Westinghouse bankruptcy – Reality check time for nuclear?

Westinghouse_Sign_New_York

This week Westinghouse, the nuclear power arm of Toshiba, filed for bankruptcy. Westinghouse was one of the last remaining element of the Westinghouse electricity company, which was founded in 1886 and was a pioneer in the mass roll out of AC electricity, working closely with the infamous Nikola Tesla.

Hardware it supplies, or components made under license via its patents, are used in half of the world’s nuclear power stations. So needless to say, this has sent shockwaves through the industry, as many worry about the fallout that this bankruptcy will have on various nuclear energy projects worldwide, including those in the UK.

In some respects I’m not hugely surprised that Westinghouse has gone under. I noticed they were pulling back from bidding in various nuclear energy projects doing the rounds. They have a relatively thin order book, so that implied they were having trouble raising capital. It seems that issues with American reactors they were building led to costly design changes, which led to losses that threatened the health of the parent company (Toshiba), who’ve thus decided to turn off the life support.

Granted companies do go bust all the time. Solar energy companies have gone bankrupt too after all. However there is a bit of a difference here. Solar power companies, while they receive some subsidies, these are tiny compared to the vast amounts of cash thrown at nuclear energy companies. As I’ve pointed out before Hinkley C is set to receive a subsidy rate of 68% of the cost of every kWh it generates. And at a price tag of £36.8 billion, means its going to cost the equivalent of £11,500 per installed kW, about nine times the current cost of wind power and seven times the current cost of solar.

subsidies-first-15-years-energy

US federal energy subsidies as a percentage of the federal budget over the first 15 years of subsidy

In short, nuclear energy companies don’t really live in the real world of capitalism. They can screw up on an epic scale and still stay in business. Just look at the train wreck otherwise known as Olkiluoto (8 years late and 3 times over its original budget) or Flammanville (dogged by similar problems). Imagine if a solar power company delivered its product 8 years late and 3 times over budget, would they still be in business? Not likely! Yet Areva now plans to double down on Hinkley C.

Many government have ,for various reasons, decided that nuclear reactors are something they should have. And they are prepared to do what ever it takes and pay whatever it costs to have them. They are also prepared to ignore all logic and sweep whatever obstacles get in their little darling’s way, hence why the Tories have gone from subsidising solar power, to taxing it, as they realise that nuclear is only viable if they kill off the competition.

But while most nuclear energy firms are state owned Quangos, Westinghouse was the closest thing in the industry to a vaguely private firm. Obviously the implication of its bankruptcy is that it is not possible to do nuclear energy without significant government handholding. A subsidy, even the absurd subsidies thrown at Hinkley C, isn’t enough. Governments pretty much needs to bank roll the entire project, tax or centrally plan all possible competitors out of the market and build vast arrays of diesel farms to keep the lights on while we wait for the constantly delayed nuclear plant to be completed. Indeed, one could argue Westinghouse over stretched themselves, building too many plants at once. Implying that the construction rate of nuclear reactors will continue to lag behind the rate at which they get decommissioned.

So while there are some in the anti-nuclear and pro-renewable camp who will be reacting with glee to this news, it does have some bad news for both groups. Certainly, competition with renewables has been part of the problem. Renewable costs are falling, the roll out rate of renewables accelerating, while nuclear’s costs are rising and they are having to run faster to stand still. However, the likely reaction of governments to this is that they will punish renewables for their success and reward nuclear for its failures.

And least we forget, the collapse of Westinghouse is also in part down to the fact it couldn’t compete against fossil fuels. Much of Westinghouse’s business model relied on the assumption that they would be sending the next few decades replacing America’s large network of ageing nuclear plants. However, its now obvious that instead they will be replaced by coal or shale gas fired stations. Which does not bode well for the climate. So its difficult to see a silver lining here.

Certainly thought, this bankruptcy should serve as a wake up call to nuclear energy supporters. They need to accept the limitations of nuclear power. There are things it can do, there are roles it can fulfil, but it has its limits, it is no silver bullet.

