Chapter 24. Energy Economics

The definition of economics appearing in a popular textbook^[†] is as follows:

^† Paul A. Samuelson and William D. Nordhaus, Economics, 18th Ed., Irwin/McGraw-Hill, Inc., New York, 2006.

Economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people.

The definition is relevant in that we seek answers to questions such as these:

• What are the comparative costs of electricity from nuclear plants and from coal or oil plants?
• What is the expected use for nuclear power in the future?
• What choices of nuclear power research and development must be made?

In this chapter we will consider the first of these questions, examining the origin of costs of electricity and reviewing past events and trends. In a later chapter we study the long-range role of nuclear power.

As background for the discussion of electric power and nuclear's role, it is instructive to examine the energy flow diagram of Figure 24.1. Several points to note are: (a) nuclear accounts for more than 8% of the total supply; (b) oil imports are more than 72% of the total oil supply; (c) the total of all renewables, including hydro, solar, wind, biofuels, and geothermal, is comparable to nuclear; (d) energy for transportation is more than 28% of the total consumption. The chart strongly suggests that conservation of natural gas and oil should have high priority. The amounts of electricity generated by the various energy sources can be seen in Table 24.1.

Figure 24.1. United States energy sources and uses. Units are quads (quadrillion Btu).

Source: Annual Energy Review 2007, DOE/EIA-0384 (2007).

Table 24.1. Electric Energy Amounts and Percentages from Various Sources (DOE/EIA Web site)

Source	Amount(× 109 kWh)	Percent
Coal	1991	49.0
Nuclear	787	19.4
Hydro	283	7.0
Gas	829	20.4
Oil	64	1.6
Other renewables[†]	96	2.4
Other	14	0.3
Total	4064	100.0

^† Geothermal, solar, wind, biomass, etc.

24.1. Components of Electrical Power Cost

The consumer's interest lies in the unit cost of electricity delivered to the home. The author's light bill, in a region of the country that uses nuclear for more than one third of electricity generation, gives a figure of close to 8 cents/kWh. This cost includes three typical components—generation (55%), transmission (32%), and administration (13%). This says that the generation or “bus bar” cost of electricity for this particular area would be approximately 4 cents/kWh or 40 mills/kWh.

The comparison between costs of nuclear and its main competitor, coal, varies in several ways. On the average, the two have about that same cost, but there are large variations among countries, with the ratio coal/nuclear between 0.8 and 1.7. Electrical generation costs are dominated by fuel costs for coal and by capital costs for nuclear. Thus differences on a global, national, or regional basis depend on the distance from coal fields and on the discount rate. For example, nuclear electricity is relatively inexpensive in Japan and many European countries because of the cost of importing coal. Another factor is the regulatory environment of the country and the degree of emphasis on clean air or nuclear safety. Operating and maintenance (O&M) costs for nuclear plants are generally high because of the great complexity of the equipment and the stringent safety requirements of the regulators. However, O&M costs can vary widely among utilities with comparable facilities because of differing degrees of management effectiveness. Capital costs of both fossil and nuclear plants were high during the decade of high interest rates and high inflation, but the increase in cost was greater for nuclear plants, because they are basically more expensive and the time to construct was excessive. Table 24.2 gives the trend of plant costs for half the United States reactors over four time periods in which commercial operation began.

Table 24.2. Construction Costs for Nuclear Units. (Energy Information Administration, United States Department of Energy, DOE/EIA-0439(84))

Period[†]	Number of Units	Average Cost ($/kWe)
1971-1974	13	313
1975-1976	12	460
1977-1980	13	576
1982-1984	13	1229

^† During which units entered commercial operation.

The capital costs of nuclear plants vary greatly, but the figure is $2–3 billion. This represents the money required to construct the plant, including interest. Nuclear power has long been regarded as “capital-intensive,” because equipment costs are high, whereas fuel costs are low. Typically, the main parts of the nuclear plant itself and percentages of the cost are reactor and steam system (50%), turbine generator (30%), and balance of plant (20%). Additional costs include land, site development, plant licensing and regulation, operator training, interest and taxes during construction, and an allowance for contingencies.

Further perspective is needed on the capital cost component. Utilities that are not affected by deregulation serve an assigned region without competition. In exchange, the price that they can charge for electricity is regulated by public commissions of state governments. When a utility decides to add a plant to its system, it raises capital by the sale of bonds, with a certain interest rate, and by the sale of stock, with a dividend payment to the investor. These payments can be combined with income tax and depreciation to give a charge rate that may be as high as 20%. The interest charge on the capital invested must be paid throughout the construction period. This is an important matter, because the average total time required to put a plant into operation by 1985 was approximately 13 y, in contrast with a figure of less than 6 y in 1972. Figure 24.2 shows the trend in construction periods for the recent past. Several reasons have been advanced for the long time between receipt of a construction permit and commercial operation. In some cases plants were well along when new regulations were imposed, requiring extensive modifications. Others have been involved in extended licensing delays resulting from intervention by public interest groups. Others suffered badly from lack of competent management.

Figure 24.2. Construction times for nuclear power plants. Adapted from DOE/EIA-0439(84).

24.2. Forecasts and Reality

The demand for electrical power varies on a daily basis as a result of the activities of individuals, businesses, and factories. It also varies with the season of the year, showing peaks when either heating or air conditioning is used extensively. The utility must be prepared to meet the peak demand, avoiding the need for voltage reduction or rotating blackouts. The existing megawatts capacity must include a margin or reserve, prudently a figure such as 20%. Finally, the state of the national economy and the rate of development of new manufacturing determine the longer range trends in electrical demand. Utilities must continually be looking ahead and predicting when new plants are required to meet power demand or to replace older obsolete units.

