August 7, 2017
ENERGY WATCH #1 by Karel Beckman
The EV revolution: how will it affect power grids – and greenhouse gas emissions?
August 7, 2017
Electric cars have been all over the news, starting of course with the announcement by UK Environment Secretary Michael Gove that the UK intends to ban the sale of new petrol and diesel cars by 2040.
This announcement has generated a lot of publicity, including a lot of alarming reports in the British press about the implications of the plan for the electricity network.
First, however, we should ask, what does the plan really amount to? You can find the official document here on the UK gov website – it’s called the “UK plan for tackling roadside nitrogen dioxide concentrations” and was published on 26 July. What it actually says is: “The shift to ultra-low and zero emission vehicles is well under way, and will continue to gather pace over the coming years as we move towards 2040, by which point the government will end the sale of all new conventional petrol and diesel cars and vans.”
Note the word “conventional” here. As Greenpeace has pointed out, what this means is that “hybrid vehicles and potentially diesel vehicles using various forms of hybrid or new technology – and even F1 cars – could be included (there is no detail on a carbon or even NOx limit that we can find). The government does have a definition of an ‘Ultra low emissions vehicle’ – which would need to be at least partially electric. But it doesn’t state in the plan that this is the criteria cars must meet.”
Greenpeace contacted DEFRA (the UK Department of the Environment), which refused to elaborate. “They are leaving it at a ban on ‘conventional vehicles’. Let’s just say, someone is going to need to clarify this…”
Greenpeace also notes about the plan that “this is merely a restatement of existing government policy to tackle climate change” – nothing new under the sun – and that it fails to tackle climate and air pollution right now, which is what matters most.
To that I would like to add that it’s easy for politicians to promise something to take place in 2040, when they know they won’t be around anymore. Is a future government going to be held to a plan announced today? Of course not.
Nevertheless, the UK government’s announcement – which followed a similar one from the French government – does give an important moral boost to the electric car industry.
It also led to a lot of reports in the UK press claiming that such a rapid expansion of cars would have seriously negative repercussions for the British electricity system. Those claims, however, seem to be unsubstantiated.
According to the website Carbon Brief, a “wholesale move to EVs, in order to meet a ban on petrol and diesel cars, would add just 10% to UK electricity demand.” This claim is based on new analysis from consultants Cambridge Econometrics.
Cambridge Econometrics in its analysis “assumes there is gradual progress towards a ban on sales of internal combustion engine (ICE) cars in 2040…. It [also] assumes that hybrid petrol and diesel cars (HEV) are included, but plug-in hybrids (PHEV) are not. Ultimately, battery electric vehicles (BEV) dominate new sales:”
In this scenario, “total electricity demand would only increase modestly, by around 10% in 2050, the Cambridge Econometrics modelling suggests. In total, EV electricity demand would rise to 40-45 terawatt hours (TWh) per year. In the context of overall rising demand, this amounts to just 10% of the 2050 total.”
The results can be seen in this chart:
In short, fitting the EVs into the electricity system should be no big problem.
Interestingly, on 14 July, two weeks before the UK government’s announcement, National Grid, the UK national transmission system operator, happened to release its annual Future Energy Scenarios, which contained an extensive discussion of the possible effects of the growth of EVs on the UK electricity system.
On that occasion too there was a heated debate in the British press on what some regarded as the dire consequences of a switch to EVs. And this debate was also fact-checked by Carbon Brief, which noted that many of the press reports were based on the most extreme scenarios from the National Grid’s publication.
The National Grid scenarios distinguish, for example, whether charging is done “smartly” or not – and that makes a big difference. According to Carbon Brief, “In one scenario, where 100% of cars go electric but smart charging and shared autonomous vehicles help manage the impact on the grid, peak demand could be limited to around 6 gigawatts (GW) in 2050. This is equivalent to 10% of the current 60GW peak demand on a cold winter’s day.”
Carbon Brief notes that National Grid “virtually doubled their outlook for EVs last year before nearly doubling them again today. In 2015, it said there could be up to 1.7m EVs on the road by 2025. Last year the figure was 2.8m, and this year it has risen to 4.8m. National Grid now says the UK could have 1m EVs as early as 2019, with 2m by 2021 and up to 35m by 2050. Note that global EV numbers only passed the 1m mark last year.”
