Wednesday, May 20, 2015

The QER, Nuclear Energy and Energy Infrastructure

Matt Wald
The following is a guest post from Matt Wald, senior director of policy analysis and strategic planning at NEI.

The Energy Department has posted the first installment of its Quadrennial Energy Review. Quite sensibly, the department cast a critical eye on the sorry state of energy infrastructure: overstressed gas lines that leak, sometimes catastrophically, and can’t meet the demand during cold spells; bottlenecks in the rail and canal systems that move coal and oil; and electric generating stations that starve for fuel when the coal pile freezes.

But the sections of the plan that have been published so far do not give any credit to generation technologies that do not add strain to the fuel shipment infrastructure. To the department’s credit, officials there say that they are working to “unbundle” the attributes of various electricity generation systems, and to assign appropriate values to each attribute, including transportation requirements.

Nuclear power plants, in addition to making clean, reliable electricity at a stable price, also reduce stress on the nation’s transportation infrastructure. That is because they operate on a highly concentrated fuel that is required in only small volumes, and is delivered over existing highways by ordinary trucks. They hold 12 to 24 months of fuel in the reactor core, available whether or not the wind is blowing, or the sun shining, whether or not fuel arrives just in time through a pipeline, and whether or not the coal pile is frozen.

Despite these attributes, the electric system is drifting away from use of that technology, into generating plants that suffer from fuel interruptions and that put heavy strains on public infrastructure outside the plant fence.

As the Energy Information Administration pointed out in February, the Vermont Yankee nuclear power plant produced nearly 5 million megawatt-hours a year until its closure last December. EIA said that the likely substitutes were natural gas, coal or oil. Using EIA formulas, that would require 50.5 billion cubic feet of gas, or 26.25 million tons of coal or 57.5 million barrels of oil – or, more realistically, some combination of these, dominated by natural gas.

These are very large increments in a system that is already stressed.

According to the EIA, the six-state New England region has an import capacity of 3.9 billion cubic feet a day – assuming no bottlenecks within New England, and no constraints from New Brunswick, Quebec or New York, which is not the case. And during the last polar vortex, constraints on the gas infrastructure pushed prices in Boston above $70 per MMbtu, and electricity prices above $500 per MWh.

26.25 million tons of coal to replace Vermont Yankee every year.
Moving 26.25 million tons of coal into New England would require more than 200,000 car loads.

The Pilgrim nuclear power plant, of approximately the same design and vintage as Vermont Yankee but about 14 percent larger, is suffering through the same problems that doomed Vermont Yankee: a relatively small, single-unit plant with higher-than-average generating costs, competing in a market with electricity prices depressed by the generally low price of natural gas. Yet Pilgrim gets no credit for reducing the strain on the region’s overstressed gas pipeline network.

These problems are directly connected: one reason gas is cheap is because of under-investment in the pipeline network. The network is simply not set up for the level of reliability required by a strong electric system.

Five reactors in Illinois are not economic under the current market structure. They have a total capacity eight times larger than Vermont Yankee. Loss of any of those reactors would reduce the region’s ability to deal with weather-induced stress, or to export fossil fuel to the East.

Yet none of those plants gets any credit either for having years of fuel pre-staged on site.

The QER proposes spending up to $3.5 billion in Federal grants to help replace old pipelines, and up to $2.5 billion for energy transport systems. That doesn’t count private sector costs. Such government subsidies only serve to encourage more use of resources that tend to drive out nuclear plants, which are cleaner and do not require such help in bringing in fuel.

If heavy reliance on fossil energy requires more spending on fuel infrastructure, the rational approach would be to reflect the expense in the wholesale price of electricity from natural gas or coal. Failing that, if the government determines that such subsidies are, in fact, in the national interest, some countervailing step would be appropriate, to sustain electricity sources that relieve the stress on existing infrastructure. In competitive markets, this could take the form of reliability payments, putting a cash value on the money-saving attributes of nuclear power, which reduce the need to spend on new pipes and compressor stations, new rail capacity, new bridges, and new ports or waterway improvements.

UPDATE: The Committee has announced that Sec. Moniz's testimony has been postponed until June 2 at 10:00 a.m.

EDITOR'S NOTE: On Thursday morning, Energy Secretary Ernie Moniz is set to testify before the House Energy and Commerce Committee concerning the findings of the QER.

1 comment:

Will Boisvert said...

Hmm. Better check your arithmetic on fossil fuel quantities needed to replace Vermony Yankee's yearly output. Per your EIA formulas, I get 2.6 million tons of coal, not 26 million tons, and 8. 75 million barrels of oil, not 57.5 million barrels.