By Sharryn Dotson, Associate Editor
Low natural gas prices, an increase in the use of renewable energy and the high upfront costs of nuclear have dominated the headlines, but many in the nuclear industry believe these are just temporary setbacks. Power Engineering sat down with several nuclear industry executives about the current state of nuclear and its future. The participants were: Bill Johnson, CEO of the Tennessee Valley Authority; Mike Rencheck, CEO of AREVA Inc. North America; Marvin Fertel, CEO of the Nuclear Energy Institute; Neil Wilmshurst, Vice President of Nuclear, Electric Power Research Institute; and Joe Zwetolitz, President of Nuclear Energy, Babcock & Wilcox. What follows is a transcript , edited for style and length, of that discussion.
PE: With the price of gas so low and the price of solar panels dropping, and the cost of a new nuclear power plant running in the billions, like we see at Vogtle and Summer, what is the financial argument for nuclear?
|Marvin Fertel: You mention Vogtle and Summer. Vogtle and Summer are obligated to, on a continuous basis almost, to inform their public utility commission of the economic value of Vogtle and Summer to their ratepayers and customers in Georgia and South Carolina. Up through the last review that they did, they continue to find that, over the life of the plant, it’s going to save their customers at Vogtle at least $4 billion over the next best alternative, which is natural gas. I think part of the reason for that is you’re looking at a 60-year asset and you’re projecting out not only gas prices, but you’re projecting out the performance of the nuclear plant. I think part of the challenge is the upfront capital costs, but if you look at customers over the long term, nuclear probably fares pretty well, we just don’t think long-term enough.|
|Joe Zwetolitz: Marvin, you’re the right person to respond to this from an overall industry perspective and I agree completely. For us, it’s about not putting all your eggs in one basket. Gas is cheap today, but we’ve seen the price go up and down in the past. Bill can probably talk about this, he’s probably seen it. As the price is low, it’s very attractive to build gas but you have to maintain your options in the future, and if everybody were to go to gas today, they’d probably suffer some of the same problems as in the past. Not just with gas, if you look at renewables, there’s obvious technical challenges with renewables. They’re becoming more cost-effective, but still very expensive and they have the limitations of intermittency, which creates problems for the quality of service, at least in the United States, that everybody’s accustomed to. When you turn the switch on, the power is there whenever you need it. For us, it’s not just simply an economic consideration, it’s also a diversity and long-term consideration as Marv was alluding to.|
|Mike Rencheck: There’s some other aspects when you look at the operation of a grid where nuclear isn’t fully compensated for its entire support of the grid. In other words, a lot of voltage control and frequency control comes from these very large machines that you simply can’t get from a natural gas plant or a renewables offering right now, and if you would, you would have to add other components into the system, making it much more expensive. When you couple that with the ability of uranium as a fuel being only 5 to 15 percent of the cost of operating a unit, you can see that over time, there’s relatively very little volatility due to swings in fuel pricing.|
|Bill Johnson: I think I am the customer representative in the group, or at least the person who is in charge of running a power system, and I would agree with all those comments. A couple of things we think about with nuclear, obviously, is the fuel diversity. You don’t want to put all your eggs in one basket. The environmental benefits over a 60-year period of the cleanest technology we have. Mike Rencheck makes an excellent point in the importance of large rotating masses in the frequency control – which is a fine point of physics – turns out to be really important in making sure the transmission system is stable. So for us, this comes down to power density transmission support, low price when you spread it over 60-80 years of the assets. General concept of balance of the portfolio. I think there’s still a strong case to be made for nuclear going forward.|
Zwetolitz: I do want to make one other point. Just looking at gas around the world, we’re obviously the lowest, and so nuclear becomes a lot more competitive around the world. I have also read stories recently about the experiment in Germany where they decided to get out of nuclear and replace almost entirely with renewables, and there’s a lot of cracks starting to be seen in that strategy. The business community in Germany is really starting to complain about the electricity rates going up. I think it’ll be interesting to see how Germany does with their experiment. I think if anybody can do it and make it work, they probably can, but they’re going to have some struggles and it’s going to be a challenge to be able to get there.
Fertel: To Joe’s point, The Journal had an article this weekend where the business community apparently sent a letter to (German Chancellor Angela) Merkel just before the election emphasizing the fact that costs in the business community had doubled from about 12 or 13 cents to 25 cents. For residential customers, it had gone up into the 46 or 47 cents per kilowatt-hour range and that was unacceptable. They were basically telling her to, I think, junk the experiment and get back to making sure they had a reliable grid at lower prices.
