Nuclear Energy and Heat, Solar Energy and Japan

CBS News finds a new hook for their look at nuclear energy:

Temperatures began going down Sunday in the eastern half of the country, dropping from last week's record triple-digits and easing a heat wave blamed for at least 34 deaths.

Boy, it didn’t feel that way from here, but okay. In any event, the question of where to get more electricity as everyone switches on their air conditioners becomes crystal clear.

Demand was said to be ten percent higher than the average for July, and with demand only growing, going nuclear is getting another look.

The story doesn’t really get into why this should be so and tries to be even handed, not always to its benefit, but it makes a strong point: that if demand for more electricity increases – and it will – then nuclear energy is an excellent way to feed that demand.

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The Wall Street Journal talks to Sharp Corp. President Mikio Katayama:

WSJ: Is it necessary for Japan to gradually move away from nuclear power?

Mr. Katayama: It would be too simplistic to say nuclear power is good or bad. There's no doubt that people are starting to question nuclear power's safety and security. Nobody would say "please build a nuclear plant next to my house." The actual cost of nuclear power may be different from previously estimated. Still, under the current system, using an alternative power source would be more costly.

Safety may be the most salient issue for people living relatively close to a nuclear plant, but it may not be so for those who are relatively distant. Wealthy people may not mind paying a bit more for electricity, while others may find it painful. Among businesses, manufacturers that consume a large amount of power and service industries that don't require much power may have different perspectives. The question is how to find a way to design a compromise plan and agree on it. That's what political leaders need to work on.

You might think, well, that’s okay, not great. But it seems strikingly honest given this reality:

Sharp could benefit from the new [Japanese government] policies, which would require utilities to buy up electricity that comes from renewable sources. The company is Japan's largest supplier of solar panels, which accounted for about 9% of Sharp's overall revenue of ¥3.02 trillion (US$38.57 billion) in the last fiscal year.

And that’s important because the government will create a marketplace for people who buy solar panels for their homes. That could spur a lot of business for Sharp.

But:

WSJ: How does Sharp compete against Chinese solar-panel makers?

Mr. Katayama: Solar power, or any other energy, is in the realm of government policies. It would be a huge mistake to think that the cost of solar power is determined by competition among private companies. Governments get involved in all sorts of ways, like feed-in-tariffs or other subsidies for construction of facilities.

Katayama is quite frank that the free market itself cannot push solar energy over the hump of broad acceptance – which is necessary to make the cost of its electricity competitive. So government, having determined that solar energy helps fulfill a public policy goal, provides a push.

But that’s all solar energy inside-baseball stuff. What’s interesting is that a solar energy entrepreneur recognizes the plain difficulty of building a market and providing electricity comparable in price to nuclear energy.

I think Katayama has more government support that he lets on – the Japanese government wants to compete with China in photovoltaics and wants home-sited solar installations, both of which will redound profitably to Sharp.

(Consider this story: “Japan is considering a plan that would make it compulsory for all new buildings and houses to come fitted with solar panels by 2030, a business daily said Sunday.”)

Still – nuclear energy doesn’t seem at all ready to cede its position as the more affordable source of electricity.

In Hakone prefecture. Not exactly NIMBY, but the panels really do mar the look of nice architecture – if they’re visible - which may discourage their adoption in some instances. If the government plan goes through, it’ll be interesting to see how the new buildings accommodate the panels.

Fluor Invests in NuScale

You know, it’s kind of sad that no one is willing to invest in nuclear energy anymore. Wait, what? NuScale Power celebrated the news of its company-saving $30 million investment from Fluor Corp. Thursday morning with a press conference in Washington, D.C. Fluor is a design, engineering and construction company involved with some 20 plants in the 70s and 80s, but it has not held interest in a nuclear energy company until now. Fluor, which has deep roots in the nuclear industry, is betting big on small-scale nuclear energy with its NuScale investment. "It's become a serious contender in the last decade or so," John Hopkins, [Fluor’s group president in charge of new ventures], said. And that brings us to NuScale, which had run into some dark days – maybe not as dark as, say, Solyndra, but dire enough : Earlier this year, the Securities Exchange Commission filed an action against NuScale's lead investor, The Michael Kenwood Group. The firm "misap...

Wednesday Update

From NEI’s Japan micro-site: NRC, Industry Concur on Many Post-Fukushima Actions Industry/Regulatory/Political Issues • There is a “great deal of alignment” between the U.S. Nuclear Regulatory Commission and the industry on initial steps to take at America’s nuclear energy facilities in response to the nuclear accident in Japan, Charles Pardee, the chief operating officer of Exelon Generation Co., said at an agency briefing today. The briefing gave stakeholders an opportunity to discuss staff recommendations for near-term actions the agency may take at U.S. facilities. PowerPoint slides from the meeting are on the NRC website. • The International Atomic Energy Agency board has approved a plan that calls for inspectors to evaluate reactor safety at nuclear energy facilities every three years. Governments may opt out of having their country’s facilities inspected. Also approved were plans to maintain a rapid response team of experts ready to assist facility operators recoverin...

Nuclear Utility Moves Up in Credit Ratings, Bank is "Comfortable with Nuclear Strategy"

Some positive signs that nuclear utilities can continue to receive positive ratings even while they finance new nuclear plants for the first time in decades: Wells Fargo upgrades SCANA to Outperform from Market Perform Wells analyst says, "YTD, SCG shares have underperformed the Regulated Electrics (total return +2% vs. +9%). Shares trade at 11.3X our 10E EPS, a modest discount to the peer group median of 11.8X. We view the valuation as attractive given a comparatively constructive regulatory environment and potential for above-average long-term EPS growth prospects ... Comfortable with Nuclear Strategy. SCG plans to participate in the development of two regulated nuclear units at a cost of $6.3B, raising legitimate concerns regarding financing and construction. We have carefully considered the risks and are comfortable with SCG’s strategy based on a highly constructive political & regulatory environment, manageable financing needs stretched out over 10 years, strong partners...

NEI Nuclear Notes

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