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About daryan12

Engineer, expertise: Energy, Sustainablity, Computer Aided Engineering, Renewables technology
This entry was posted in climate change, economics, energy, Global warming denial, history, Japan, nuclear, politics, renewables, Shale Gas, Shale oil, subsidy and tagged , , , , , , , , , . Bookmark the permalink.

16 Responses to Westinghouse bankruptcy – Reality check time for nuclear?

  1. Paul Baars says:

    When comparing costs of different technologies like nuclear and renewables you should also calculate the costs of the power storage. The only usable technologies are the ones that deliver power at the very moment we need it. Like nuclear, or renewables with battery storage for say 3 weeks. How does the costs picture look then? Probably nuclear looks better.

    Besides this Hinkley was a simply a political decision, not a technical one.

    • daryan12 says:

      Nuclear also requires backup. We are adding PHS capacity in the UK right now so the grid can cope with the possibility of Hinkley C suddenly going offline on a winter’s night. Also certain renewables like Hydro, biomass or tidal energy are less variable and indeed are better than nuclear at providing load following or peaking power. We also have this thing call “weather forecasts” which lets us know what the weather’s going to be like weeks in advance, i.e. how sunny, how windy.

      Why 3 weeks storage? Does the sun regularly stop shinning and the wind stop blowing for 3 weeks? I do know there’s been times a number of nuclear plants of a similar design have been forced offline for more than a month due to safety issues, but you are building in requirements to a future energy grid that exceed our current standards. So yes if we massively overdesign an energy grid it will be more expensive, but we kind of know that! And for the record there are various storage options that could provide that level of storage at a modest cost.

      These sort of flippant strawman arguments, a simplistic one dimensional understanding of how energy grids work, is precisely the problem with the nuclear industry & its supporters right now. This failure to grasp the facts of life is what put Westinghouse in the position where it went bankrupt and my guess is they won’t be the last.

      • Paul Baars says:

        In my country (Netherlands) we have 6 weeks of storage in oil, coal and gas. When the energy crises started (1979) this time turned out to be very short. The 3 weeks I mentioned is in fact way too short, badly underdesigned.

        Renewables like wind and solar will never completely replace fossil. Just calculate the costs of the dam you mentioned and the connecting powerlines. Nuclear is probably cheaper. And not every country can build a dam like that.

        In repy to your last paragraph: I have an advanced degree in engineering and do know how grids work. That my opinion differs from yours is unfortunate, but I would like the world to be greener too. The way leading to a green world however is IMHO very different..

        My take is to end all subsidies for renewables, and spend it in sensible projects like renewables with storage attached, fusion, Gen IV reactors.

      • daryan12 says:

        You’re moving the goal posts, you are talking about overall energy here, not just electricity. This is mostly heating/cooling (36% of TFC) and transportation (30%). Both are highly seasonal, with a big spike in demand come winter (or summer). So to do that with nuclear you’d need a network of plants with a very low capacity factor, something like 33-25%, which would effectively increase the costs of nuclear 3 to 5 fold…or use seasonal energy storage to even out the peaks (my guess is this would be cheaper). Its also not practical to put a nuclear reactor in every car or truck, so logically, we’d need some sort of energy storage medium to sit between the two. Bottom line, once we move beyond simply supplying baseload electricity nuclear is in exactly the same boat as renewables. And even with baseload, that statement ignore’s certain practicalities to how the grid works.

        And its a bit rich you saying how powerlines from dams are so bad, how then do you propose to get all the electricity from nuclear plants to customers? using magical nuclear pixie fairies? As for low lying countries, there is the option of geological storage of hydrogen as an energy storage medium or tidal fence facilities. PHS is merely one energy storage tech. Gen IV & fusion doesn’t exist and might never work commercially, you’re basically suggesting blind faith in a fantasy, while ignoring technology that already can do the job and exists.

