Pundits, politicians, and many in the energy industry have largely applauded the surge in natural gas production, pointing to the cheap and abundant resource as providing a much needed boost to the economy, as a potential tool in achieving greater energy security, and as a means to address climate change and transition to cleaner forms of energy. But as natural gas plants become increasingly widespread, they are displacing other power sources, such as coal, an increasing number of renewables and now a nuclear plant.
Observers have noted that cheap natural gas has turned the tide in favor of natural gas generation over coal-fired power plants, but the closure of a nuclear plant in Wisconsin, largely as a result of new energy economics, is a new development. The nuclear plant, owned by Dominion Resources, is a smaller, older plant, and has been for sale since 2011, but newer nuclear plants may be in danger of going offline, too. That’s because although nuclear energy is generally cheaper than natural gas – 2.2 cents per kilowatt hour in 2011 to produce power in a nuclear plant versus about 4.5 cents in a gas plant – the costs associated with running a nuclear plant, including security and regulatory oversight, are tipping the scales in favor of natural gas. Peter Bradford, a former member of the U.S. Nuclear Regulatory Commission, pointed out the threat of natural gas prices to nuclear plants, saying “A number of nuclear units won’t run their 60-year licensed lives if current gas price forecasts prove accurate.”
Is an increasing reliance on domestically produced natural gas a threat to long-term energy security or stable access to electricity? Are there unintended negative consequences that will accompany a transition to natural gas? What does a safe and smart energy mix look like going into the future?
Additional resources:
Electric Sector Capacity Planning under Uncertainty: Shale Gas and Climate Policy in the US
“The situation Dominion faces at Kewaunee is the result of circumstances unique to the station and do not reflect the nuclear industry in general”, Thomas Farrell, CEO of Dominion. This quote at the bottom of the cited article says much to modify the issue under discussion, if true. The threat of becoming too focused on natural gas at the expense of nuclear and renewable energy may not be the issue in this particular case of retiring an older plant. Historically, this is called “rationalization” of a given fleet of assets and occurs in multiple industries. The question with which we should concern ourselves is does the low price of natural gas deter the construction of new renewable and nuclear plants?
The jury is certainly out regarding renewables. That the answer seems to hinge on the continuation of investment and production tax credits, and that those in turn have a negative impact on the continuation of older gas-fired plants illustrates the complexity of the issue. It appears that technological advances – higher capacity wind turbines and cheaper solar materials – may (or may not) save the day for renewables. While I don’t oppose the continuation of those tax incentives, the very best thing that could happen to renewable energy is the demonstration that it is economically competitive on its own.
In the nuclear case, while cheap power can’t possibly help additions to plant of any kind of generation, it’s the current regulatory and NIMBY issues that appear to be the more severe disablers of further nuclear development. Addressing nuclear waste in some fashion other than just leaving it laying around would seem to be an absolute necessity to ameliorating those difficulties. Spent nuclear fuel can be reprocessed to recapture long half-life materials and reduce both volume and required storage times for the residual waste. Doing so would appear to be a no-brainer. That reprocessing isn’t being widely discussed is peculiar. One suspects various entrenched interests resist it for reasons of their own. My Inner Marxist (he sits just to the left of my Inner Child and lectures incessantly; what a bore) suspects economic motives.
When I think about this topic, my thought process has evolved from simply what is going on in the US to what is going on around the world, and how that fits into the big picture. To be brief, I don’t see renewable energy innovation happening in the US on any grand scale; the politics of energy and the national mindset is not conducive to such now; there may have been a chance a few years ago – and especially so without the global economic recession. An Obama administration without being dominated by the recession and bailout mess, and the spearheading of healthcare as a big ticket item, would have been a much more likely ‘environment’ for renewable development. Whether it would have turned out well (Solyndra) is not for sure, but, the point is, I really don’t see a situation conducive towards renewable energy growth or development right now, in the US.
Fukushima, along with Solyndra and the economy have created a more conservative attitude (which may as of late be breaking), but the hype and ‘results’ (drop in omissions) of the shale gas boom has taken the wind out of renewable energies’ sales, sails, and turbines.
It seems more likely that at best intellectual progress would be made in some of the well-equipped US institutions, but as far as actual national development, and private market incentive, there is comparatively less potential within the US.
I don’t think it’s necessarily accurate to ‘blame shale gas’, or see shale gas / tight oil as blocking renewable progress; I’m beginning to see that as a more or less ideological statement of discontent – particularly those who think the US can/should get off of fossil fuels, right now. I don’t blame them for having such aspirations, but, the more I spend time examining both US politics and government functioning, the less likely I see a situation for renewable energy breakthroughs, full stop.
It seems much more likely that the US will cling to advancing hydrocarbon technologies, and perhaps look to adopt up-and-coming renewables from other countries; I think of Europe and the Middle East (UAE, for example), as being places with much more ‘incentive’ (less hydrocarbon options, less beholden to hydrocarbon industries), for any major breakthroughs to happen. Even in terms of nuclear power, I’d look to Japan or Germany, perhaps even someplace like India, as being much more likely to innovate than the US.
I say all of this because I have seen many remarks citing how shale gas will ruin the funding or sense of urgency that renewables needed – and I’ve felt that way in the past. I still do, somewhat, but there’s more to the story than that; the US isn’t well positioned in general due to the preexisting energy and economic environment. Throwing a gigantic new opportunity in refracking old sites, and the opportunity to refine and spread the use of US industry technologies to a thirsty global market, and it makes renewable progress even less likely.
So again, it’s not that “shale gas” is stealing the show altogether, it’s just that the US is chronically not well positioned, and the last five years have only made that worse, and not better, overall.
I think renewables will continue to struggle forward, and will not receive much more support until something important happens, or, there is a sense of “we’re finally out of that recession”, which is not yet the case. If the next presidential administration is Obama, a ripe opportunity may come again in the next few years provided the economy blossoms. If there is a Romney administration, this is less likely, especially if there is not economic progress.
In the mean time, the dominant inertia outcome is a stronger reliance on and celebration of natural gas – and I’d be very surprised if Keystone XL was not cleared as well, which is also cited in deterring the growth of non-hydrocarbon energy in the US.
If I was an adviser to the president on security or energy issues, I would very much continue to push forward for US focus on renewable energy and particularly getting off oil and retooling transportation. But there appears to be very little momentum for significant progress along those lines, given the current situation.
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I tend to share Jesse and Joel’s skepticism. The capability of the newest generation of natural gas power plants to vary their output to adjust to changing demand is a particularly attractive feature to utilities.
I agree with Joel that breakthrough in the real cost (unsubsidized) of renewable energy options needs to happen to really change the game. (I’m assuming that consumption efficiency improvements are not being included in the category of ‘renewable’ here.) Simply throwing more money at typical government programs, even if more funds were available than currently seems likely, probably won’t suffice to change the incremental pace and form of innovation. IMO, a basic change in strategy is both needed and (fortunately) possible. That is the subject of my new book: http://energyinnovation.perelman.net/.
Part of that needed new strategy, along the lines Jesse suggests, is to take a less nationalistic and more global approach, embracing international collaboration. Emerging markets are where significant energy innovations are most likely to be implemented: partly because they have less legacy infrastructure (and hence vested domestic interests) , younger populations, and also growing incomes and demand.
As for nuclear, its prospects are, as the others suggest, not hampered only by competition from natural gas. The thorium fuel cycle may be the most promising opportunity to replace ‘old’ nuclear power with an attractive, new, cleaner and safer brand that can be disassociated from the stigma of Fukushima, Chernobyl, etc. India seems to be the country most interested in pursuing it at the moment.
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