Tuesday, January 15, 2008

The cost of new energy

Kirk Sorensen has pointed to another article on Utah's energy future in this morning's Salt Lack City Deseret Morning News. This article drives home something I have been increasingly aware of for some time, the fact that the materials that will go into new electrical generating capacity will become increasingly expensive over time. This is already happening, and is already beginning to increase the cost of both renewable energy sources, and traditional power generating technology. Competition for steel and concrete with Europe and China are driving the cost of those basic building materials higher and higher. The Deseret Morning News reports that in 2000 steel cost $425 per ton, and in 2007 it was $893 per ton. Material costs are increasingly increasing the price of renewable generating capacity. The report quotes Dave Eskelsen, of the Rocky Mountain Power in Salt Lake City: "In 2003 you could get a wind turbine for $1 million. Now it will cost you $2 million, and almost all of this is for the cost of steel and concrete." The cost of wind generation projects will quickly becoming their limiting factor if such inflation continues, and it is expected too.

The story offers Rocky Mountain Power's recent price estimates for new generating capacity. Eskelsen pointed to the inflation in price of new coal fired power plants: "The current cost of Rocky Mountain Power's generation is around $35 a megawatt-hour," Eskelsen said. But if the utility were to build a new coal-fired plant, using the efficient pulverized-coal technology, "that would cost you $60 to $65 a megawatt-hour."

New geothermal systems would cost more than $60 per megawatt-hour; new wind farms at Class 5 sites would boost the price of power by a few more dollars per megawatt-hour, and new nuclear plants would cost around $75 per megawatt-hour.

The "concentrating solar" system, like that used in the California desert, comes in at an estimated $180-plus per megawatt-hour.
This statement invites several comments. First, the price of wind-generated electricity refers to the price of wind as supplemental power. If fossil fuel generation is phased out, intermittent wind generation will be of little use without an energy storage system. Storing wind energy will raise the cost. The materials inflation will most certainly continue to raise the cost of new wind generated electrical capacity.

Secondly, the price of coal fired steam plants appears to not include a carbon penalty.
Carbon penalties should be included in risk assessment with fossil fuel fired electrical plants.

Thirdly the cost of Geothermal should be noted with the understanding that Utah has some geothermal resources at fairly shallow depths. The limits of those resources are not discussed in the article, but many Utah geothermal power plants are small.

Finally, the we ought to note the estimated cost of nuclear power. Early last tear Westinghouse was quoting figures as low as $1 per KW for an AP-1000. This figure was actually the cost of a reactor kit. Assembling the reactor and building the installation was expected to cost at least a billion more in the United States. Some independent estimates put that figure at more like two billion dollars, and estimates run even higher. To that we can add the cost of money. Now the design of the AP-1000 has many advantages over past reactors. Fewer parts go into the reactor, so less material is used. The reactor kit contains pre-assembled modules, shifting assembled costs away from the reactor construction site. The reactor is designed for rapid construction, thus limiting the accumulation of pre-startup interest. Finally the reactor installation has been designed for rapid construction and to decrease material demands. Still materials inflation has influenced Westinghouse to back off from their earlier price expectations. The $75 per megawatt-hour is in line with recent reactor cost experiences in Europe. However, European reactors have not gone through the Westinghouse materials diet.

We ought, however, look carefully at the materials demand of even the AP-1000. It is clear that light water reactors will always require far more steel, concrete and other materials than some other reactor designs. In particular the Pebble Bed Reactor and the Molten Salt Reactor require far less materials in both the reactors themselves and in their installation. Both reactor designs are inherently safer than Light Water Reactors. Much of the material requirement for light water reactors is safety related. Light Water Reactors heat water under pressure. The pressure means that each LWR needs a massive steel pressure container, which contains the reactor and its inner plumbing. The pressure container is a production bottleneck for LWRs.

Because they are safer, make far less materials demands, and are less expensive to build, the PBR and the MSR are clearly the best options for the American energy future. Both reactor designs can be built in factories, thus bringing economies of scale to production costs. Both can be produced in relatively small compact packages. Mass produced reactors like these can be quickly installed, without the massive buildings required by LWRs.

The MSR has several notable advantages over the PBR. It is a breeder, and thus far less fuel than the PBR. The MSR can breed thorium a material that is so abundant, that an economy base on energy from MSRs can provide all the electricity we need for thousands of years. Finally the MSR virtually solves the problem of nuclear waste, since it produces 0,1% pf the waste produced by light water reactors. The RBR produces waste at similar rates to LWRs.

I believe that rising material costs, and the many advantages of the MSR will make it the inevitable choice for America's and indeed the worlds future source of energy.

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