        Furthermore you are dodging the obvious, if nuclear is sooo cheap and energy storage is such a major cost for renewables, why is it that even despite subsidy cuts (of the type you favour) in the UK we are are still adding renewables? And many countries have no subsidy scheme, yet they are also adding renewables, but not building nuclear plants. Nobody wants to build a nuclear plant unless they get a massive subsidy. And one of the main suppliers of nuclear tech has just gone bankrupt.

        And given that the installation rate of nuclear lags behind renewables by a factor of 20 (595 TWh/yr of renewables, v’s 27 TWh/yr nuclear, we are using TWh’s which accounts for the lower capacity factor of renewables), its quite obvious that nuclear could never grow fast enough to resolve climate change. In fact its unlikely that the many western states will even be able to replace their existing nuclear capacity before the current fleet reaches the end of its service life.

        You need to leave hy Brasil.

      • daryan12 says:

        Oh and of course the 6 weeks storage you mention of coal and oil also reflects the fact that we are relying on something that has to be imported, supply of which might face interruption. Again, that’s not a problem with renewables (or nuclear for that matter). Underground storage of hydrogen isn’t that dissimilar a concept to underground storage of natural gas. A facility in the US has been storing H2 this way since the 1980’s.

      • Paul Baars says:

        I never said powerlines from dams are bad, just expensive.
        Gen IV & fusion doesn’t exist. Yet. Just like a 100% renewables grid.
        Nuclear is not cheap. Neither is storage.
        And who wants a windmill (or nuclear station) in his backyard?

        The future will tell who is right. Our country opened 4 new coal power stations in the last years to get rid of Russian gas. China and India move ahead with both renewables and nuclear. Fusion may take another 20 years to develop.

        Can we agree on moving ahead with all available technologies while it is not clear how we are going to fight climate change? Oh, thats just what China and India are doing. Maybe they are smarter then we think they are and we should follow their example,

        .

      • daryan12 says:

        100% renewable not possible? LOL I’ll mention that to people in Iceland, Norway or several other countries in Africa & South America next time I’m there. Denmark, Portugal and Scotland regularly exceeds 100% too, although closer 70-50% on average from renewables. While Scotland & Portugal had quite a lot of hydro to back up its supply Denmark doesn’t, yet they get by okay. Sweden, Ireland and Austria aren’t far behind.

        Energy storage (at a few thousand per installed kW) is always going to be cheaper than nuclear (at tens of thousands per installed kW). We don’t need to wait for the future, just look at the current energy market. Renewables are expanding, the much fabled “intermittency” problem doesn’t seem to be constraining growth. And when they are faced with the choice between energy storage or nuclear in almost every case utilities (unsurprisingly) pick energy storage. Do you think companies like Westinghouse would be going bankrupt if nuclear was such a good idea?

        Who wants a wind mill in their back yard? Plenty of people! One of the reasons why there’s little opposition in some countries is because the communities often own the wind turbine and get a share of the cheap electricity and subsidies it supplies.

        Fusion will not be available in 20 years time, not commercially anyway. The best guess from the ITER program is that theymight be in a position to build the first generation nuclear fusion powerplant about 30 years after ITER goes online. That pushes the likely date into the early 2060’s. And that probably won’t be cheap, it will take, as with all technologies, some time to mature. So realistic, we’re looking at the latter half of this century….maybe

  2. Paul Baars says:

    Electricity production is only a few procent of the total energy use, and in most industrialized countries renewables only deliver a small part of this electricity production. So in fact this is only a tiny part of the total energy use. Can you show me a realistic way how to replace fossil with renewables?

    • daryan12 says:

      Iceland gets most of its heat load from renewables too & they are experimenting with FC & EV vehicles, including boats. Norway has a growing BEV fleet, they are also looking at electric boats and they are also using heat pumps, some of them on a town sized scale. Both Denmark & Sweden have similar plans, as do the Germans, although they are much further behind. I know more than a few people in Scotland or Southern Ireland how have a passivhaus, which generally heated through a combination of a solar gains, and either a solar thermal collector, heat pump or biomass boiler. The net gain from on site renewables equals their electricity consumption, with enough left over to recharge a hybrid car for the drive into town (or they rely on public transport). So there’s already people living in the post-fossil fuel world. Asking whether its possible is kind of a flippant question.

