Italy Joins the Nuclear Thaw

In l987 – following the Chernobyl nuclear disaster – Italy voted to abandon nuclear, and a similar gesture was made by the good people of Sweden about the same time. According to the (UK) Financial Times (February 24, 2009), Italy’s “relatively advanced nuclear capacity was (immediately) mothballed or dismantled.” Fortunately though, Sweden specified 2010 as the date for dismantlement, because over the last decade Swedish nuclear energy – together with hydro – has provided this country (Sweden) with perhaps the lowest cost electricity in the world, and until the curse of electric deregulation appeared, the price was also among the lowest in the world.

The new Italian facilities are scheduled to be constructed by ENEL (EN), with the cooperation of Electricité de France [EDF] (ECIFF.PK), who played a key role in the design of the reactors to be installed. This equipment will not make its appearance in Italy in the very near future though, and in fact if there is a serious nuclear accident near that country, it may never come into existence. But given the nuclear renaissance that is gaining momentum in Europe and elsewhere, a change in Italy’s nuclear plans will hardly be noticed. According to the German firm Siemens, at least 400 new reactors will be deployed globally by 2030. Moreover, several years ago Mr Vladimir Spidla, the Czech prime minister at the time, visited Finland, and among things he said that while Finland was the only country in Europe that displayed intentions to build an advanced nuclear facility, “soon almost all will join it.”

They will join it if they prefer a higher standard of living to a lower standard! Italy’s energy situation is a great deal better than many because of its access to the natural gas of north Africa (and particularly the expanding reserves of Algeria), but as I never tire of pointing out, the first time I taught in Australia, the Maui gas field of New Zealand was thought by many to be virtually inexhaustible. In another decade however it may only be a memory. I can also mention that it was via the premature exhaustion of Maui resources that a misleading interpretation of New Zealand’s attempt to restructure its electric market was put into circulation – an interpretation that seduced several academic stars and ‘wannabes’ into supporting deregulation exercises that I correctly identified as economically absurd.

Because of the ostensible “need” to rebuild its nuclear safety authority, and to identify sites for the new installations, the first new Italian reactor may not be in operation until 2020 – or even later. My reaction to this news is complete indifference! The important thing in Italy and elsewhere is that preparations are made to construct this equipment before the price of oil and gas goes into orbit, which many observers now believe could happen sooner rather than later.

The nuclear reactors that are to be constructed in Italy are ‘European pressurized reactors (EPR)’, or as they are often designated ‘third generation’ (Gen 3) equipment, where the emphasis is on safety. (Safety with this equipment means that if control systems stop working, the reactor shuts down automatically, dissipates the heat produced by the reactions in its core, and stops both fuel and radioactive waste from escaping.) Unless I am mistaken, it makes sense for Italy not to hurry their new project, because while things might go smoothly if these reactors were being constructed in France, or even China, there could be problems of a cultural nature in Italy, where ENEL and EDF must coordinate their efforts in order to meet deadlines and keep costs under control.k

There have been some serious ‘issues’ of a cultural nature in Finland, where EDF and the Finnish power group TVO are constructing a 1600 MW(e) installation, that is the largest reactor in the world. Anne Lauvergeon – the CEO of Areva (ARVCF.PK) (France) – has blamed her Finnish collaborators for the delays and excessive costs experienced with this project, and without being especially familiar with the details of this accusation, I suspect that Madame Lauvergeon’s displeasure is justified. As compared to nuclear-friendly France, there are a large number of persons in Finland who believe that renewables are economically superior to nuclear, and even if this bizarre delusion has not infected the air in the vicinity of the construction site, it has almost certainly resulted in the kind of frictions that are unavoidable in multicultural projects – as I unfortunately discovered when teaching mathematical economics at a United Nations post-graduate institute in Senegal.

With regard to the above comment of Prime Minister Spidla about the future of nuclear, I would like to emphasize that the basic issue is the growing but not well understood value of electricity in the life of people in every country, in every walk of life, and especially individuals who are vulnerable to the economic discomforts that are likely to appear in a world characterized by a growing competition for resources and various other necessities. I choose to believe that a nuclear facility taking 4 years to construct, with a ‘life’ of at least 70 years, is an optimal piece of equipment for delivering reliable and comparatively inexpensive electricity. Some algebra associated with this belief can be found in my energy economics textbook (2007).