In the UK, this growth “will have a significant impact on [electricity] demand,” the report says, adding: “If not managed carefully the additional demand will create challenges across all sections of the energy system, particularly at peak times.”
The Financial Times reported on this with the headline: “Electric cars forecast to create extra 18GW demand,” with a subtitle saying: “National Grid predicts peak impact equivalent to capacity of 6 nuclear plants by 2050.” But “the [FT] article does go on to note that technologies such as smart charging could minimise the problem, describing 18GW as ‘the most extreme scenario’ and including a quote from National Grid to the effect that the scenarios are not predictions.”
According to Carbon Brief, `National Grid’s scenarios suggest that with 23-25m EVs in 2050, peak demand could be as high as 18GW, or as low as 6GW, depending how well managed the roll out is.`
National Grid itself set out some of the challenges of EV charging and technical options available to address them in a “thought piece”. It “notes that UK carbon targets probably necessitate an all-electric car fleet, which in turn would require a national charging network and on-street charging for those without a garage.”
Other issues it identifies “are the need to reinforce the low-voltage local power networks that connect homes to substations, and to anticipate the uptake of fast-chargers, which draw more power from the grid. Smart chargers, already on the market, will become the norm, it says, helping spread EV demand away from peaks.”
Another burning issue is whether a massive shift to electric cars will actually help reduce emissions, given the extra electricity that needs to be generated. The answer of course depends to a large extent on how this is done.
The analysis mentioned earlier by Cambridge Econometrics notes that “domestic transport in the UK currently emits around 120 million tonnes of CO2 (MtCO2) per year, roughly a fifth of the UK total. Tailpipe emissions from petrol and diesel cars accounts for around half of this, a little over 60MtCO2 per year.”
A rise in electric vehicle uptake dramatically cuts these emissions, the Cambridge Econometrics modelling shows. If, on the other hand, there were no improvement in car emissions and the sector continued to emit 60MtCO2 each year, this would be equivalent to half the UK’s total carbon budget in 2050.
A 2040 ban on new sales would cut tailpipe emissions to around 14MtCO2 in 2040:
The additional electricity demand from EVs would partially offset the gains in tailpipe emissions, “but only to a very limited extent, according to Cambridge Econometrics’ model.”
For example, “with a 2040 ban, tailpipe emissions fall to 14MtCO2 that year, with additional power sector emissions adding just 4MtCO2 to the total (see chart, below). This limited impact is partly down to expected improvements in the emissions rate of the power sector, which is gradually cutting the amount of CO2 per unit of electricity, in line with UK climate goals.”
“Note that EVs offer CO2 savings even under relatively CO2-heavy electricity grids including coal-fired generation”, notes Carbon Brief. “This is because EVs are more efficient than combustion-engine cars. Similarly, the CO2 associated with manufacturing EV batteries is more than offset by savings during EVs’ lifetimes.”
Carbon Brief further notes that “a comprehensive literature review from the International Council on Clean Transportation (ICCT) says EVs offer CO2 savings of 40-50% compared to average combustion engine vehicles. This includes full lifecycle emissions including manufacture, use and electricity generation, based on an EU average grid mix. This means EVs could cut global emissions by 1.5 billion tonnes of CO2 per year in 2050, a second ICCT study says.”
This should put to rest any overheated claims that EVs are not beneficial to the climate at all.
ENERGY WATCH #2 by Karel Beckman
BNEF upgrades EV forecast but Koch brothers and MIT are sceptical
August 7, 2017
The EV debate in the UK is no doubt played out in similar ways in many countries where the spread of EVs is threatening established interests. In some countries the fight, in fact, gets pretty ugly.
In the United States, an organisation called Fueling U.S. Forward, funded by the famous Koch brothers who have large interests in fossil fuel companies, has produced two videos attacking electric vehicles, reports the website ThinkProgress. The Koch-financed campaign is specifically targeted at minority groups, claiming that taxpayers are subsidizing rich white men to buy Teslas. It also shows the miserable working conditions of children in African cobalt mines.