      Furthermore, as nuclear is only generally used for baseload (or perhaps a bit of load following electricity) they by your own admission it can only ever supply “a tiny part of the total energy use”. Bashing renewables does not improve the case for nuclear.

      My view is that we’ll just have to make do with what we’ve got. As I mentioned renewables growth is about 600 TWh/yr, yet we need between 1,000-1,500 TWh/yr. So either we double or triple renewables output in the near future, or there will be a gap. Nuclear is threading water and in danger of going into decline, so there is no way it can fill that gap.

      My guess is that in the absence of such a expansion in the near future (and with Trump et al I think this is unlikely), we’ll likely have to just rely on energy conservation and make do with what we’ve got. Certain things like international flights, red meat, being able to own a large SUV, while they won’t go away, they might become much more expensive. A rare treat. There might even be some sort of carbon/energy rationing for a period, much as there was during the wars. But bottom line is humans survived for thousands of years without fossil fuels, with the tech we’ve got we can survive again without them.

      • Paul Baars says:

        >Bashing renewables… I am not bashing renewables but only recognizing its limitations. Just as I recognize the limitations of nuclear power.

        >Nuclear is threading water … so there is no way it can fill that gap. If the legislation is right then nuclear may get a chance to fill a large part of this gap. Look to the US, something is shifting in the development of nuclear after 30 years.

        It turns out that we see it mostly the same way, only I see a big opportunity for nuclear and you don’t. You should see it this way: nuclear is better then the alternatives (fossil or nothing) to fill the gap.

      • daryan12 says:

        Look to the US….where Westinghouse has gone bankrupt! Its possible that some of the projects they are working on will now get mothballed. There’s a 100 reactors in the US, and only a handful are likely to be replaced before they hit the end of their service lives.

        Governments have bent over backwards for nuclear and it still can’t get anywhere. And with the UK government taxing renewables while lavishing subsidies on Hinkley, nuclear is more part of the problem than the solution. When a horse is dead, stop flogging it.

      • Paul Baars says:

        >When a horse is dead, stop flogging it.

        I agree the herd of Gen 2 horses is dying. However, a new generation of workhorses may thrive if you give them room.

        As you said, we need a lot of power, and renewables cannot do the job alone. Also we have to stop using fossil fuels. To fill the gap, we need a CO2-free technology. The only available technology that is able to do this job is nuclear. So we better start building soon!

        If you were responsible for the energy supply in your country you would make the same decision. At this moment there is simply no alternative.

        A CO2 fee or tax will help accomplish a fast transition, it should be obligatory worldwide..

      • daryan12 says:

        All generations of nuclear reactors have run over budget and late, the current crop of them are if anything even worse than those in the 70’s.

        If I were an energy minister I’d conclude that for every £ i invest in renewables I can get 5-9 times the useful power output that I could get from the same £ put into nuclear. Furthermore, while renewable prices are falling, nuclear’s costs are rising. Chances are any nuclear plant ordered will likely be late and over budget. For the same money Hinkley C is costing, I could get a Severn Barrage with 9-17 GW’s of capacity and some energy storage to boot. I never said the gap can’t be filled by renewables (we’ll have to wait and see, it depends on a lot of various factors), but I’m pretty sure if past experience is any judge, that it certainly can’t be filled by nuclear.

        Carbon taxes might help renewables but they won’t help nuclear. I seem to recall seeing a document produced by a bank (Citigroup I think), which more or less said as much. I know people in the energy industry and they will not invest in nuclear power if you dragged them there with wild horses. They see the nuclear industry as a bunch of spiv’s and time wasters who can’t give a straight answer.

  3. Paul Baars says:

    Not a reply to this post (could not find your email address) but something that will interest you. It is written in Dutch but you will get the picture.
    https://www.nuon.nl/duurzame-energie/windenergie/opslag-windenergie-in-nieuwe-superbatterij/

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