Such forecasts have to be made well into the future because of the long time required to build a new power plant. But forecasts can readily turn out to be wrong because of unforeseen events or trends, including the interruption of energy supplies from abroad, shifts in the state of the economy, and major changes in the regulatory climate. If an estimate of power demand is too low and stations are not ready when needed, customers face the problem of shortages; but if the estimate is too high, and excessive capacity is built, customers and shareholders must bear the effects of added expense.

The history of nuclear growth and eventual stagnation over the last several decades of the 20th century serves well to illustrate this situation. It is not possible to identify any single cause for the situation, but we can indicate many of the factors that had an effect. Optimism about nuclear energy was based on the successful development of military applications and the belief that translation into peaceful uses was relatively easy and straightforward. After studying and testing several reactor concepts, the United States chose the light water reactor. Hindsight indicates that safety might have been assured with far less complexity and resultant cost by adoption of heavy water reactors or gas-cooled reactors.

There was a post-World War II economic boom in which the demand for electric power was approximately 7% per year. New coal-fired plants provided most of the growth. In 1957 the first commercial power reactor was started at Shippingport, Pennsylvania, and new designs of larger units were developed by two concerns. Some of these were attractive to utilities because they were turnkey plants, priced very favorably. A large number of orders were placed in the 1960s to the main vendors—Westinghouse, General Electric (GE), Babcock & Wilcox, and Combustion Engineering. These orders were placed on the basis of sustained electric power demand growth well to the end of the century and an expected construction time of approximately six years.

Predictions were optimistic in that period. For example, in 1962 and later in 1967, the Atomic Energy Commission (AEC) predicted^[†] the following installed nuclear capacities:

 

Year	GWe
1970	10
1980	95
2000	734

^† Civilian Nuclear Power—A Report to the President-1962 (and 1967 Supplement), United States Atomic Energy Commission.

The reasons for the optimism were expectation that the United States economy would continue to expand, that electricity would substitute for other fuels, and that nuclear would fill a large fraction of the demand, reaching 56% by the year 2000. As it turned out, the level of 95 GWe was actually reached late in the 1980s, but the figure only reached 100 GWe after an additional decade.

What is the reason for the great discrepancy between forecasts and reality? The first is that it took longer and longer to build nuclear plants, adding large interest costs to the basic capital cost. Inflation in the 1970s drove costs of construction up dramatically, as we saw in Table 24.2. The effect on nuclear plants was especially, severe because of their complexity and the requirement of quality assurance at every stage from material selection to final testing.

The Middle East oil boycott of 1973 caused an increase in the cost of energy in general, accentuated a national recession, and prompted conservation practices by the public. The growth rate of electrical demand fell to 1% per year. As a consequence, many orders for reactors were canceled. However, by this time, a large number of reactors were in various stages of completion—reactors that would not be needed for many years, if ever. Some that were approximately 80% completed were finished, but work on others of 50% or less was stopped completely. The hard fact was that it was cheaper to abandon a facility on which half a billion dollars had been invested rather than to complete it.

Nuclear power was barely getting started when the environmental movement began and consumers' interests became more vocal and influential. Opposition to nuclear power was composed of many elements. Early activists expressed themselves as opposed to the power of the entity called the military-industrial complex. Because nuclear energy is involved in both weapons and commercial power, it became a ready target for attack. Those philosophically inclined toward decentralized authority, the return to a simpler lifestyle, and the use of renewable energy were enlisted into the antinuclear cause. Those fearful of radiation hazard and those concerned about the growth of nuclear weapons were willing recruits also. Well-organized opposition forces set about to obstruct or delay reactor construction through intervention wherever possible in the licensing process. The Nuclear Regulatory Commission (NRC) had a liberal attitude toward intervenors in the interests of fairness. The net effect in many cases was to delay construction and thus increase the cost. The high costs then served as an additional argument against nuclear power. The general public has tended to be swayed by statements of the organized opposition and to become doubtful or concerned. Traditional distrust of government was accentuated in the 1970s by the pains of the war in Viet Nam. The aftermath of the Watergate affair was a loss in confidence in national leadership. The public was further sensitized by the revelation that industrial chemicals were affecting plant and animal life and that wastes had been mismanaged, as at Love Canal. Because of accompanying radiation, wastes from nuclear power were regarded as more dangerous than ordinary industrial wastes. Concerns were aggravated by the apparent inability of government and industry to deal effectively with nuclear wastes. Changes in policy and plans between national administrations on the basis of differences in approach were ascribed to ignorance.

In the 1980s the demand for electricity began to increase again, but by that time, other factors had developed that discouraged utility management from resuming a building program. In earlier years, the utilities in a state were regulated monopolies that could readily pass on costs to the consumers and could show continued decreases in the cost of electricity. When the recession occurred, costs increased, and customers adopted conservation measures, reducing income from the sale of electricity.

In the interests of improved protection of the public, the NRC increased the number and detail of its rules and guidelines, often requiring that changes in equipment be made or additional equipment be installed. Examples of mistakes in design, installation, testing, cost overruns, shoddy workmanship, and inept management received a great deal of media attention, further eroding confidence among investors and the general public.

