do not provide any money to
> fulfill those requirements.

Well its impossible to prove a negative. But if we can provide one
counterexample to a negative, then that negative is false. In this
case New England Power paying good money to acquire totally inactive
nuclear power plants is a counterpoint to the falsehood you've stated
above.

> At least not since the earliest nuclear plants
> in the early 60's were built.

So, now even you are backpedaling. Why? Because you know you're lying
just as you did with respect to the importance of the cost of power
and how it contributes to the cost of energy. You're trying to block
issues that arise in your own mind and figure I might come up with.
Sheez.
 
> 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.

Yet they get something don't they?

> >
> > 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.

No,you need to understand the importance of time in converting power
to energy and simultaneously understand the time value of money. Once
you do that converting a fixed capital cost for power into a cost for
energy is quite simple - and important in finding the total costs of a
power source.

> The lifetime and capacity factor go into it as well.

Yes, just like the term of a loan reduces the payments. But, once you
get past 15 years or so, the interest rate predominates and the
difference in the payments don't count for much.

> 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)

What's the interest rate? Extending a 40 year term to a 60 year term
at 8% reduces the cost of $1,000 to $80.80 from $83.86 on the 40 year
term. You know this - At $2.25 per watt (and the 95% utilization is
bogus) and 70% utilization we have 6,136.2 hours of operation of
1000/2.25 = 444.4 watts of capacity. That's an annual total of
2,726.9 kWh of energy with a capital cost of $0.0296 - the $0.03 you
stated above.

The point is I don't believe the $2.25 - have you any good references
to back that up? And are these complete? It seems to me if you examine
the 10k reports of publicly traded utilities who built nuclear power
plants (available from EDGAR) and added up all the reported costs -
deducting tax and other incentives and cash payments received from the
government - you'll have a clear idea of what things actually cost.
ANd it will be $5 per watt - not counting capital costs of fuel
plants, decommissioning and so forth.

>
> 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.

Nonsense. The cost of coal is cheap and the cost of a coal fired
plant is on the order of $0.50 per watt - even for a new one. That's
why fuel costs are so important to coal plants.

Anything that lasts more than 15 years bears has only marginal
differences in their capital cost contribution to the energy they
produce.

> 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.

Depends on ROI in the current year my friend. You're just throwing
sand into our eyes in order to keep the lies you stated at the outset
going. Shame on you.

> But nucs cannot operate beyond their license (although some have had
> extensions).

What nonsense. Make everything infinitely long lived - then you
merely have the discount rate to contend with - the interest that the
money would have earned had it been put somewhere else. If that's 8%
then $1,000 will have to earn $80.00 You make it seem that an
inifinitely long lived device would be infinitely valuable. Of course
infinitely long lived devices are fantasy - but it illustrates a
point. Discount rates rule. The time value of money is the critical
issue. Anything that lasts more than 15 years is only marginally
different from things lasting longer. Check it out;

      30 years --> $88.83
      35 years --> $85.80
      40 years --> $83.86
      60 years --> $80.80
      infinity --> $80.00

This has to be paid every year no matter what if we say the time value
of money is 8% - if the thing that we bought lasts forever, that only
means none of the payment goes toward paying off the principal -
because we can sell it when we're done with it at full value. This is
impossible, but it shows us the importance of the time value of money
in this contribution to energy costs. Something you're trying to
convince us is unimportant. You have carried out a number of accurate
computations of this very contribution so you know that you are lying
and know that you are trying to fool us - so shame on you.

Look, if you pay $5 per watt for a nuclear plant and you pay $0.50 per
watt for a coal fired plant, you'll get 10x the power output for your
money in a coal fired plant. Given that the cost of money is the same
in both instances, the cost of energy produced over the year -
assuming utilization is the same too - will be 1/10th the cost per kWh
for the coal plant than the nuclear plant.

Now, this is only the contribution of capital cost to the cost of
energy. We also have recurring costs. These costs are for fuel and
maintenance. For the coal fired plant this is very large. For the
nuclear plant - small.

What about one time charges for things the nuclear plant needs?
Things like decommissioning, construction of a factory to supply the
nuclear fuel, the cost of decomissioning that factory? All of that?
Clearly that has to be considered a capital expense and amortized the
same way.

This is clearly $5 per watt.

[snip}

Well, I'd like to continue this conversation, but I think we've beaten
a dead horse here. Clearly we need to know the cost of power and
utilization and life cycle and cost of money in order to figure out
the total cost of energy from a power source. In the case of nuclear
energy the capital cost contribution to energy costs exceeds the cost
of fuel, maintenance and so forth. In the case of coal, the capital
cost is small compared to the recurring costs. Any equipment that
lasts for 30 years or more is nearly equivalent in their capital cost
per year. Although longer periods mean larger total costs.

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