Unanswered Questions: Nuclear Power and Energy Storage
During the Energy Innovation 2013 conference at the end of January, panel moderators fielded hand-written questions submitted by the audience. Time was limited and many questions went unasked. Fortunately, the moderator of the panel on nuclear power and energy storage, IEEE Spectrum Associate Editor Eliza Strickland, as well as two of her panelists, author Gwyneth Cravens and Ambri CEO Phil Giudice, have since taken the time to respond to a few of them.
What are the cost differences between new nuclear in the U.S. v. China? What explains the difference? What if anything can be learned from China’s nuclear development?
It’s impossible to compare the costs of nuclear development in the US vs China, because the Chinese government is not at all transparent about its nuclear policies or practices. Analysts are forced to cobble together an understanding based on talks at international conferences, articles in the Chinese newspapers, and the occasional official pronouncement. The World Nuclear Association does a great job of keeping track of the situation, and updates its China page regularly: http://www.world-nuclear.org/info/inf63.html.
As for what, if anything, can be learned from China’s example, the rather unfortunate lesson may be: It’s easier to get nuclear plants built (and to embrace innovative designs like molten salt and pebble bed reactors) when you’re an authoritarian government.
Like South Korea and France, China considers providing electricity a government job. It has 16 operating reactors and is busy building 30 or more new ones. The rapid construction of plants in China is thanks to a government decision to provide virtually unlimited government support to meet the rapidly growing demand to supply more electricity. Thousands of workers can be deployed to quickly put up a plant.
In the US, plants are built by corporations like Constellation and Duke and Exelon, who then own them. All that they can get from the government, after negotiations, is a loan guarantee (see the Price-Anderson Act for details) in case they default on the billions they borrow to finance the huge licensing fees paid to the Nuclear Regulatory Commission and the contractors who build the plant. Once completed, after a process that may take a decade or more from siting to licensing to first watt sent to the grid, the plant eventually pays for itself and becomes what some in the industry call a cash machine–profits are big. This is because the cost of fuel is so low and so are the costs of running the plant.
What state policies can help advance storage R&D and deployment?
A range of state policies could be helpful for realizing the full potential benefits of new storage technologies.
Several of these policies should be considered to be “pump-priming” to encourage appropriate early adoption and to minimize unintended consequence of existing policies. Examples of these policies include:
- States can incorporate new storage technologies in their leading-by-example programs at state facilities showcasing the benefits of storage at all state facilities including prisons, universities, colleges and campuses, and others.
- State regulators can also encourage early adoption via innovative regulatory policies to encourage a relatively small number of storage projects to be implemented by state regulated entities including public utilities, marine and airports. These early adoption programs could be structured to allow a small portion of the facility’s total energy spend to pay for new technologies which have insufficient proven commercial track record to fulfill traditional cost/benefit requirements.
- States can forgo property tax on new storage technologies for a period of time (e.g., 3 to 7 years.)
- State policies should explicitly establish a streamlined site permitting and interconnection process for a small number of initial storage projects to maximize learning and experience with storage technologies. These processescan be particularly burdensome for new technologies where permitting agencies and interconnection policies are unfamiliar.
Storage when proven and successful will not need mandates or on-going government support to realize its potential. After early adoption of storage is achieved, policies that with foster ongoing support for storage include:
- States should account for storage which is directly enabling renewable resources to be incorporated in the renewable resource category from a public policy standpoint.
- States can establish policies which explicitly call for all cost effective storage to be included when planning and building electric systems. The calculation of benefits will need to include a quantification of the value of increased grid reliability, reduced price volatility, elimination of market congestion, increased ability to integrate intermittent generation, reduced greenhouse gas emissions, and avoided capital investments. Lower capacity electric systems will be needed when designed on the basis of meeting average demand with storage instead of meeting peak demand without storage, and this means less spend will be required on generation, transmission and distribution infrastructure.
What is the business model for storage? Who pays for it?
Storage will provide a variety of economic benefits and each gives rise to a range of possible business models with multiple customer types, including electricity end-users, utilities, and independent power producers.
End-users: Storage can reduce electricity costs by enabling residential, commercial and industrial end-users to optimize time-of-use rates, reduce demand charges, integrate onsite generation including solar, wind and CHP, and improve reliability & power quality
Independent power producers: Storage can participate in wholesale electric markets including capacity, day-ahead and real-time energy and ancillary services such as regulation, spinning and non-spinning reserves; increase revenues for renewable and fossil fuel generating assets; and meet requirements around operating parameters
Utilities: When proven, storage could evolve to be integrated in all utility systems to help variable renewable resources like wind and solar, relieve grid congestion, avoid and defer investments in generation, transmission and distribution infrastructure
Clifton Yin is a Clean Energy Policy Analyst at the Information Technology and Innovation Foundation. Prior to joining ITIF, he earned a Master of Public Policy degree with a focus on environmental and regulatory policy from the Georgetown Public Policy Institute. His master’s thesis sought to use statistical analysis to evaluate the effectiveness of California’s Renewable Portfolio ...
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