In this period, the role of the Public Utilities Commissions (PUCs) became more important. These state regulatory organizations are committed to protect the consumers' interest. They became alarmed at the rising costs of nuclear plants and were reluctant to allow utilities to pass costs on to consumers, thus reducing the margin of profit to the company and its stockholders. The practice of prudent review is applied to the construction of facilities after construction is complete. Questions are asked, “Would a reasonable person have incurred those costs, or canceled the project?” A related “used and useful” test asks, “Were those facilities actually needed?” or “Should a cheaper power source have been built?” Expenditure by utilities was disallowed for many reasons. Some costs were unreasonable, such as cost overruns that could have been avoided with better project management. Others were in the category of errors in judgment but only in hindsight. An example is a decision to build a generating plant that turned out to be larger than necessary. In many cases, expenditures by the utility were disallowed even though they were outside the control of the management. As a consequence of unhappy experience, utility executives became increasingly wary of any new large-scale long-term commitment. The prospect of fiscal disaster outweighed that of criticism for failing to anticipate and meet electricity needs.

On a very positive note, more than 100 reactors were in operation by the turn of the century, contributing approximately 20% of the total United States electricity, with no harm to the public, and at a cost that was well below that of oil-fired units and many coal-burning plants. Realistically, however, it is a fact that the cost of nuclear plants had increased dramatically. Utilities found little sympathy for their requests for rate increases to meet costs of operation. The last new orders for reactors were in 1978.

The Three Mile Island accident of 1979 (Section 19.5) dealt a severe blow to the nuclear power industry in the United States. Although releases of radioactivity were minimal and no one was hurt, the image of nuclear power was seriously tarnished. Media attention was disproportionate to the significance of the event and greatly increased the fears of local residents. The apparent confusion that existed immediately after the incident and the revelation of errors in design, construction, and operation caused national concern over the safety of all reactors.

The Chernobyl accident of 1986 (Section 19.6) commanded international attention. The effect on public opinion may have been greater in Europe than in America, in part because of the geographic proximity to the event. It is generally appreciated in the United States that the Chernobyl reactor was operated by the U.S.S.R. without adequate precautions, was basically more unstable than LWRs, and lacked a full containment. Nonetheless, the spectre of Chernobyl remained over the United States nuclear industry.

The environment surrounding modern nuclear utilities is complex and demanding. Competition among utilities and between utilities and other independent generators has increased, because consumers are anxious to obtain the lowest cost electricity. To attract and keep customers, the margin of profit must be reduced or production costs must be minimized, or both. Among the steps taken by utilities were removal of excess layers of management and reductions in staffing. Recognizing that operations and maintenance (O&M) costs are a major part of the cost of producing electricity, utilities increased attention to efficiency in the maintenance and repair process. They concentrated on reduction in the time required for refueling outages and eliminated unscheduled reactor trips to enhance capacity factors. Such actions had to be taken with care that safety was not jeopardized. It is clear that every additional monitoring device or safety equipment or special procedure intended to enhance safety adds to the product cost. As performance improves, it becomes more difficult to find areas of further improvement. But it is difficult for a regulator, either from government or industry, to refrain from recommending new safety initiatives. In the limit, the industry could be put out of business by escalating costs. From another point of view, the addition of excessive complexity to a facility can be counterproductive to safety. This suggests that greater attention be given to establishing priorities and to reducing costs in other areas besides those that are safety sensitive. A more important goal still is the achievement of a uniform level of excellence in every nuclear unit in the country.

A recent trend toward consolidation of management is notable. Companies such as Entergy bought nuclear plants for market value, which is much lower than initial cost. As a result, their electric power from nuclear is generated at cost competitive with natural gas or coal.

24.3. Technical and Institutional Improvements

The nuclear industry has made great efforts to improve efficiency and safety. Some of the activities are cited in the following.

• Computer assistance. Word processing capability for generation of reports and correspondence is standard, and plant computers provide status information displays on the basis of measurements by a host of instruments. The computer plays a vital role in scheduling actions during planned outages. The down times have been reduced to well under 1 month.
• Expert systems. These capture a large body of human knowledge and make it available for decisions and problem solving. It is one facet of the broader subject of artificial intelligence (AI), which has been researched extensively. Some other relevant components of AI are (a) simulation, in which a computer program imitates a reactor control room, providing a variety of experiences for operators in training, (b) robotics, involving computer, circuits, and mechanical devices to simulate movement of human beings and perform tasks in hazardous environments, (c) neural networks, computer programs that model the processing of neurons in the brain, and (d) virtual reality, which provides visual and tactile experience for workers in preparation for complex operations.
• Digital control of nuclear plants. The instrumentation and control (I&C) system of a power reactor provides (a) continuous information on status, including neutron flux, power level, power distribution, temperatures, water level, and control rod position; (b) provides commands to trip the reactor if preset limits are exceeded; and (c) reports deviations from normal or failures of components. Traditionally, the I&C systems were of the analog type, involving a sensor, a feedback circuit, and a display device. Such systems tended to become unreliable with time. The industry has converted to digital I&C, which consists of computer software and microprocessor-based hardware. The NRC recommended and supported the conversion in the interests of reliability and safety. Large expenditures were incurred to achieve the transition.
• Reactor life extension. The life of a nuclear reactor system was set by Congress on economic grounds as 40 y, with prior termination for marginal safety and excessive outage for maintenance and repair. In view of the high capital cost of a reactor, it pays to stretch the life beyond the 40-year mark. Some of the problems to be addressed are (a) difficulty in finding spare parts, (b) corrosion and plugging in generators, (c) deterioration of electrical systems, (d) high radiation levels because of buildup of deposits, (e) corrosion of piping, and (f) radiation damage of reactor vessel welds from neutron bombardment. The last item is associated with the possibility of pressurized thermal shock (PTS), in which temperature changes in embrittled material result in vessel rupture. Location of fuel with low neutron production rate near the surface is a helpful solution.
• License renewal. Extension of an operating license for 20 y can be granted by the NRC if several submissions by the operating company are provided. The procedure is described in NRC rules. Environmental matters are covered in 10CFR51, and license renewal is in 10CFR54 (see References). Regulatory Guide 1.188 tells how to apply, and a Standard Review Plan gives NRC's techniques. Special attention in the licensing must be given to the potential effects of aging of components and systems, with information on ways to mitigate the effects. The objective is to determine whether the plant can operate safely in the extended period. The license renewal process is outlined in an NRC Web site (see References). The applicant for a renewal license must submit an environmental report that analyzes the plant's impact during the continued operation. Use can be made of a Generic Environmental Impact Statement (GEIS, see References) prepared by NRC, with adaptation to fit the specific plant.

