Monday, September 19, 2011

Solydra and Nuclear Energy Loan Guarantees

Solyndra-logo11A lot of the posts over at the National Journal’s energy blog have been about Solyndra – as one might expect – but the loan guarantee aspect of the story has a nuclear energy angle. NEI President and CEO Marv Fertel explains (about a quarter of the way down the page):

Loan guarantees are one of the most effective tools available to the federal government, and are widely used by the federal government to support financing of projects that have substantial public value. The federal government manages a successful loan guarantee portfolio of approximately $1.2 trillion which, on balance, returns more to the Treasury than it costs the taxpayer.

Loan guarantees cost the taxpayers money when a company defaults. That’s collateral damage from the the Solyndra collapse, because the company had received one - with a good deal of fanfare.

Why offer loan guarantee at all? Well, they lower the cost of a loan, making it more plausible for a company to risk the considerable cash needed to erect a nuclear facility or solar array. And as Fertel points out, they are “are widely used by the federal government to support financing of projects that have substantial public value.”

By reducing the cost of capital, loan guarantee programs serve the public interest by accelerating the deployment of clean energy technologies at a lower cost to consumers.

Or, to be honest, anything that requires large loans to bring off successfully - shipbuilding, steelmaking and affordable housing, to name a few. The government recognizes the need and private industry does most of the heavy lifting.

I’ve seen the failure of Solyndra used as a whipping post for loan guarantees, renewable energy, the solar industry and green jobs. Ignore all of it. Solydra was a company that failed – we’ll learn more about why it failed as we go along and whether the government did adequate due diligence – but companies fail all the time. Even the federal government can back a bad horse sometimes.

The Energy Department has offered one conditional loan guarantee for a nuclear energy project, to Southern Co.’s Vogtle reactors in Georgia. The company’s exceptional financial strength and 30-year history of safely operating nuclear energy facilities make it a solid credit-worthy candidate for the DOE loan guarantee. 

Southern Co. is different company, in no danger of failing and taking advantage of a loan guarantee to build new reactors at its Vogtle facility. The result will be a lot more electricity for Georgians – at minimal risk – and at a lesser cost.

Fertel has this subject exactly right. Read the rest at the link.

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Siemens has left the building, shuttering (most of) the nuclear aspects of its business. This is a major shift for the company:

"The chapter is closed for us," [Siemens head Peter] Löscher said. "We will no longer be involved in managing the building or financing of nuclear plants."

Siemens is international in nature, with a lot of its work in Europe and especially in Germany, where it had a hand in all 17 nuclear facilities there. The decision to shut all the nuclear plants there no doubt caused Siemens to rethink its options. This didn’t help, either:

An arbitration tribunal in May ordered the German company to pay €648 million ($927 million) to France's Areva after it failed to meet contractual obligations in a nuclear joint venture with Areva that it left earlier this year.

Although that could have been mitigated by this:

The nuclear exit would mean that the company would shelve a long-planned joint venture with Russian nuclear firm Rosatom, he [Löscher] said, adding that he still wanted to work with the Russian partner in other areas.

Just two years ago, the Munich-based conglomerate announced a venture with the Russian firm to build up to 400 nuclear plants by 2030.

No doubt there will be much more about this story. For example, the New York Times turned up this tidbit:

The Siemens decision does not amount to a boycott of the nuclear energy industry. A spokesman said the company would continue to make systems that could be used in nuclear power stations.

“We will provide conventional steam turbines that can be used for nuclear power plants and conventional power plants,” Alfons Benzinger, a spokesman for Siemens’s energy business, said Sunday.

Always wise to leave a crack open in the door.

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Meanwhile,

Chancellor Angela Merkel's authority is being undermined by leading members of her coalition partners, the FDP and CSU parties, who have openly challenged her policy on the euro. There is growing speculation that her coalition may collapse, prompting a return of the right-left grand coalition of conservatives and SPD.

Don’t ask me to try to explain German politics, but I do know that SPD are the Social Democrats. They are closest in nature to our Democrats. FPD are the Free Democrats and leans to the right fiscally and the left socially – sort of like what used to be called Rockefeller Republicans here, mostly from the Northeast, that held similar views. The CSU, Merkel’s party, are the Christian Democrats, closest to our Republicans.