PE: In light of the recent court decision ordering the NRC to finish looking into Yucca Mountain as a nuclear waste storage site, where do we stand with respect to waste storage? How big of an impact does the waste storage issue have on the nuclear industry’s ability to be competitive?
Fertel: First of all, on the court decision, we think that the NRC will eventually tell everybody if they are going to go forward. We think that they’ll be able to finish the safety evaluation report, which we expect will demonstrate that Yucca Mountain, at least from the staff standpoint, is safe. We’re not sure they’ll get money to do very much more because of Senator (Harry) Reid, so I’m not sure how much movement we’ll see on that. From the waste standpoint, part of the blessing and the curse for us is we manage the waste so safely and securely at our sites that quote, unquote, “there’s no crises,” and that’s why the government can steal $30 billion and not fulfill its obligation. And there won’t be any crisis because we will continue to do that. To your question of how does it hurt us competitively, it hurts us a little bit because we’re paying for it, but that’s only part of the issue. The issue is everybody else should be paying for what they should be paying for. So, we would like to see all costs fairly internalized for everybody, and we would like to see our waste program go forward. But, fundamentally, we’re in it for the long haul.
Rencheck: Just to comment on the waste statement. Really, 96 percent of a fuel assembly is reusable. So, the amount of waste produced is very small, in essence, because you can recycle the fuel assemblies. It’s done with techs today and if we spend more R&D efforts on it, then I’m sure we can continue to improve on those processes, either through new reactors or recycling technologies.
|Neil Wilmshurst: Obviously, the waste confidence discussion going forward is important. The number of efforts going on which we’re involved in, the demonstration of high burn-up, long-term storage and the long-term viability of the existing dry cask storage facilities. So, I think there’s a lot of work going on in the background to keep the confidence for the safe storage of the waste. I was in Vienna last week at the IEA General Conference, and a number of the new entry countries we’re observing, countries like Vietnam and Turkey, were saying “We’re being advised by IEA to consider the whole fuel cycle, and actually consider disposal before we build a program. What is the U.S. doing about it?” People are looking at us as an example, like “Well, you guys haven’t figured it out yet, why should we figure it out before we start?”|
PE: What is the status of the mPower small modular reactors and the SMR project at the Clinch River plant site?
Zwetolitz: We’ve been in the design phase for the SMR for a number of years. We are looking for a goal of next year to have our design certification application being submitted to the NRC sometime in the late part of 2014. And then in 2015, working with TVA, we hope to have a construction permit application submitted at that time. It will take a number of years going through the NRC process to support that, so design is going on to support the DCA, we have detailed design going to continue after that. All that converging around 2018 or 2019 to have design certification document in hand and all of that in support of a goal of having two SMR mPower units running at Clinch River in the 2021 timeframe. We have the agreement with the Department of Energy in terms of the funding opportunity, which we were awarded, so that’s already underway. We had a recent increase in the amount that has been provided under that agreement. We look at this as an excellent opportunity to work with the federal government to develop U.S. technology that’s going to be a game changer in the nuclear industry.
Johnson: Let me talk a little about what’s going on at Clinch River. Prep work is going on at the site, so things like core boring, drilling, geographical assessments, meteorological data, those kinds of things are going on. The latest action from us is preparation of a Notice of Intent to submit a Supplemental Environmental Impact Statement on construction, and then have a public meeting sometime in October, probably in Oak Ridge, to discuss these things. As Joe said, there’s a lot of work going on in the design and development of applications to the NRC. This is going to come down to, is it a commercially viable technology. I don’t think anyone has any doubts about the technology itself. Its application has been longstanding in various forms. The operational construct for SMRs is going to be different than we’ve been doing with the large reactors for a long time. The NRC is going to have an important role to play here in sorting through the differences and see how this is going to come to fruition.
PE: Entergy recently said that the power market was partially to blame for the closing of the Vermont Yankee plant. Do you feel that the markets are having a negative impact on U.S. nuclear? What can be done to change that?