The first United States plants to seek license renewal were Calvert Cliffs, operated in Maryland by Baltimore Gas & Electric, and Oconee, operated in South Carolina by Duke Power. Subsequently, a number of plants initiated plans for license renewal.

24.4. Effect of Deregulation and Restructuring

The electrical generation industry faces problems related to access to its transmission lines. There are a growing number of nonutility producers of electricity that use wind, water, and cogeneration. Industrial consumers seeking the lowest cost electricity would like to buy power from such independent generators and use the existing utility-owned network. Users in the northern United States would like to import more power from Canada. The process of transferring large blocks of power around the grid is called “wheeling.” Utilities are concerned about the effect of increased wheeling on system stability and reliability, on costs of new transmission lines, and on safety. The problem is not solely that of the utilities, because residential and commercial users may experience higher costs if the utilities lose large customers.

Various new approaches to energy management on the part of utilities have been required by public utility commissions. The broadest category is Integrated Resource Planning (IRP), which takes account of all aspects of energy, including environmental effects and social needs. Within it is Demand Side Management (DSM) that seeks to reduce usage rather than meeting customers' requirements. DSM emphasizes encouragement of conservation and avoidance of new large facilities by use of alternative energy sources. Related is Least Cost Planning (LCP), which requires the examination of all costs, including existing plants. This comes into play when a major equipment replacement such as steam generator is needed. Shutting down the plant might be more economical. In all these methods, the PUC played a more active role in decision making than previously.

The Energy Policy Act of 1992 (Section 23.8) will continue to have a significant effect on the electric utility industry. Some of its pertinent provisions are noted. For example, the Public Utility Holding Company Act of 1935 (PUHCA), which governed power production by utilities, was modified to allow greater competition among power producers, including a new category called “exempt wholesale generators” (EWGs), which are unregulated power producers. The objective was to let market forces play a greater role. Independent power producers (IPPs), those outside the utility structure, were encouraged to develop. The Federal Energy Regulatory Commission (FERC) was given greater power, especially to order transmission access, when it can be shown that it is in the public's interest (i.e., reliability is maintained and costs to users is reduced). The process of integrated resource planning (IRP) is required at the state level. The new law thus accelerates the process of utility industry restructuring that had been evolving since the energy crisis of the 1970s.

Nuclear power's position was enhanced by the Energy Act through streamlining of the reactor licensing process, the use of certification of standardized reactor designs, and the establishment of a government corporation for uranium enrichment. However, the effect of other features of the Act is uncertain. Mandatory efficiency standards were set for electrical equipment and the development of an electric automobile given greater support. Meeting efficiency goals clearly would tend to reduce the need for new electric power, whereas massive electrification of ground transportation would increase demand. From the regulatory standpoint, it will be easier to license new reactors, thus encouraging investors. On the other hand, new competition will increase the economic pressure on the utilities. They must cut costs but are required by NRC and INPO to maintain safety. The recurring question “How safe is safe enough?” needs to be addressed to the satisfaction of the industry, the regulator, and the public.

The Energy Act of 1992 requires that each state of the United States develop a plan for transition of electric generation by regulated monopoly to a free market. A variety of techniques to ensure equity among the various stakeholders have been developed. One of the key issues in the debates is how to handle “stranded costs.” These costs to utilities result from the change itself and consist of several categories: (a) locked-in power purchase contracts with independent generators required by the Public Utilities Regulatory Policies Act (PURPA); (b) regulatory assets, which are programs for energy efficiency, low-income assistance, and deferred fuel costs, approved by regulatory bodies; (c) capital investment debt, incurred in the construction of nuclear power plants, normally to be paid off over many years by income from consumers; and (d) decommissioning funds required over and above those already accumulated. The question is, “Who should bear the burden of the stranded costs?” Users of electricity and their advocacy groups believe that the consumer should not have to pay for what is considered mismanagement on the part of utility executives and provide a bailout of the industry. They argue that investors in utility stocks and bonds must take their chances on loss just as with any other investment. Utilities on the other hand point out that there was a contract involving approved expenditures in exchange for reliable electricity and that decisions to build nuclear plants were fully supported by regulators. Those holding stocks or bonds obviously do not want the value of their investment to decline. The ideal solution of this problem is to devise a formula that gives each party a fair part of the burden, such that the transition can be effected smoothly and efficiently, with realization of the goal of reduced costs to consumers with assured reliability.

