1. Nuclear Energy: Coming or Going?
Peter Schwarz Professor of Economics, Belk College of Business and Associate, Energy Production and Infrastructure Center (EPIC) UNC Charlotte
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2. Outline Introduction A Brief Economic History Regulation Private Cost
Social Cost
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3. Introduction (1) Case for nuclear energy Baseload power Reliable
20% share of electricity generation in U.S.
Reliable
None of the emissions associated with fossil fuels
Energy security
100 year supply
Similar for global supply
Static analysis appropriate given that today’s decision to use uranium has little impact on future availability
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4. Introduction (2) Case against nuclear energy
Construction cost can exceed $10 billion
Ten or more years to build
Large scale to minimize average cost
High levelized cost
Costs and size consistently exceed projections
Unique design characteristics
Ever-increasing safety requirements
Safety issues
High-level radioactive wastes
Remain active for 100,000 years or more
No permanent solution
Yucca Mountain still being deliberated
Temporary solution: On-site storage
Reprocessing used in France
U.S. banned in 1977.
Fear of nuclear proliferation.
Even though President Reagan lifted ban in 1981, we do not reprocess due to a combination of risk and high cost.
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5. Brief Economic History (1)
Nuclear fission
1917: Ernst Rutherford “split” the (nucleus of) the atom
Bombarded it with alpha particles
Occasionally dislodges a proton
Changes element
Energy released (E = mc2)
Released neutrons start self-sustaining chain reaction
If uncontrolled, get explosion
1942: Enrico Fermi produced first controlled self-sustaining reaction
Initial interest was bomb to end WW II.
1946: Atomic Energy Commission established to look for peaceful uses.
1953: “Atoms for Peace”
Nuclear submarines
1957: First large-scale nuclear energy plant
Shippenport, PA
U235 used in nuclear reactors. As compared to U238, it is easier to cause fission and the release of energy.
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6. Brief Economic History (2)
U.S. and globally (Japan, France, and other countries)
Rapid growth in 1960s and especially beginning in 1973 in wake of rising oil costs.
Growing doubts about safety
What to do with spent fuel waste?
1979: Three Mile Island partial meltdown.
No deaths or injuries
Nevertheless, led to a virtual moratorium on new plant construction.
Occurred 12 days after the movie, “The China Syndrome” (nominated for 4 Academy Awards).
1986: Chernobyl: the most serious accident
Used a different technology than U.S. plants
No containment building
Not the same safety culture
Nevertheless, reinforced the fears about nuclear energy
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7. Brief Economic History (3)
2000s: Talk of nuclear renaissance
Increased attention to carbon emissions, climate change
2005: U.S. Energy Policy Act
U.S. Department of Energy (DOE) offered incentives for new nuclear plants.
Advanced designs compared to 1960s, 1970s-era plants
16 applications
Then came Great Recession
2011
Fukushima
Plant built in 1960s.
Located by Pacific Ocean; nuclear plants require large quantities of cooling water.
Hadn’t been upgraded based on updated information
Regulatory capture (Recall Stigler (1971))
Renaissance ends
Even if Japan’s experience unlikely elsewhere
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8. Brief Economic History (4)
Germany accelerates phase-out of nuclear energy
Subsidized renewables
Very costly
Returned to coal (lignite)
Now has some of highest electricity prices in the EU
Japan shuts down nuclear plants
Had accounted for 30% of electricity generation
High electricity prices even before Fukushima
Few energy reserves
Returning to nuclear energy
Deregulating its electricity industry
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9. Brief Economic History (5)
Fission vs. Fusion
Fission
Strength: No carbon, NOx, Sulfur emissions
Weakness: Possibility of radioactive release
If reactor core overheats
Ordinary (light) water reactor
Water moderater (slows the reaction) and coolant (keeps fuel from overheating).
Backup cooling system- Backup generator to provide power to cooling system.
Containment building to prevent radiation from escaping
Fusion
Fuse lighter elements together
Potentially produces much more energy than fission
But so far, energy required to initiate the reaction exceeds energy produced
Research ongoing at France’s ITER (International Thermonuclear Experimental Reactor)
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10. Brief Economic History (6)
Pressurized Water Reactor (PWR) vs. Boiling Water Reactor (BWR)
PBR most common in U.S.
Pressurized water reaches 300 degrees without boiling
Hot water pumped from reactor vessel to second water supply away from fuel source.
Hot water creates steam to spin turbine, drive generator, and produce electricity
Unused steam condensed back to water, recycled to create more heat
BWR
Higher thermal efficiency- only a single circuit
Reaction easier to control by monitoring water around core
Less radiation, fewer components
But requires larger reactor vessel because of larger amount of steam released in accident
Allows small amount of radiation to get into turbine system
Workers must wear protective clothing.
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11. Regulation (1) Origins of nuclear energy with government, not market
Find peaceful uses to justify continued research
Nuclear submarines
1957: Shippenport, PA, First large-scale nuclear plant owned by U.S. DOE
Operated by Duquesne Power and Light, a private company
U.S. Atomic Energy Commission (1946)
Charged with regulating and promoting civilian commercial uses
Inherent conflict (Recall Stigler (1971) (Capture) Theory of Regulation)
1957 Price-Anderson Nuclear Industries Indemnity Act
Limited liability of nuclear operators in event of an accident
1975: Nuclear Regulatory Commission (NRC) succeeds AEC
Concerns about cozy industry-regulator relationship continue.
2005: Extension of Price Anderson, loan guarantees, production tax credits
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12. Regulation (2) Spent Fuel
1982 Establishment of Nuclear Waste Policy Act to identify permanent waste site
Beginning in 1983, electric utilities contribute 0.1 cent/kWh (paid by consumers)
Towards establishment of permanent waste site
$75 billion collected
Some spent on site preparation of Yucca Mountain
Obama (with urging by Senate Majority Leader Harry Reid) abandoned project in 2010
In 2013, fee suspended since no prospects for permanent site.
In what state is Yucca Mountain?
Hint? What state did Harry Reid represent?
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13. Regulation (3) Spent Fuel (cont.) Temporary sites Reprocessing
Spent fuel rods stored at reactor sites in lined concrete pools reinforced with steel rods.
As pools reach capacity, utilities move some of the older spent fuel to dry casks.
U.S. NRC originally pronounced method safe for 30 years.
Recently extended it to 60 years.
Reprocessing
Used in France, where nuclear accounts for about 75% of energy used to generate electricity.
Only a small fraction of uranium used to generate electricity is spent.
Recycle and use again (closed loop)
In U.S., President Ford suspended and President Carter banned reprocessing
Fear that separated plutonium would fall into wrong hands.
Currently makes little economic sense as long as price of uranium remains low.
Mixed-Oxide (MOx fuel) Mix of plutonium and uranium. Plant under construction.
Savannah River Site, Georgia
Multiple cost overruns, time delays.
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