ThinkProgress counters that the oil industry also receives huge subsidies and that children being put to work is caused by the economic system, not by the use of batteries. In addition, Fueling U.S. Forward ignores of course the damage the damage being done to poor people by global warming.
The New York Times has reported on a Fueling U.S. Forward-sponsored event – a gospel concert in Richmond, Virginia – “where DJs surprised some attendees with a free month of utility bill payments and regular shout-outs to fossil fuels…. About halfway through the event, the music gave way to a panel discussion on how the holidays were made possible by energy — cheap energy, like oil and gas.
The concert flier was adorned with a red car bearing Christmas gifts. ‘Thankful for the fuels and innovation that make modern life possible,’ it read.”
However, according to the new 2017 edition of Bloomberg New Energy Finance’s Electric Vehicle Outlook, the EV train can’t be stopped.
The report analyses five underlying factors that we expect to drive increased EV adoption over the coming years:
- Short-term regulatory support in key markets like the U.S., Europe and China
- Falling lithium-ion battery prices
- Increased EV commitments from automakers
- Growing consumer acceptance, driven by competitively priced EVs across all vehicle classes
- The growing role of car sharing, ride hailing and autonomous driving (termed ‘intelligent mobility’ here)
On the basis, BNEF has increased its EV forecast from last year: “We expect more aggressive EV adoption than we did in our 2016 forecast, due primarily to battery costs falling faster than expected and rising commitments from automakers. By 2040, 54% of new car sales and 33% of the global car fleet will be electric. Falling battery prices will bring price-competitive electric vehicles to all major light-duty vehicle segments before 2030, ushering in a period of strong growth for electric powertrain vehicles.”
The projections are shown in the following graphs:
Note that the real revolution, according to BNEF, won’t start before 2025. According to the report, there will be “an inflection point in adoption between 2025 and 2030, as EVs become economical on an unsubsidized total cost of ownership basis across mass-market vehicle classes.”
According to the Electric Vehicle Outlook, “Electric vehicles become price competitive on an unsubsidized basis beginning in 2025. Some segments will take longer, but by 2029 most will have reached parity with comparable internal combustion engine (ICE) vehicles. Real mass market adoption only starts after this point in most markets.”
Some other findings from the report:
BNEF expects “battery electric vehicles (BEV) to leave plug-in hybrid vehicles (PHEV) behind. While we expect PHEV sales to play a role in EV adoption from now to 2025, after this we expect BEVs to take over and account for the vast majority of EV sales. The engineering complexity of PHEV vehicle platforms, their cost and dual powertrains make BEVs more attractive over the long-run. Only in Japan do we think PHEVs will continue to play an important role after 2030.”
“Electricity consumption from EVs will rise to 1,800TWh by 2040 from 6TWh in 2016. While this represents just 5% of our projected global power consumption in 2040, the ‘peakiness’ of fast-charging load profiles will need to be managed by utilities and regulators through the introduction of time-of-use rates to encourage off-peak charging, as well as storage solutions at the operator site which can mitigate high power demand from the grid.” This confirms of course the analysis made by National Grid discussed above.
Finally, if 34% of cars on the road are EVs by 2040 – 530 million EVs in total – this will displace up to 8 million barrels of transportation fuel per day, notes BNEF. That’s roughly 10% of global oil demand. Not enough to completely destroy the oil market – but enough to get the Koch brothers up in arms.
But the Koch brothers are not the only sceptics around. James Temple at the respectable publication MIT Technology Review has been cranking out critical articles on EVs regularly for some time – especially critical of Elon Musk and Tesla.
Of course there is nothing wrong with that. But Temple’s criticisms seem to come out a bit too easily somehow.
In an article published on 28 July, he recalls that “Eleven years ago, Elon Musk laid out a grandiose, three-point plan for a niche electric car startup known as Tesla Motors. The company would deliver three vehicles at successively lower prices, funneling cash from sales of its sports car and luxury sedan back into research and development, driving down costs and speeding up the timeline for the ultimate goal: an all-electric, low-cost family car…. Only once clean vehicles reached the mass market could the company achieve what Musk saw as Tesla’s overarching purpose: expediting the shift from “a mine-and-burn hydrocarbon economy towards a solar electric economy”.