The subject of deregulation is very complex because of the many issues and variety of groups affected, as well as differing situations among the states, which are addressing the opportunities and problems. Several discussions of the subject from different vantage points are found in References.

24.5. Advanced Reactors

Light water reactors of the Pressurized Water Reactor (PWR) and Boiling Water Reactor (BWR) type have performed very well over several decades. However, in the United States without any action being taken, a number of reactors would come to the end of their license period and be shut down. Many believe that it is in the best interests of society to continue the nuclear option as a part of an energy mix. To do so, nuclear power must be acceptable to the public, the utilities, the regulatory agencies, and the financial community. This implies the need for confidence in reactor safety and economy.

The United States nuclear power industry includes electric utilities that use reactors, equipment manufacturers and vendors, and service organizations. That industry is convinced that electricity from nuclear power will continue to be necessary to sustain economic growth. Leaders note that nuclear power does not contribute to pollution and potential global warming and helps provides energy security through the reduction of reliance on uncertain supplies of foreign oil. The industry believes that energy conservation and the use of renewable sources of energy are highly desirable but not sufficient for long-term needs, especially in light of a growing population and the demand for environmental protection.

Accordingly, a Strategic Plan for Building New Nuclear Power Plants (see References) was published with a final version dated 1998. The document serves to highlight the industry's commitment to encouraging new plant orders. The Plan identifies a number of “building blocks” for accomplishing goals. Among these are continued plant safety and reliability, stable licensing including NRC design certification, well-defined utility requirements, successful first-of-a-kind engineering, progress in disposal of high-level and low-level wastes, adequate fuel supply, enhanced government support, and improved public acceptance.

Crucial to the success of the mission are changes in the method of licensing of siting, construction, and operation by the NRC. The conduct of a single hearing for the license on the basis of standardization of designs will reduce the time required and eliminate much uncertainty. Experience gained in the more than 30 y of commercial reactor operation is to be applied to the design, operation, and maintenance of the new advanced reactors. Self-improvement initiatives through INPO will be continued.

The first major step in carrying out the Plan was the development of an Advanced Light Water Reactor Utility Requirements Document (see References). It provides policy statements about key features such as simplification of systems, margins of safety, attention to human factors, design for constructibility and maintainability, and favorable economics.

Two different concepts were specified: (a) A large output (1300 MWe) “evolutionary” design that benefits from current designs, and (b) A mid-size output (600 MWe) “passive” design that depends more on natural processes for safety instead of mechanical-electrical devices.

Numerical specifications include completion in 5 y, low worker radiation exposure (less than 100 mrems/y), refueling on a 24-month basis, and an ambitious 87% average availability over a 60-y design life.

A thorough analysis was made of the means by which standardization can be achieved in design, maintenance, and operation, along with the benefits that accrue:

• A reduction in construction time and costs comes from the use of common practices.
• Use of identical equipment in several plants favors both economy and safety.
• Standardized management, training, and operating procedures will lead to greater efficiency and productivity.

Three advanced reactor designs intended to meet the United States nuclear industry objectives were developed. A description of the principal candidates is given in the following.

The ABB Combustion Engineering System 80+ (see References) is an evolutionary 1300-MWe reactor that satisfies the Requirements Document. Its containment is spherical rather than the typical cylindrical, giving more working space. Its control system features the latest in electronics, including fiber optics, computers, and visual displays. Safety is enhanced by many features, including a gas turbine for emergency AC power. A combination of simplicity and economy of scale makes the cost of electricity competitive. Versions of the design have been built in Korea.

General Electric Co. has an Advanced Boiling Water Reactor (ABWR) design of 1300 MWe (see References). The ABWR circulates coolant by internal pumps. Passive safety features include containment cooling that uses natural convection. Analysis of the plant by probabilistic risk assessment (PRA) indicates negligible hazard to the public. The reactor design conforms to the Requirements Document and was reviewed by the NRC. Two ABWRs are being built in Japan and others are planned.

Westinghouse designed an advanced reactor with acronym AP600, with a lower power level of 600 MWe (see References). The principal design goals were simplicity and enhanced safety. The numbers of pipes, valves, pumps, and cables were greatly reduced in this design. The AP600 has a number of passive processes for safety, the use of gravity, convection, condensation, and evaporation. Examples are a large water storage reservoir for emergency cooling and another one for containment wall cooling.

Early reactor development in the period 1950–1965 was spearheaded by the federal government through the AEC. In the new advanced reactor program, the Department of Energy (DOE) is helping the endeavor, but there is now an imposing array of organizations cooperating to bring about the new generation of reactors. In addition to overall guidance by the Nuclear Energy Institute, support is provided by the Edison Electric Institute (EEI), the Electric Power Research Institute (EPRI), and the Institute of Nuclear Power Operations (INPO). A review and forecast by the DOE of electrical generation in the period 1980–2030 is shown in Figure 24.3.

Figure 24.3. Energy generation by fuel, 1980–2030 (billion kWh).

Source: Annual Energy Outlook 2008. DOE/EIA-0383(2008).

24.6. Nuclear Power Renaissance

The revival of interest in the United States in nuclear power in the first decade of the 21st century is characterized as a renaissance. The situation contrasts with the stagnant conditions of the previous two decades. A number of utilities have made application for reactor license renewals, and several have initiated planning for new nuclear plants, the first in more than 25 y.

Reasons for the new attitude toward nuclear are: (a) increased concern about the global warming consequences of carbon emissions from fossil fueled plants; (b) recognition of the vulnerability of the country to the uncertainty of foreign oil supply; (c) favorable economics compared with other energy sources; and (d) an anticipated greater demand for electricity but opinion that renewables are inadequate.