Fertel: First I would say yes, it’s having a negative impact. It’s not clear yet what the right solution may be, even though there’s a lot of them out there. I’ll quote from The Market Monitor in ISO New England, and this was in his 2012 State of the Market Report. He said “it is unlikely that significant generation investment will occur until capacity clearing prices increase significantly.” Basically, if you’re not paying people correctly for the capacity that they have there, and this was true in Wisconsin with Kewaunee, you’re basically going to lose some units and you’re not going to be replacing them very easily. So, for instance, both the VY case and the Kewaunee case, if natural gas is up around $4.50, which is certainly not outrageous for where it is today and where people think it will go, both of those plants would have been in the money. Right now, with the way the market treats them for the capacity that’s there all the time – and it’s clean capacity, doesn’t emit any greenhouse gases – it makes it hard for single units to survive, so there are dysfunctions in the market.
Rencheck: I would also add that baseload nuclear is also not being paid for all of the ancillary services it provides, like frequency support, for the grid. That’s also something that maybe should be looked at with the intermittency of renewables now entering the market and not having to bear those costs.
Johnson: I don’t have any experience in operating in those markets. An observation from afar is I think there may be an inadequate price signal on the capacity piece here, agreeing with Marv and Mike. When you have an existing asset that is baseload and is providing ancillary services, it doesn’t clear the market because of short-term economic or supply dynamics. I think a little longer view here would probably have been helpful. I don’t know the actual internal workings of the plants or the economics of it, but I would say there is a significant problem here if we are going to retire assets in a market that doesn’t give a capacity signal to build new ones.
Fertel: Just to Bill’s last statement, for both VY and Kewaunee, VY was just about $50 per megawatt-hour and Kewaunee was, like, $52, which is not outrageous as far as the price of electricity.
PE: A new and vitally important security frontier is cybersecurity. What is your company doing in their own business to protect themselves, and what protections are you offering to your customers?
Rencheck: We build digital control systems. We have taken cybersecurity very seriously, and I think the industry has as well. In March of 2009, the NRC issued a new cybersecurity rule outlining how the protection of digital computer and communications systems should be done. NEI then followed suit for the industry, working with all the different players in the industry to come up with a document called NEI 08-09, that would be used to assist utilities and folks like us in looking at our stations and figuring out what assets need protecting and how best to go about protecting them. I think that process is being implemented very effectively at the plant sites now, and one of the products that AREVA offers is we have a cybersecurity offering where we have teamed up with Northrup Grumman, who, over the years, has provided a number of different tools for the Department of Defense, Homeland Security and other national assets to be able to apply a product, but then look at the nuclear power plant’s assets and then be able to provide monitoring systems and protection systems for those units. We think we’re being very proactive in cybersecurity space. We recognize it as a challenge that we think we’re up for the challenge as an industry, and we’re able to keep our plants safe and operating well.
Wilmshurst: The Department of Energy, who several years ago was fully aware of the need for worker and cybersecurity, worked with us and established an organization called NESCOR, the National Electric System Cybersecurity Organization Resource, which EPRI is providing as part of its partnership with DOE for the entire electric infrastructure, including nuclear. NESCOR works collaboratively with the DOE, and the federal agencies on enhancing cybersecurity, assessing security features, looking at R&D priorities and disseminating those best practices. So, we’re really deeply engaged and involved in the entire spectrum of the cybersecurity effort.
Johnson: From the operating systems side, this obviously is a topic that has gotten a lot of interest from the Congress, from various agencies, from the military. So we are heavily engaged in this every day. We follow the NEI standard, the NERC Critical Infrastructure Protection Standards. There’s a whole frame of these standards that require, obviously, information systems protection, physical security. We have a very strong awareness program internally and externally. The problem with this topic is the threat evolves, so it’s hard to get ahead of the strong thinking of the bad guys here. So, no matter what you do, they’re always trying to get ahead of you and this is one of the harder issues that I’ve seen in my long time in the business.
Zwetolitz: Yeah, I agree with that. For my company, B&W, we have two category 1 fuel cycle facilities where we handle strategic nuclear material. And we have a tremendous challenge fortifying those operations against cyber attacks. We had an event recently where we had to respond to a rather aggressive attack. We’ve instituted very strong and very fortified IT defenses, and it carries throughout our workforce, because we have such a variety of activities within our company, the presence of those two cat 1 facilities has created a level of security that has to necessarily vary across the company, but maintains a minimum threshold for everybody, so it’s a real challenge in our mobile work environment. We defend the facilities quite well, essentially isolating them from the outside world, but creating significant barriers for individuals when they’re traveling with their accessed information and protection of information on all of their devices, and so on. It’s a significant issue, and we have to continue to be on our toes because, as Bill says, the threats are going to continue to evolve and we have to be ready for them.