With the recent launch of the Model 3, Musk has done just that (although $35,000 is still a bit high-priced for most families), but Temple claims that “arriving at step three, of course, is very far from fulfilling Musk’s grander vision. For all the rapid recent growth, electric vehicles are still a tiny market, representing less than 1 percent of new sales globally.” Well, perhaps, but you can’t say Musk did not deliver on his promise – or that his grand vision has failed. It has only just started.
Temple goes on to echo all the familiar criticisms of EVs: “Electric vehicles will almost certainly grab a swelling portion of the auto market in the years ahead. But it will be a long time before they tip into the truly mainstream, and longer still before they could meaningfully reduce the sector’s dependence on those hydrocarbons. Many things still need to change in underlying infrastructure, consumer appetites, public policies, and battery prices before any of this can happen. And there is wide disagreement about how fast that’s likely to unfold, and where Tesla will stand once it does.”
All true but hardly news.
When he goes into specifics, Temple reveals that his claims are not very well backed up. For example, he writes: if half of all new cars in the US were electric by 2027, as Musk has said is “probable”, and if those 9.1 million electric vehicles, “all ran on 60 kilowatt-hour lithium-ion battery packs—reportedly the standard package for the Model 3—it would require enough manufacturing capacity to produce 546 GWh worth of battery packs annually. And that’s just for the United States market. To put that into context, worldwide EV battery production stands at only 90 gigawatt-hour today, and there’s only 270 GWh in the planning or construction phases, according to Bloomberg New Energy Finance”.
Actually, that does not seem an impossible hurdle. Indeed, as Temple writes, BNEF expects 270 GWh of “large format battery cell production to be online globally by 2021, led by global suppliers including LG Chem, Samsung SDI, Lishen, CATL, Tesla and others. The supply chain will need to scale up further in the 2020s to meet demand.” The rapid expansion of battery manufacturing capacity is shown in this chart:
This means that by 2021 global capacity is already half of what the U.S. will need by 2027. This may not be enough to take capacity to what the U.S. will need to make Musk’s projection come true, but it’s not idiotically out of reach.
Indeed, press agency Bloomberg reported on 3 August that German industry executives are preparing to build a new 34 GWh battery factory, which would break ground in 2019 and reach full capacity in 2028.
“The battery factory is the latest sign that German industry, the motor behind the world’s fourth-biggest economy, is gearing up for a new stage in the energy revolution”, writes Bloomberg.
The company behind the project, Terra E Holding, “will choose one of five candidate sites in Germany or a neighbouring country next month”, Frankfurt-based Chief Executive Officer Holger Gritzka said in an interview with Bloomberg. The former ThyssenKrupp manager “has helped to assemble a consortium of 17 German companies and won government support for the project.”
To get back to Temple, he lists more familiar objections to EVs, such as the alleged challenges for the grid and the claim “that you could actually end up with higher greenhouse emissions” if coal power is used as a source for the additional electricity EVs need. But they don’t sound very convincing. It is clear by now that an EV revolution does not require the continued use of coal power and can be handled by the grid pretty easily. The only question really is how long it will take before EVs start flying. That may be longer than the optimists think, but it won’t change the results in the end.
ENERGY WATCH #3 by Karel Beckman
Shell adopts “lower-forever mindset”, OPEC raises EV forecast 500%
August 7, 2017
How will the growth of electric transport affect oil markets and oil companies? That is one of the big questions, and not just for those companies themselves, but also for (institutional) investors and policymakers.
One answer was given recently by Shell’s CEO Ben van Beurden. He said in an interview with Bloomberg that his next car will be electric! In fact, he will switch from a diesel car to a plug-in Mercedes-Benz S500e in September, said Bloomberg, adding that Shell’s CFO Jessica Uhl already drives a BMW i3 electric car.
“When the boss of Europe’s biggest listed oil company says his next car will be electric, it says a lot about the future of fossil fuels”, noted Bloomberg.
But Van Beurden said more than that. In an earnings call with investors he also said the company has adopted “what we call a lower-forever mindset”.
