the dollars and cents of energy

The question keeps coming up: Is wind/solar cost-competitive yet?  Is nuclear?  The answers shift depending on fuel prices and location.  In Morocco when I researched this in 2001, for example, they had no fossil fuels at all, so imported coal was going to cost 6c/kWh in hard currency whereas the steady tradewinds along the Atlantic coast generated wind energy at 4.5c/kWh at the one wind park that had been up for a year.  In the rest of the world, newly built natural gas facilities are usually cheapest at about 3.5c per kWh, and wind at around 5.5c for good locations, but obviously this depends on the price of gas.  Solar used to be absolutely non-competitive (in the double digits), but new “thermal solar” (where parabolic mirrors heat a liquid that turns a turbine) are now being built on a utility scale.  Handily for solar, the sun shines during the day’s peak demand hours.

The breakdown goes something like this:

1. Construction Cost:

– Gas is cheapest, coal second-cheapest.  New “clean coal” technologies cost a bit more than renewables.
– Renewables are costly to construct since fuel is free.  The entire per-kilowatt price for windpower is the construction cost divided by 20 years.
– Nuclear is basically ludicrous.  When on budget, it costs the same as wind.  When off budget, it’s out of the ballpark.  The last nuclear plant to come online in the US took 23 years to build at a cost of $6.9 billion. The history of nuclear is a history of government bail-outs, and McCain’s nuclear energy plan is yet another example of faith-based economics.

2. Fuel:
– Gas prices depend on whether you are piping it within North America or getting liquified natural gas (LNG) from other continents.  The US has some gas in Alaska and the Gulf of Mexico, but most of the world’s gas is in Russia, Iran, and Qatar.  Gas costs more than coal and prices are expected to rise.
– Coal prices are low, and we (and China) have unlimited amounts of it if we choose to mine it.  People are working on how to turn coal into natural gas.
– Renewables cost $0 and will always stay at $0 no matter how other prices move.
– Nuclear: mining, refining, using, decommissioning, and storing the fuel costs some unspecified amount.  Uranium comes from Australia and Canada.  Some say the marginal dispatch price is only 1.7c/kWh for nuclear after the plant is built, but Britain paid $90 billion in liabilities for its inept and now-bankrupt waste re-processor, according to the Economist.

3. Maintenance:
– Gas and coal turbines have to be shut down for cleaning (coal more than gas) on a regular rotating schedule.  The average plant has 2-6 turbines.
– Wind just has air blowing through its turbines, so maintenance is less intensive.  The average utility-scale plant has 80-200 towers.  Solar’s surfaces have to be cleaned to maintain efficiency.
– Nuclear sometimes gets less maintenance than it should, leading to scary stories of cracked concrete.  All power plants have security, but nuclear has super-security.

4. Public Costs:
– Coal is dirty, causes cancer, etc.
– Gas is pretty clean but still has global warming problems.
– Nuclear has no global warming, but the nuclear waste sticks around.  A Chernobyl-style disaster isn’t a real likelihood, though.
– Importing fuel adds to the trade deficit, whereas high construction dollars tend to stay in the country in the form of construction jobs.
– Price insecurity can also have geopolitical consequences, such as wars for Kuwaiti/Iraqi oil or Iranian natural gas.  See where 2/3 of the world’s gas is located: http://en.wikipedia.org/wiki/List_of_countries_by_natural_gas_proven_reserves.
– Nuclear waste leads to dirty bomb risk.
– A network of 200 wind turbines is harder to bomb, though the transmission nodes could still be targets.  Flammable things like gas pipelines, LNG terminals, and coalyards are all obvious targets.

You can see that I think wind and solar are the most sensible choice.  For a case study with real numbers, here’s a Swarthmore engineering prof’s analysis of the market in Pennsylvania.

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2 responses to “the dollars and cents of energy

  1. i agree that nuclear is swizzle hizzle hells of expensive, and it takes forever. but there is reason to believe that the cost and timeline have more to do with an excessive, paranoid federal body of regulation that was enacted to appease the fears of a queasy public and a minority of staunch anti-nuke activists. with good research and design, and changes in regulations, nuclear power might could be safe and affordable.
    the advantages are considerable. uranium releases several orders of magnitude more energy than the same weight of fossil fuel. fuel costs are essentially negligible, and the fuel supply is next door to unlimited. there is no peak uranium, especially if we get over ourselves and start building breeder reactors, which actually produce more fuel than they consume. the only carbon emmissions associated with nuclear are those incurred mining, transporting and processing the fuel.
    yes, there are downsides, primarily the risk of accident and terrorism. but in a world pinched between growth and warming, and with limited availability of and experience with renewables, we may not have a choice.
    what about high level waste? okay, yeah, its a problem, no lie. but between glassification and geological sequestration, we can store wastes in an extremely secure location, from which they can be retrieved if we 1. think of a better way to store them or 2. actually come up with a use for them
    perfect and problem free? no. worth the effort? yup.

    • I agree that there’s an irrational fear response to nuclear, but in a world where we have mature wind technology and extremely promising tidal technology, I just don’t see any upside to fission. I don’t think the fuel and safety costs of nuclear will ever be “negligible.” Mining, transporting, processing, re-processing, and sequestering fuel isn’t cheap and easy. Historically the cost has not just been caused by public resistance, but also by corruption and poor building and safety procedures.
      If we are arguing a hypothetical world where the regulations and public sentiment can be discounted, then renewables are not of limited availability or experience. Half the cost of wind is getting the land rights from people who oppose them and fighting through local regulations and lawsuits. A lot of companies start developing wind parks only to have one or more of the local townships issue a moratorium on wind development. It also costs a freaking lot of lawyer time to fight through zoning and grid regulations.
      The technology itself isn’t new-fangled. 30-story turbines of over 1 MW each have been going up since 2000, and they’ve only gotten better since then. And in thinking about this I definitely keep one eye on security because a dirty bomb is the one threat that actually does make me think twice about living in DC.
      What price tag do we put on energy security? How many days of blackout before cities start rioting? On the first day everyone is fine, on the second they are nervous and not going to work, on the third day they start to panic if decisive relief isn’t on the way. A diversified, distributed network of renewables with thermal backup is the most resilient system we could build in our hypothetical world.

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