By Nancy Spring, Senior Editor
The global economic crisis dominated the discussion at POWER-GEN International 2008, held Dec. 2-4, in Orlando, Fla. As the financial markets swung widely on the latest round of unemployment figures or speculation about the incoming Obama administration’s energy policies, the effect of the financial turmoil on the power generation sector was the focus of intense debate.
More than 18,000 people attended POWER-GEN International 2008 in Orlando in December, breaking all other attendance records.
From the keynote session to the editors’ briefings, no consensus could be reached on how long the crisis would last or how far the ripples from the frozen credit markets would spread.
“People just do not trust anybody and that lack of trust is driving up the cost of money,” said Doug Houseman, principal, energy, utilities and chemicals, Capgemini, during a Power Engineering magazine editors’ briefing on the credit crisis. “Even alternative capital is hard to find.”
Art Simonson, managing director, rating services, Standard & Poor’s, said if a project makes good economic and business sense, it will be financed. “I’m a free market guy. Financing will be there for the right project.”
One thing is for certain: the economic slowdown will touch every sector. Still, on the 20th anniversary of POWER-GEN International, the conference broke all previous attendance and size records.
“We are still in the grips of a financial tsunami that has changed the economic landscape,” said Thomas Farrell II, chairman, president and CEO of Dominion and a Keynote Session speaker. “We will work our way through this. We have no choice.”
Optimism and Reality Mix at Keynote Session
While the economic crisis evoked concern, the promise of major change in Washington has invigorated the energy discussion, but Farrell warned that a national policy on energy has to be approached pragmatically. “We create great peril when we dispense with proven truths in favor of unexamined optimism,” he said. “Our challenge is to better explain the realities of electricity.”
Keynote Q&A (l-r): Thomas Farrell II, Dominion; J.M. Bernhard, Jr., Shaw Group; Dr. Rick Duke, Natural Resources Defense Council; Jacques Besnainou, Areva Inc.
The public at large is often ill-informed on exactly what it is that the generation industry does, and Farrell said that the industry bears some of the blame for this. “We are going to have to defend electricity by dispelling such illusions, not by flinching when we are confronted by them.”
This renewed emphasis on educating the public must begin with coal, he said, as so much of the country’s supply of electricity depends upon the baseload power generated by coal.
“Those who call clean coal an oxymoron neglect to mention how far we have come in reducing carbon, sulfur, mercury and other particulate emissions,” he said.
Farrell said we benefit from a diverse portfolio of generation, which includes nuclear power, but it “involves numbers that are downright scary.” He said current realities make market financing doubtful and that the nuclear renaissance has yet to be “launched.”
J.M. Bernhard, Jr., chairman, president and CEO of Shaw Group, disagreed. He began his keynote session remarks by stating that the nuclear renaissance is not something that will happen in the far-flung futureit is already happening today.
Nuclear power remains the most tested, cheapest and most reliable way to produce emissions-free energy, Bernhard said, adding that factors such as increasing coal prices and a volatile natural gas market only make nuclear energy a more attractive option. “Nuclear power is expensive up front, but then you have fixed prices for 50 or 60 years.”
When greenhouses gases are taken into account, “we believe nuclear is where we need to go,” he said.
Bernhard called for a national commitment to build up to 50 nuclear power plants by 2030 and said the jobs, clean electricity and energy independence created by a nuclear renaissance offer a unique platform to achieve the “hope and change” pledged by President Barack Obama.
Bernhard and Farrell agreed that Yucca Mountain does not have to be part of the picture for nuclear power in the U.S. “Vast sums of money” have already been spent on Yucca Mountain, Farrell said. “I question whether we should spend any more.”
One reason a nuclear renaissance is vital, Bernhard said, is that alternative forms of generation are years away from providing reliable, plentiful and affordable carbon-free electricity. While wind and solar are receiving a lot of attention as sources of clean energy, Bernhard cautioned that “we need to be honest” about their ability to meet U.S. electricity needs.
“Hope is not a plan,” said Bernhard. “We need a good, solid plan. Everyone sitting here knows we will not have baseload wind and solar. Let’s get on with it.”