Changes in automotive technology, the fight against climate change and slowing economic growth in China are dampening the world’s once boundless appetite for crude oil, said Van Beurden, according to Bloomberg. Speculation in the energy industry has shifted from so-called peak oil — the idea that consumption will keep rising until the supply of fossil fuels dries up — to peak demand, when reserves considered valuable assets today wind up being left in the ground.
We highlighted “the surprising New Energy side of Shell” in an article on 5 July on Energy Post.
How seriously are other oil players taking the EV challenge? Seriously – but not quite as seriously as Shell, it seems.
Tellingly, OPEC last month came out with a new study quintupling its forecast for sales of EVs – in just one year time, as this chart shows:
Nevertheless, OPEC’s projection of 266 million plug-in cars on the road by 2040 is still only half of BNEF’s forecast of 530 million, discussed above. It goes to show how far removed OPEC was in its 2015 forecast, which predicted just 46 million EVs in 2040, one-tenth of BNEF’s projection! So OPEC has a new mindset too.
What about other companies and institutions?
As BNEF reports:
- The International Energy Agency more than doubled its central forecast for EVs, raising its 2030 EV fleet size estimate from to 58 million from 23 million. To compare: BNEF forecasts 100 million by 2030, i.e. twice as much.
- Exxon Mobil recently boosted its 2040 estimate to about 100 million from 65 million. That is still way behind OPEC’s forecast.
- BP anticipates 100 million EVs on the road by 2035, a 40 percent increase in its outlook compared with a year ago, but again, behind OPEC.
- Statoil, the Norwegian state oil company, says EVs will account for a 30 percent of new sales by 2030.
That’s as far as the oil companies go – but what about the automobile companies? According to BNEF, the world’s large automakers have a combined plan to sell 6 million EVs a year by 2025, rising to 8 million in 2030. By my calculation, that would add up to around 70 million EVs on the road by 2030 (we are at over 1 million today). This is in between the 2030 estimates of the IEA and BNEF.
How do these forecasts translate into “peak oil demand” – the day dreaded by the Koch brothers when the world’s demand for oil will plateau and oil will no longer be a “growth industry”.
“If policies and innovation really work well, I can see liquids peaking in demand in the early 2030s and maybe oil will peak a little bit earlier if there’s a lot of biofuels coming into the mix as well,” Shell’s Van Beurden said.
BP’s CEO Bob Dudley, when asked the same question at the International Economic Forum in St Petersburg in June, said: “June 2, 2042.” A bit of a joke, but it does tie in with BP’s recently published Annual Energy Outlook, which estimates oil demand will plateau in the next 25-30 years.
Total has predicted demand will peak in the early 2040s, writes Gregory Brew on Oilprice.com, who adds that a report from the Carbon Tracker Initiative notes that “some $2.3 trillion has been spent on projects which, if prices slump along with demand, will supply oil nobody needs or wants. Certain companies, including ExxonMobil, are highly vulnerable to scenarios where peak demand comes sooner rather than later, while Chevron, ENI and Shell have invested thirty to forty percent of their capital expenditure in projects that will be useless if demand slows down.”
But there are still plenty of sceptics too: “The International Energy Agency predicts growing consumption and higher prices before 2040. Exxon feels the same way, despite its hedging and vulnerability to wasted investments, while major state-run companies in Saudi Arabia and Russia don’t see demand diminishing until after 2050.”
Meanwhile, while demand growth is slowing down or stalling, on the supply side there is no sign of any shortage. The new key word is “abundance”.
As Bob Dudley, CEO of BP said in a speech at the World Petroleum Conference in Istanbul on 12 July: “Abundant supply is now a fact of life – with the shale revolution and advances in technologies such as enhanced oil recovery. We have half a century’s worth of oil and gas in our proved reserves alone. And there is much more out there. China, Argentina and Algeria are each estimated by some to contain as much shale as the US, for example.”
Dudley made it clear he doesn’t ever expect a return to a high-price environment. Oil prices will go up and down, but won’t go back to the $100 per barrel seen a few years ago. No surprise then that, as Dudley explained, “six out of the seven major projects coming on-stream this year [at BP] will produce gas”.