Fertel: As Joe and Bill just said, this is a threat that’s very significant for our country, not just for our nuclear plants or our electricity system. I think that everybody has summarized a lot of things that are being done. The only thing I would add is right now, as we’re talking, our security working group is actually in town today meeting with NRC on issues like cyber and what do we need to do that maybe we haven’t. We have a number of what we designated as critical digital assets in our plants. Most of them have no consequence from a safety standpoint, they do have a consequence from a reliability and operations standpoint. We don’t have that many that really have safety consequences if you lost it, but those are certainly being protected. EEI is now the Secretariat for the Electric Sector Coordinating Council. We actually have a meeting with about 20 CEOs from across the industry and the associations that involves us, American Public Power Association and the National Rural Electric Cooperative Association, this Friday with DOE, DHS, FBI and every other acronym you can think of, for quarterly meetings that we have with them to go over cyber issues as well as a briefing that they will be giving. So, there’s a tremendous amount of high-level and working-level energy going into protecting our grid and our plants from a cyber standpoint. The challenge, I think Bill articulated it very well, is the bad guys try to keep thinking of new things they can do, and I think the good guys are thinking about that, too. Everybody’s doing what they need to.
PE: The Fukushima Daiichi nuclear plant has been back in the news for several large leaks of radioactive water. Do you think the latest headlines will influence public opinion in the U.S. against nuclear power? How does the industry combat that?
Fertel: This is coincidence, but we do a couple of surveys a year on public opinion. We actually had one in the field Sept. 5th through the 15th, which was right at the height of a lot of the Fukushima information on their water leaks in the tanks and other places. Our folks, I was told, were concerned that would influence the outcome of the opinion survey and, if it did, that would be good input for us. It actually didn’t. The favorability towards nuclear was 69 percent, which is basically what it was before the Fukushima accident. It dropped to 46 percent immediately after the accident and recovered up to 65 or 66, it’s now at 69 percent. All the other key things that we looked at were really good. 84 percent of the public thought that you ought to go forward with license renewal; 70 percent of the public said if you needed more electricity and you wanted to build a new nuclear power plant site where one exists, they supported it, it was acceptable; 77 percent of the public said that they believed plants in the U.S. were safe, that’s up from 73 percent in our earlier survey in February. Also, they did ask a question very relevant to yours. They asked have you heard anything about nuclear in the news recently, and 60 percent said yes. So, the Fukushima issues didn’t really seem to influence their opinions.
Johnson: Just an observation on the public perception in the U.S., Marv is right that public support continues to be strong. I think one reason is that the public generally trusts us, has confidence in us and believes that we will protect them. That’s a good, but sobering, reminder of our responsibility everyday.
Fertel: You’re right on. One of the questions that they ask was “Do you think that we learned from what happened to make plants safer?” And 83 percent of the public said yes, so Bill is right on with that.
Zwetolitz: I think the key to keeping the support in the public is information. The public is generally more informed and it’s reflected in those survey results. A lot of the schools, because I still have children in schools, the curriculums, especially in science, are including pretty in-depth discussions on nuclear energy. So, the education is out there in the general public and even starting with young folks. So there’s some greater familiarity that comes with a level of trust.
Rencheck: I think in the U.S., we are fortunate to have a regulator in the Nuclear Regulatory Commission that is transparent and open with the public and also, through the Institute of Nuclear Power Operations (INPO), where the industry is self regulating and uses peer pressure and peer reviews to establish best practices, have gone a long way to ensuring the public confidence has been maintained throughout the events at Fukushima.
Wilmshurst: I’m just back from Japan. I was fortunate to be a participant in a trip by all the U.S. CNO’s to Fukushima organized by INPO. We got to see up close and personal the Fukushima event. Really, just echo what’s been said about the work of INPO and NEI. NEI has done a great job since the Fukushima event with really communicating what’s happened and what’s been going on. I think the visit from all the U.S. CNO’s to the plant and the communications that’s starting to come out from the videos, the websites of various utilities, are going to go a long way to communicate the magnitude of what happened and show the genuine kind of response and the serious reflection within the U.S. industry.