A consensus developed in the United States that it was time to expand nuclear power. The reactor concept most likely to be adopted in the nuclear renaissance is Westinghouse's Advanced Passive 1000 (AP1000). It is a system for which design preapproval has been issued by the NRC. That approval greatly simplifies the application by a nuclear company for a construction/operating license (COL).

The AP1000 has the same design goals and methods of achieving them as the AP600, discussed in Section 24.5. Again, passive processes such as gravity, convection, combustion, and evaporation are employed, and water reservoirs are provided. Changes from AP600 are limited to those required by the higher power. Modular construction is employed to minimize costs and time. The estimated core damage frequency is smaller than NRC requirements by a factor of 250. Some of the key parameters of the Westinghouse design (see References) are as follows:

• Net electrical/thermal output 1117 MWe/3400 MWt
• Number of 17 × 17 fuel assemblies 157
• Peak coolant temperature 321 °C (610 °F)
• Reactor vessel ID 399 cm (157 in)
• Operating cost 3.5 cents/kWh

Ownership of Westinghouse had gone through phases including purchase by British Nuclear Fuels (BNFL), which sold the company to the Japanese firm Toshiba.

Three ambitious programs were presented: the Energy Act of 2005 by Congress; Nuclear Power 2010 by the DOE; and Vision 2020 by the nuclear industry. The programs have in common a principal objective to make much greater use of nuclear processes. In the following, we describe the key features of the initiatives. A variety of activities, programs, and projects have been set into motion in preparation for an implementation of the renaissance. These are described briefly in the following.

• Energy Policy Act of 2005. First is the Energy Loan Guarantee Fund, which is a sort of insurance that nuclear and other sources of energy can use. The guarantee is up to 80% of the cost of the project and a long-term repayment is allowed. Second is a tax credit of 1.8 cents per kWh produced on 6,000 MW of new capacity for a period of 8 y. For example, if there is an allocation of 750 MW to a 1,000 MW plant, it can claim (0.75)(1.8) = 1.35 cents per kWh, with certain limitations. Third is the renewal for 20 y of the Price-Anderson Act, which expired in 2003. It provides insurance coverage in case of nuclear accident. Plants are required to purchase $300 million of private insurance as primary coverage. Then they must pay a fee of $95.8 million per reactor. With more than 100 United States reactors, the total is more than $10 billion. Fourth is standby support for new plants if there is delay caused by the NRC or from litigation. For the first two new plants, 100% coverage is up to $500 million each, with 50% for the next four plants. Fifth is a require-ment on NRC to take several actions in support of counterterrorism. Sixth is authorization of approximately $3 billion for nuclear R&D and hydrogen projects. Further details on the Act are found in the References.
• Nuclear Power 2010. This program, announced by DOE in 2002, is an industry-government cooperative effort to find sites for new nuclear power plants, to develop advanced technologies, and to test the regulatory process. The objective is to see orders for new reactors by 2010.The motivation for the program is the expectation that the demand for electricity will increase by 50% by the year 2030. Advantage is to be taken of the fact that uranium is relatively cheap and readily available in Canada and Australia; interest rates are still low; and there is a favorable image of nuclear facilities.In response to the initiative, three consortia of utilities and vendors have arisen. One plans to use GE's Economic Simplified Boiling Water Reactor (ESBWR); another a PWR, Westinghouse's AP1000; and a third GE's ABWR.New technologies may assist in approaching a “hydrogen economy” that would greatly relieve the demand for foreign oil for transportation.
• Vision 2020. The nuclear industry as represented by the Nuclear Energy Institute proposes to add 50,000 MWe of nuclear power by the year 2020, plus 10,000 MWe by 2012 through increased efficiency of operation and productivity, and a startup of a mothballed reactor. These goals are aimed at contributing to the prevention of global warming because of emissions of greenhouse gases. The amounts are believed necessary to achieve a 30% nonpolluting component of United States electric power generation as hydropower decreases. Immediate action is recommended for a demonstration project to produce hydrogen (and oxygen) from off-peak electricity. Nuclear reactors are needed as well to provide the heat for purification of contaminated water and desalination of seawater to relieve shortages in the Western United States and Florida. Vision 2020 calls also for expansion of uses of radioisotopes in medicine and food safety.
• Future nuclear reactors. The growth in world population in the 21st century and the expectations of developing countries will require unusual demands for energy. Nuclear reactors can provide part of that energy economically, safely, and without environmental effects.

Looking toward further improvements in reactor technology, the United States DOE initiated a study of new nuclear designs titled Generation IV. Contributing to the study is the Generation IV International Forum (GIF), a consortium of 10 countries^[†] and the European Union. The long-term goals are well described in a 2002 report titled, “Technology Roadmap for Generation IV Nuclear Energy Systems,” (see References). The goals are: (a) Sustainable Nuclear Energy, which focuses on waste management and resource utilization; (b) Competitive Nuclear Energy, which seeks low cost electricity and other products such as hydrogen; (c) Safe and Reliable Systems, which implies both prevention and responses to accidents; (d) Proliferation Resistance and Physical Protection, which means control of materials and prevention of terrorist action. Of a large group of reactor systems, six were identified as prospects for research and development, as follows:

1. Gas-cooled Fast Reactor (GFR). Helium cooled, fast neutron spectrum, closed fuel cycle for actinide burnup.
2. Lead-cooled Fast Reactor (LFR). Lead or Pb-Bi coolant, fast neutron spectrum, closed fuel cycle, metal fuel, long core life.
3. Molten Salt Reactor (MSR). Circulating coolant of molten Na-Zr-U fluorides that allows actinide feeds, graphite moderator, thermal spectrum.
4. Sodium-cooled Fast Reactor (SFR). Na coolant, fast neutron spectrum, closed pyrometallurgical fuel cycle, MOX fuel.
5. Supercritical-water-cooled Reactor (SCWR). Fast or thermal spectrum, operation above the critical point for water (22 MPa, 374 °C), high thermal efficiency.
6. Very High Temperature Reactor (VHTR). Thermal spectrum, once-through cycle, either HTGR or pebble bed-type, high efficiency, useful for process heat.
   • Global Nuclear Energy Partnership. In 2006 an initiative with multiple benefits called Global Nuclear Energy Partnership (GNEP) was proposed by President Bush. It seeks to involve a number of countries in R&D needed to achieve an ideal nuclear system. As described in a set of Web sites, the program has the following seven elements.
     • Expansion of United States nuclear power. GNEP is the next step in the efforts to stimulate new nuclear plant construction. This element builds on the earlier initiatives of the Energy Policy Act, Nuclear Power 2010, Standby Support, and Early Site Permits.
     • Proliferation-resistant recycling. New chemical separation processes make plutonium less accessible to rogue nations or terrorists. As a substitute for the PUREX process, which creates a pure plutonium product, the UREX+ process will include other actinides—neptunium, americium, and curium. The mixture of elements will be recycled to burn out wastes and obtain maximum energy.
     • Minimization of wastes. Separated fission products would have a volume far less than that of spent fuel. The heat source and activity of wastes would be reduced to the extent that the Yucca Mountain repository would be adequate to handle both past and future needs.
     • Advanced burner reactors. New fast neutron reactors are to be developed to destroy transuranics by fission and transmutation. A small test reactor would be followed by a full-sized reactor, and ultimately by a fleet of advanced burners.
     • Reliable fuel services. Cooperation is sought between “fuel supplier nations” and “user nations” to reduce incentives for enrichment and reprocessing. Suppliers will ensure fuel to be used and returned for recycling and take care of residual wastes.
     • Small-scale reactors. Reactors that are suitable for developing nations are to be designed and tested. They would be simple, safe, long-lived, and proliferation-resistant. They would be able to provide heat applications such as district heating and desalination.
     • Nuclear safeguards. Full control and accounting for all nuclear materials is visualized. In the reactor development program, cooperation with International Atomic Energy Agency (IAEA) will enhance safeguards and deter proliferation of weapons.

^† Argentina, Brazil, Canada, France, Japan, Republic of Korea, South Africa, Switzerland, United Kingdom, and United States.

The GNEP program is planned to start with studies of feasibility and economics, and be implemented well into the 21st century. Some observers believe that the GNEP will be unsuccessful, in part for lack of committed funding, and there is an opinion that the project distracts and detracts from the United States nuclear power renaissance (see articles by Kadak and by Wald in References).

24.7. Summary

Half the cost of electric power is for generation. Electricity from plants that use coal or nuclear fuel is comparable in cost, with a tradeoff between capital costs and fuel costs. Costs of construction of nuclear plants and the time to complete them in the United States were exorbitant for several reasons. There have been no orders for new nuclear plants since 1978. The nuclear industry has several opportunities for improvements including license extension but is faced with the challenges of electricity restructuring. Several advanced reactor concepts are being promoted to preserve the nuclear option. A nuclear renaissance involves building additional power plants and carrying out research on new reactor concepts.

24.8. Exercises

1. Many different energy units are found in the literature. Some of the useful equivalences are:
   • 1 eV = 1.602 × 10⁻²⁴ J
   • 1 cal = 4.185 J
   • 1 Btu = 1055 J
   • 1 bbl (oil) = 5.8 10⁶ Btu
   • 1 quad = 10¹⁵ Btu
   • 1 Q = 10¹⁸ Btu
   • 1 exajoule (EJ) = 10¹⁸ J.
     • Find out how many barrels of oil per day it takes to yield 1 GW of heat power.
     • Show that the quad and the EJ are almost the same.
     • How many quads and Q correspond to the world annual energy consumption of approximately 300 EJ?
     • How many disintegrations of nuclei yielding 1 MeV would be needed to produce 1 EJ?
2. Find the yearly savings of oil by use of uranium in a nuclear reactor, with rated power 1000 MWe, efficiency 0.33, and capacity factor 0.8. Note that the burning of one barrel of oil per day corresponds to 71 kW of heat power (see Exercise 24.1). At $75 a barrel, how much is the annual dollar savings of oil?

24.9 References

Electricity Sources DOE/EIA Electricity Sources DOE/EIA

http://www.eia.doe.gov/cneaf/electricity/epa/epat1p1.html http://www.eia.doe.gov/cneaf/electricity/epa/epat1p1.html

Data on generation by type of producer Data on generation by type of producer.

The 1970's Energy Crisis The 1970's Energy Crisis

http://cr.middlebury.edu/es/altenergylife/70's.htm http://cr.middlebury.edu/es/altenergylife/70's.htm

Effects of the oil embargo Effects of the oil embargo.