Switching from a CSU-FPD to CSU-SPD coalition would be kind of goofy from an American perspective (though it would be closer to what we actually do have now when you think about it), but the result still would not be noticeably better for German nuclear energy. Whereas the CSU supported nuclear energy before the accident in Japan, the SPD took up that position while in power in the late 90s and got the ball rolling on closing the nuclear facilities. And that hasn’t changed. So, Siemens may see no way back.

Still, it provides an evil tingle to read this:

[A] January 2007 report by Deutsche Bank warned that Germany will miss its carbon dioxide emission targets by a wide margin, face higher electricity prices, suffer more blackouts and dramatically increase its dependence on gas imports from Russia as a result of its nuclear phase-out policy.

Evil, of course, because we don’t want any of this to happen. But so it goes.

2 comments:

SteveK9 said...

Nobody in the world is close to our current Republicans, unless you count fringe parties.

Anonymous said...

The Three Ways Out
By George Taylor
Posted on Jan. 15, 2007

Any prudent observer would consider the possibility that fossil fuels might run short within years and very short within decades. Given that we depend on oil, natural gas, and coal for 90 percent of our energy, we could be facing the most catastrophic change in modern history. Equally scary, even should more fossil fuels be discovered, burning them without storing away the carbon dioxide they produce could cause global warming.
The False Ways Out

Many purported ways out are false hopes, either because they are too small to matter or because they have a fatal flaw.

- Hydroelectric power is low-cost, but cannot be expanded.
- Geothermal is available in only a few locations, and likewise cannot be expanded.
- Wind has huge potential capacity, but even in the best locations only blows fast enough to turn the windmills one-third of the time. Its fatal flaw is that we have no storage mechanism for electricity today, and none of the proposed ones would return more than 25 percent of the energy that goes in. The electricity produced by windmills could be used to make liquid fuels, but such transformations are very wasteful. If battery technology improves enough, hybrid-electric or pure electric vehicles may be the wave of the future, and full-time electric power plants (such as coal or nuclear) would avoid the conversions required by intermittent ones, such as wind or solar.
- Photovoltaic solar is many times more expensive than competing technologies, and will remain so indefinitely because sunlight is weak, the physical infrastructure costs are huge, and the sun delivers only about two thousand effective hours per year (25 percent), even in the desert. Plus, solar has the same flaw as wind: we can’t store it. Thus, while it may address peak electricity demand on a summer afternoon, it would not be reliable enough to power the world.
- Biomass as currently practiced – corn ethanol or soybean diesel – produces such small net gains in energy that no amount of farmland could ever replace a meaningful portion of our fossil fuel consumption.
The Real Ways Out

Fortunately, we won’t have to live in the dark or melt all the glaciers. Conservation, efficiency, and nuclear power are real ways out.

Cutting demand (conservation) won’t be popular, but we could take at least one significant step – by curbing population growth. By 2050, the path we’re on will add 150 million people to the 300 million we reached in the U.S. this year. But the growth is driven almost entirely by immigration levels set by Congress, which Congress has the power to reduce. They just haven’t made the connection between population and energy.

Increased efficiency, particularly in transportation, space heating, and electric appliances, could generate huge savings, and many observers claim the first 50 percent reduction could be achieved with little impact on quality of life. Higher-mileage cars, better insulation, and more efficient lighting could go a long way.

But after all that, we will still need a massive source of reliable, long-lasting, low-pollution energy. And, except for a huge piece of luck, there might have been none. But we’re lucky, and one exists – nuclear fission fast reactors.




Not that all of this will be simple. The development of closed fuel cycles and fast reactors is not yet finished. But what’s left is engineering, not the discovery of new solutions. It will take decades to build a thousand reactors, but that just underlines the task’s urgency. We can’t wait until there’s a crisis to start developing solutions, and we can’t afford to waste time on false hopes.

George Taylor is a writer in Los Altos, California who is researching a book on the feasibility, economics, and environmental impacts of all practical sources of primary energy for the next 50 years.