PE: Over the course of the next decade we’ll need to bridge a rather large generation gap among workers in the nuclear industry. What is being done to address the vacancies that will be left when as much as 40 percent of the nuclear workforce will reach retirement age by the middle of the decade?
Rencheck: We’re doing a lot in the area of STEM outreach in the communities in which we’re present to be able to go into the various school systems starting in the elementary schools, and working our way through the community colleges and the universities. We think STEM outreach is not only important for the nuclear industry, but it’s also important for the country. When you look at the number of jobs that the nuclear industry has to offer, these are good-paying jobs. Jobs that are truly middle class or higher that you can have a career and raise a family with. I think the opportunities are there whether you want to be a craft worker, a welder, an electrician, a mechanic, or if you want to go into the engineering ranks, taking a STEM – Science, Technology, Engineering and Math – education is very important. The reason I say that is because when you look at this, in the ninth grade, there’s about 4 million students who typically enter the ninth grade. By the time they graduate from college, we’re at about 167,000 with a STEM degree. When you look at our industry needing to replace about 50,000 jobs by 2016, the opportunities will be there for jobs and for well-paying jobs, and I think that will attract as we’re seeing, people back into the STEM programs at various universities.
Zwetolitz: I agree with Mike. We, like many in the industry, have been involved in partnerships with the local schools and community colleges and universities, and it’s starting to pay off. Mike and Bill and Marv were talking before about how old we’re getting and we’re reminded by that when we walk around our organizations and see the many young faces that are out there. What I’m amazed about is the fact that these efforts are starting to pay off with the quality. Not only are they young, but they’re coming out with the right skills and the right backgrounds to be able to do this kind of work. And that’s, for me, showing significant payoff. We’re also doing a lot of work to retrain the existing workforce, so as people have been in this industry and have the background, they’re training for new roles and different roles within the nuclear industry, and that’s also paying off as well, so we’re having those kinds of programs bearing some fruit.
Johnson: I have a little different view, I suppose, given the operational nature of our business. We are doing all the usual things in outreach in the community colleges with the young nuclear, the typical things. I’m really not as concerned about finding the workforce as I am about the loss of experience in the current workforce. I do agree with Joe that the people we see today are generally better educated, better trained and ready to go to work. But if you think about the history of the industry, in the ’80s, our capacity factor was in the mid-50s. Today, they’re in the mid-90s, and one of the ways that we got there was we made every mistake possible and figured out how to do it right. In our current workforce, which is aging, there is a tremendous amount of operational engineering and other knowledge that is more experienced-based than education-based. So, I think our biggest challenge here is knowledge transfer, some efficient way of experienced transfer so that when these new workers show up, we can train them up not just with qualifications but with the experience of the past generation.
Zwetolitz: I agree with Bill. I don’t think we realize how much we are leaning on those experienced folks. It’s going to be an eye opener, perhaps.
Wilmshurst: Just following on from Bill’s comment, the new generation of workers, they learn differently. So, we’re in the process now of working with a number of utilities to deploy electronic work packages. You see maintenance techs out there with iPads with all their procedures. Delivering knowledge through apps, using videos and gaming technology, developing web-based training packages, which are being shared through INPO, and other things, just to help people maybe learn faster and learn quicker and learn differently. I think that’s going to be key as well to bring on the new generation quicker.
Fertel: The only thing that I would add is that you should have the impression that we are taking the issue very seriously on both sides of the issue. It’s attracting the right people and it’s the knowledge transfer because of the loss of the people we currently have. And as Neil just said, it’s the recognition that the new people coming in may actually behave a lot differently in how they learn and how they work. I wish I had as much confidence in the non-commercial part of the nuclear industry, the weapons side, the regulatory side, that they are giving the same amount of attention to these very challenges that our industry has. Not that we’re there yet, but we at least recognize it.
Rencheck: I’d like to add one comment. I agree with all of that, but we were talking a little about the 1980s before the call. One thing that was prevalent in the 1980s was that when you were a young engineer starting, you really didn’t have anybody to ask questions to, because the whole industry was in an infancy state. The younger folks coming in, when they have a question, they can actually stop, ask somebody and get an answer. That will make a difference in these folks getting up to speed a lot quicker then, potentially, the folks of our generation did.
Power Engineerng Issue Archives
View Power Generation Articles on PennEnergy.com