Weinberg, 1985 Alvin M. Weinberg, Continuing the Nuclear Dialogue 1985 American Nuclear Society La Grange Park, IL Essays spanning the period 1946–1985, selected and with introductory comments by Russell M. Ball

Ott and Spinrad, 1985 Karl O. Ott, Bernard I. Spinrad, Nuclear Energy: A Sensible Alternative 1985 Plenum Press New York Titles of sections: Energy and Society, Economics of Nuclear Power, Recycling and Proliferation, Risk Assessment, and Special Nuclear Issues Past and Present

Jackson, 1985 Philip C. Jackson Jr, Introduction to Artificial Intelligence 2nd Ed. 1985 Dover Publications New York A popular update of a classic work

Bernard and Washio, 1989 John A. Bernard, Takashi Washio, Expert Systems Applications Within the Nuclear Industry 1989 American Nuclear Society La Grange Park, IL

Instrumentation and Control Instrumentation and Control

http://portfolio.epri.com http://portfolio.epri.com

Select 2009 Research Offerings/Nuclear/Instrumentation and Control Select 2009 Research Offerings/Nuclear/Instrumentation and Control.

Dorf and Bishop, 1998 Richard C. Dorf, Robert H. Bishop, Modern Control Systems 1998 Addison-Wesley Menlo Park, CA Feedback control theory with practical examples. A chapter titled Digital Control Systems. Two nuclear problems

Regulatory Guides on Digital Computer Software Regulatory Guides on Digital Computer Software

http://www.nrc.gov/reading-rm/doc-collections/reg-guides http://www.nrc.gov/reading-rm/doc-collections/reg-guides

Select Power Reactors to access Regulatory Guides 1.168–1.173 Select Power Reactors to access Regulatory Guides 1.168–1.173.

Digital Instrumentation and Control Systems in Nuclear Power Plants Digital Instrumentation

http://www.nap.edu http://www.nap.edu

Search on the topic above Search on the topic above.

License Renewal Process License Renewal Process

http://www.nrc.gov/reactors/operating/licensing/renewal.html http://www.nrc.gov/reactors/operating/licensing/renewal.html

Overview, Process, Regulations, Guidance, and Public Involvement Overview, Process, Regulations, Guidance, and Public Involvement

License Renewal Generic Environmental Impact Statement License Renewal Generic Environmental Impact Statement

http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1437 http://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1437

Available to utilities to reference in applications. From NRC Available to utilities to reference in applications. From NRC.

Electricity: The Road Toward Restructuring Electricity: The Road Toward Restructuring

www.cnie.org http://www.cnie.org/NLE/CRS/abstract.cfm?NLEid=67

Congressional Research Service Report by Abel and Parker Congressional Research Service Report by Abel and Parker.

Energy Policy Act of 2005 Energy Policy Act of 2005

http://www.nei.org http://www.nei.org

Search: Energy Policy Act of 2005; Select Highlights, etc. (from Nuclear Energy Institute) Search: Energy Policy Act of 2005; Select Highlights, etc. (from Nuclear Energy Institute)

The Global Nuclear Energy Partnership The Global Nuclear Energy Partnership

http://www.gnep.energy.gov http://www.gnep.energy.gov

Select from Implementing Elements Select from Implementing Elements.

Wald, 2006 Matthew Wald, The Best Nuclear Option Technology Review 200659-

Advanced Reactors Advanced Reactors

http://www.uic.com.au/nip16.htm http://www.uic.com.au/nip16.htm

A briefing paper from Australia. Table of reactor data, features, and status A briefing paper from Australia. Table of reactor data, features, and status.

Advanced Reactors Advanced Reactors

http://www.nucleartourist.com http://www.nucleartourist.com

Links to the principal designs. By Joseph Gonyeau Links to the principal designs. By Joseph Gonyeau.

Bruschi, 2004 Howard J. Bruschi, The Westinghouse AP1000—Final Design Approved Nuclear News November 200430-35

“A Technology Roadmap for Generation IV Nuclear Energy Systems,”, December 2002 A Technology Roadmap for Generation IV Nuclear Energy Systems December 2002 Idaho National Laboratory DOE

http://nuclear.inl.gov/gen4 http://nuclear.inl.gov/gen4

Click on A Technology Roadmap Click on A Technology Roadmap.

New Commercial Reactor Designs New Commercial Reactor Designs

http://www.eia.doe.gov/cneaf/nuclear/page/analysis/nucenviss2.html http://www.eia.doe.gov/cneaf/nuclear/page/analysis/nucenviss2.html

From DOE/EIA From DOE/EIA.

ABB Combustion Engineering System 80+ ABB Combustion Engineering System 80+

http://www.nuc.berkeley.edu/designs/sys80/sys80.html http://www.nuc.berkeley.edu/designs/sys80/sys80.html

University of California Nuclear Engineering student report University of California Nuclear Engineering student report.

AP600 AP600

http://www.ap600.westinghousenuclear.com http://www.ap600.westinghousenuclear.com

Attractive and informative Web site Attractive and informative Web site.

Brennan, 1996 Timothy J. Brennan, A Shock to the System: Restructuring America's Electricity 1996 Resources for the Future Washington, DC

Nuclear Renaissance Nuclear Renaissance

http://www.eurekalert.org/features/doe/2003-12/danl-nr031804.php http://www.eurekalert.org/features/doe/2003-12/danl-nr031804.php

AAAS/DOE AAAS/DOE.

Annual Energy Outlook 2008 With Projections for 2030 Annual Energy Outlook 2008 With Projections for 2030

http://www.eia.doe.gov/oiaf/aeo http://www.eia.doe.gov/oiaf/aeo

Report DOE/EIA-0383(2008) on all forms of energy Report DOE/EIA-0383(2008) on all forms of energy.