Dr. Rick Duke, director of the Center for Market Innovation of the Natural Resources Defense Council described himself jokingly as the “radical tree-hugger” of the group. Duke told the keynote session audience there was no group he would rather speak to on the subject of climate change legislation than people representing the power generation industry, as that industry will play a pivotal role in any such legislation.
“The science says we can’t wait,” said Duke. “We need to begin responding to this problem today, and we can do it in a market-based way so that it doesn’t hurt.”
Because of the increase in public support for some form of climate change laws and the changes that will accompany a new Congress and a new presidency, Duke estimated that some legislative progress will be seen within the next two or three years. Duke advocated for a cap-and-trade plan that would generate public funds for emerging renewable generation technologies. This funding method would phase itself out as the new generation industries matured to become more financially sustainable.
Jacques Besnainou, president and CEO of Areva Inc., called for the further development of carbon-capture technologies and a cleaner energy production mix worldwide. Like Bernhard, Besnainou said that more investment in nuclear power is warranted, and added that no one energy source can solve all problems facing the industry.
“Nuclear power is not the solution, but there is no solution without nuclear power,” Besnainou said.
“We are based in Europe, but we will be more and more based in the United States,” he said of the France-based company. “What we want to do is simple: We want to revive the U.S. nuclear supply chain.”
Besnainou issued a challenge to President Obama, asking him to support an “Energy New Deal,” which would include loan guarantees for U.S. energy companies, including nuclear. “We are not here just to build a plant. We are here to build an industry that will create jobs, provide a cleaner environment and increase energy security.”
Consensus Hard to Reach
While discussing climate change during the keynote question-and-answer session, Bernhard said, “The last thing the economy needs is to raise prices for electricity. It’s deceiving people to say wind will be base load.”
Dr. Duke said it is possible in select cases, but Farrell labeled wind farms that require gigantic transmission lines, “Disneyworld.”
“It’s not going to happen, so why talk about it?” he said. “We need to talk about reality.”
Overall, debate at the conference was especially intense on the future of the nuclear renaissance. During the credit crisis editors’ briefing, Capgemini’s Houseman said he expects nuclear plants to be built in many countries, but he is not optimistic about nuclear power in the U.S.
“I think we’ll be the only G20 country that will not break ground on a new nuclear plant in the next eight years and I would be surprised if we actually ‘light the fires’ in a nuclear plant in the U.S. in the next 13,” he said. “We may be nuclear free in 30 years.”
Art Simonson from S&P said, however, that he sees nuclear plants moving forward under the Department of Energy’s “umbrella.” Other speakers agreed that nuclear projects in the U.S. will continue and that those that receive federal loan guarantees will likely move forward more quickly.
Mega-sessions Cover Wide Range of Topics
POWER-GEN International mega-sessions covered gasification and synfuels, renewable energy integration, large gas turbines and carbon capture readiness.
During the carbon capture readiness panel discussion, speakers delivered remarks on the advances made on carbon sequestration technology and the promise the technology might hold for utility-scale generation.
John Anda, a researcher with Duke University’s Nicholas Institute for Environmental Policy, said he got involved with the university in his current capacity because he was tired of seeing promising generation technologies die. Carbon capture, Anda said, is of crucial importance for the coal industry.
Coal generation will account for most new electricity generation in the countries that need new capacity the most, namely China, India and the U.S. If some manner of carbon-trading market is started in the U.S., Anda said generators who participate in carbon capture and storage (CCS) should be allowed to make money from the sale of credits if the costs of implementing CCS are below carbon’s market value. To support utilities that invest in CCS, Anda said the federal government could offer energy price guarantees for the first commercial CCS plants built to help offset some of the risks.
“These prices could be set at a significant premium to existing power prices,” Anda said.
Speaking on the debate over carbon and climate change, Ian Copeland, president of new power technologies at Bechtel, said the uncertain future of climate change policy is leading to confusion in the fossil fuel generation market, especially coal-fired generation.
Some plants and projects are being canceled or are being denied permits. “There’s no laws on the books for carbon, and yet projects are being canceled,” Copeland said.