ENERGY WATCH #4 by Karel Beckman
“Costly nuclear bad for climate” – but can costs come down?
August 7, 2017
“One needn’t argue about whether [nuclear power] is proliferative or unsafe or whether we know what to do with the waste if there’s no point building it because it’s a money loser … A new nuclear plant will send out electricity at anywhere from, if you’re quite optimistic, perhaps 12 US cents a kilowatt hour (KWh) to perhaps twice that. And at the same time unsubsidised renewables in good sites are selling long-term contract renewable electricity for three cents a KWh. That’s a factor roughly three to six lower. And if you broaden beyond good sites to more ordinary ones, that’s less than a factor-two difference.”
This quote is from the famous energy specialist and renewable energy supporter Amory Lovins, founder and CEO of the Rocky Mountain Institute and author of many books and articles, which he made in an interview with Carbon Brief early July.
Lovins made another observation as well. He said “this means that if you built a new nuclear plant you would actually be making global warming worse than it should have been, because you are buying a lot less solution per dollar – it was dearer, and you just turn the maths round. If climate’s the problem, we need to be buying the most solution per dollar and per year, but nuclear is both costlier and slower than modern renewables, or, for that matter, energy efficiency which is typically cheapest of all.”’
In other words, Lovins denies claims by nuclear supporters that nuclear power is good for the climate, thus taking away one of the major weapons of nuclear supporters.
Clearly, it is difficult to argue in favour of nuclear power if this technology is wildly uncompetitive, which some major recent projects seem to be showing. However, there are other examples, like Fennovoima in Finland, built by Rosatom, which look a lot cheaper. Rosatom has promised its Finnish customers electricity at 50 eurocents per kWh, i.e. half of the 12 US cents that Lovins claims is the cost.
What is more, a recent study suggests that the costs of so-called “advanced nuclear power” – a term covering a range of new technologies being developed by different companies – may come out at only half of the costs of conventional nuclear plants, energy journalist Dan Yurman reports.
The peer reviewed study, undertaken by the Energy Innovation Reform Project (EIRP), with data collection and analysis conducted by the Energy Options network (EON) on its behalf, compiled extensive data from eight advanced nuclear companies that are actively pursuing commercialization of plants at least 250 MW in size.
“This study signals the potential for a new chapter in the role of nuclear to address the global demand for economic energy solutions,” said Jeff Merrifield, Partner at Pillsbury Winthrop Shaw Pittman LLP and former commissioner, U.S. Nuclear Regulatory Commission, in a response. “At these costs, nuclear would be effectively competitive with any other option for power generation. At the same time, this could enable a significant expansion of the nuclear footprint to the parts of the world that need clean energy the most—and can least afford to pay high price premiums for it.”
The companies included in the study were Elysium Industries, General Electric (no information supplied by the company; study used publicly available information) Moltex Energy, NuScale Power, Terrestrial Energy, ThorCon Power, Transatomic Power and X‐energy.
One of the hopes of the nuclear industry is based on the prospects of “small modular reactors” (SMRs). James Temple at MIT Technology Review – the same guy who doesn’t like electric cars a lot (see above) – wrote an article in July hopefully entitled “Small reactors could kick-start the stalled nuclear sector”.
Temple notes that the company NuScale Energy “earlier this year took a crucial step forward in its prolonged effort to build 12 scaled-down nuclear reactors on an empty parcel at the Idaho National Laboratory, a sprawling research campus on the outskirts of Idaho Falls. The U.S. Nuclear Regulatory Commission agreed to begin the formal process of reviewing the company’s designs for the 600-megawatt plant, which could power a city the size of Boise twice over.”
Not news really but according to Temple, NuScale’s project is at the crest of a wave: “Many more SMR projects are coming or under way. There are around 50 designs or concepts in various development or planning stages around the world, according to the International Atomic Energy Agency. Four are already in advanced construction in Argentina, Russia, and China.”
The big promise of SMRs is that they could lower costs: “If the early projects are built and succeed, these smaller and potentially safer nuclear reactors raise the real possibility of mass-produced mini plants that can significantly reduce the industry’s up-front costs and risks. That, in turn, could make it far easier to add a source of carbon-free energy that many experts believe will be critical to lowering the risk of climate change.”