Several presenters in the panel discussion were involved with projects with an eye toward advancing carbon-capture technologies. Robert Eriksen with Basin Electric Power Cooperative’s environmental assessment task force presented some of his company’s plans for an enhanced oilfield extraction carbon-capture project in North Dakota. A pipeline from the Dakota Gasification Co.’s Antelope Valley Plant would carry carbon from Beulah, N.D., into southern Saskatchewan’s Weyburn Oil Field to be used for enhanced oilfield recovery.
Eriksen said sulfur and carbon emissions from the two-unit, coal-fired, 450 MW Antelope Valley Plant are captured and reused so that the plant is a “zero-discharge” facility. Construction on the project is expected to begin in three years, he said.
“Enhanced oil recovery could be used as a bridge until CCS technology advances,” Eriksen said. “Our industry needs CCS to be successfully demonstrated.”
Max Ball, project manager with SaskPower’s Clean Coal Project, said planned upgrades to his company’s 813 MW Boundary Dam Power Station are a further demonstration of carbon sequestration technology. The upgrade to Unit 3 would extend the life of the six-unit coal-fired plant by 30 years, Ball said, adding that carbon recovered from generation would be used for enhanced oilfield extraction.
“Coal can indeed be clean,” Ball said, adding that challenges remain for clean coal technology as well as carbon sequestration.
NUCLEAR POWER International Conference Grows
Co-located with POWER-GEN International for its second year, NUCLEAR POWER International featured conference mega-sessions and breakout sessions on nuclear power issues, plus a dedicated exhibit hall for nuclear power vendors. The mega-sessions covered new nuclear reactor technology and the current state of the nuclear build in the U.S.
In “Countdown to Breaking Ground for the Nuclear Industry, an Owner’s Perspective,” conference delegates had the opportunity to find out at what stage three companies are in the process of constructing the next generation of nuclear plants.
CPS Energy is partnered with NRG on the South Texas Project (STP) 1 & 2. The utility is experiencing load growth of 3 percent even after implementing conservation and efficiency plans, said Robert Temple, CPS Energy deputy general counsel. CPS set a goal of 20 percent capacity from renewables by 2020, but knows it will “take everything to get there,” he said. Compare nuclear power to coal and “it’s all about the carbon and that means nuclear power.”
Temple said building a plant that is the first of its kind is a risk and to manage that, Toshiba’s Advanced Boiling Water Reactor (ABWR) was chosen because it has been built before. “It’s critical to have commodity and manpower estimates,” he said.
STP’s combined construction and operating license application (COLA) was submitted in 2007 then modified when the project changed technologies and chose Toshiba. Phase I of the Department of Energy (DOE) loan guarantee process has been submitted and site-specific engineering should be completed by the time the project gets its COLA. “We want to get to full notice to proceed with no guess work on either side,” said Temple.
Temple said he expects the NRC to set a schedule for COLA approval soon. He estimated that it will cost approximately $1 billion to get to that point. Construction may start in late 2011.
Mike McGough, senior vice president of UniStar Nuclear Energy, said Areva’s Evolutionary Power Reactor (EPR) was chosen because of the evolutionary nature of the pressurized water reactor and its extensive construction track record. “It will be built four times before we build it at Calvert Cliffs,” he said.
UniStar plans to build one EPR unit next to the Calvert Cliffs Nuclear Power Plant in Lusby, Md. Calvert Cliffs Unit 1 began generating electricity in 1975 and Unit 2 joined the system in 1977. The pressurized light water reactors have a total capacity today of 1,735 MW.
Bill Maher, director, licensing, new nuclear projects, Florida Power & Light, said building a nuclear power plant is not the same for his company because FPL is a regulated utility. For Turkey Point 6 & 7, “cost recovery is different,” he said.
FPL plans to have Turkey Point online in the 2018-2020 period. Maher said Turkey Point already has five generation units, three natural gas and two nuclear, so it was logical to propose the two new-build units at that site. The Westinghouse AP1000 design will be used.
“The challenge is finding a reliable source of water,” said Maher. About nine-tenths of the Turkey Point property remains in its natural state of mangroves and fresh water wetlands so the potential of using reclaimed water from Miami is being explored.
The regulatory climate in Florida could work in nuclear’s favor, he said. A gas plant and a coal plant were both turned down by the Florida Public Service Commission and Florida’s governor is active and vocal about the environment.
Jeff Postelwait, Power Engineering magazine’s online editor, contributed to this article.