“The grand promise of commercial SMRs is that they would be compact enough to prefabricate in factories and ship to their destination, where they could be stacked together to produce whatever level of energy generation is needed. Over time, the technology could introduce new levels of predictability, reliability, and economies of scale to an industry that’s become synonymous with billion-dollar cost overruns and years of delays. It also opens the possibility that nuclear power could serve smaller markets, and even military or industrial applications, where a full-scale reactor wouldn’t make economic sense.”
The most immediate advantage, however, notes Temple, “is that they might be cheap enough to get built at all. Raising the massive up-front capital to construct new full-scale reactors has become increasingly difficult in the United States” and elsewhere.
NuScale’s main financial backer is the large engineering firm Fluor, not to mention the U.S. Department of Energy which has given the company a $217 million grant under the SMR Licensing Technical Support Program.
Despite the promise of SMRs, “the technology is not a sure bet”, Temple acknowledges. “The cost per megawatt-hour doesn’t necessarily come down just because you’re building a smaller plant,” says Ryan Fitzpatrick, deputy director of the clean-energy program at the think tank Third Way. “There have to be cost savings derived through other processes.”
The key to driving down costs would be setting up factories to crank out a lot of reactors, says Neil Todreas, a professor of nuclear science and engineering at MIT.
That, however, notes Temple, “may present a bit of a chicken-and-egg challenge: securing financing to build the plants will probably require a lot of orders, but it would be hard for a company to obtain those orders before it could reliably produce reactors cheaply.”
In the end, SMRs may or may not end up being the ideal or most economical way to add significant nuclear generation to the grid, writes Temple – but they are simply the only nuclear game in a town: “In a nation where it’s become nearly impossible to build any new nuclear plants, it could simply be the technology needed to get the industry moving forward again at all, Todreas says.”
Todreas admits he is “not sure there will be a march toward small modular reactors across the U.S. for decades”. M.V. Ramana, a researcher at the University of British Columbia in Canada, does not believe in SMRs at all.
Ramana, writing in The Conversation, notes that the Canadian Nuclear Laboratories put out a “call for a discussion around Small Modular Reactors (SMRs) in Canada. The news release asserts that SMRs are “a potential alternative to large-scale nuclear reactors,” would be effective at “decreasing up-front capital costs through simpler, less complex plants” and are “inherently safe” designs.”
Ramana says he is “skeptical of these claims”.
He points out that nuclear power reactors did not become big for nothing: they increased in size to capitalize on economies of scale. Historically, he notes, “small reactors built in the United States all shut down early because they couldn’t compete economically.”
Ramana notes that “NuScale Power says a 12-unit version of its design that feeds 570 MW to the grid will cost less than $3 billion. But because the reactor design is far from final, the figure is not reliable. There is a long and well-documented history of reactors being much more expensive than originally projected.” And $ 3 billion for a 570 MW plant is hardly a bargain.
With regard to safety, the author is also skeptical. “SMR developers say the technology poses a lower risk of accidents, as Canadian Nuclear Laboratories suggests when it asserts “inherent safety” as a property of SMRs. Intuitively, smaller reactors realize safety benefits since a lower power reactor implies less radioactive material in the core, and therefore less energy potentially released in an accident.
The problem is that safety is only one priority for designers. They must also consider about other priorities, including cost reductions. These priorities drive reactor designs in different directions, making it practically impossible to optimize all of them simultaneously.”
What is more, “most commercial proposals for SMRs involve cost-cutting measures, such as siting multiple reactors in close proximity”, as in the case of NuScale. “This increases the risk of accidents, or the impact of potential accidents on people nearby.”
Ramana concludes that “the future for nuclear energy in Canada is not rosy. Canada’s National Energy Board’s latest Canada’s Energy Future 2016 report states: “No new nuclear units are anticipated to be built in any province during the projection period”, i.e. until 2040.
Perhaps the world should bet on nuclear fusion instead. The latest news here is that Google has become active in trying to help speed up nuclear fusion technology. If Google can’t do it, who can?