On at least one occasion the former Swedish prime minister called nuclear energy “obsolete”, but unless I am mistaken he did so in hopes of obtaining the additional votes from members of the anti-nuclear booster club that would have enabled him to continue his presence at the head of the Swedish government. With all due respect, I am sure that in the overworked mind of that gentleman his gratuitous evaluation of nuclear’s future was to some extent justified, but in point of truth he was simply unable to comprehend the complex architecture of energy economics, and he is not alone where this shortcoming is concerned. As I suggested in a number of lectures, one of the recent prime ministers of Italy was deceived by the promise of plentiful and inexpensive natural gas due to trans-Mediterranean pipelines, but apparently the present prime minister does not agree, nor was it necessary for him to agree, because the price of gas will not have its present appeal to consumers for many more decades, or perhaps even years. (Although not certain, the price of natural gas is and has been for a long time below its equilibrium price, measured with respect to e.g. the BTU price of oil.)

Though unfortunately ignored by many energy economists, the optimal course of action for a country like Italy may be maintaining or increasing its consumption of natural gas during the period in which entry – or re-entry – onto the nuclear scene is being prepared. Despite the opinion of deeply concerned though amateur economists like the former Swedish prime minister, if Italian and Swedish voters do not have a guaranteed access to nuclear energy later in this century, they could find themselves without access to the kind of goods and services that they have no desire or intention to be without – although as yet most of them do not appear to be inclined to recognize this fact.

Comments

[aquaculture:]

youtube.com/watch?v=0i...

Mar 09 07:32 AM

[fran:]

when will we be entertained by the first large scale prototype?


On Mar 09 07:32 AM aquaculture wrote:

> youtube.com/watch?v=0i...

Mar 09 12:02 PM

[fran:]

an interesting complementary article--

r. bryce, 3/6/09 energytribune.com


the world will need every energy arrow[option] in its quiver

Mar 09 12:09 PM

[CLH:]

Geothermic may work sometime in the future but for now there is only one cheap, safe and clean power source and that is nuclear power. Where is Obama? Back in the 1600s trying wind and sun.

Dumb--dumb---dumb

Mar 09 12:19 PM

[Igorsky:]

To CLH, with today's signing of the document that affirms science over 'faith', Obama may not be far from being convinced by his 'scientific' energy man Mr. Chu, he will start to see the light on nuclear power. Hoever, i am not holding m breath.

Mar 09 03:17 PM

[PHL:]

I've been reading "Game Over" by Leeb, which is also complementary to this article.
It seems it's not a matter of *which* energy source is better at the moment, but the need is to ramp up and develop just about every energy source we can to get us through the coming oil crunch, and in the process determine which sources can continue with a net positive energy return.
If the entire world were to go nuclear, the building of the power plants and mining equipment would consume a chunk of our now-limited mineral resources, and there is only so much uranium to dig up. Nukes are probably a large part of the energy bridge to the future, but they are not the final solution.
Me, I think small scale, self-sustaining algae farms hold some hope (eg Valcent). Problem is, the self-sustaining technology isn't up to speed yet..:-(

Mar 09 03:20 PM

[nakedjaybird:]

Well done Fred.

Two points:

1) market-based pricing may seem fair, but it can be very dishonest and play right into the hands of the greedy-powerful to decieve and wrongfully steal, legally.

Cost-based pricing, which normally determines whether or not to be in a business, goes against the grain of economists and Main Street generally, and Wall Street and Madison Avenue for sure, along with the normal, lost, fallen human being; it is no longer a barter situation of one man's days work traded for another. Can you imagine how many YEARS a plumber would have to work for any wall street player for one HOURS worth of financial advice?? Stupid.

Cost-based pricing is the only legitiment basis for real competition. Market-based pricing to assess your competitive position is eventually foolishness.

Market-based pricing is generally greed-based legalized theft by those that have the power to pull it off.

Hence, also, your faulty argument about the BTU content equivalent price of gas to oil, regardless of it's source, availability, or ease of availability, etc.

Maybe gas or any energy should not be based on the value of it's BTU content, but the cost to provide it to customers plus a reasonable profit to stay in business, which does not have to be regulated as long as it's reasonable and is not theft or rape, and the honest-abe business(man) is also satisfied about it's fair practices. This sounds too polyanna and simplistic and naive, right?

Well, free solar and wind energy will eventually have a problem competing because the market will not permit the generating equipment be priced for installations based on cost of generation, especially with fuel costs at zero!! The greedy businessmen selling generating equipment will sell their equipment based on market priced energy. Hence, the price of capital remains a barrier to entry. Sad? Greedy? Depends on which side of the coin you represent. You can talk about Adam Smith, free-enterprise, real capitalism, etc., or you can talk about greed, punishing power, etc., (and then ultimately, regulation!)

Sadly, hydroelectric power produced at a couple tenths of a cent/kwh is sold at a punishing public-raping price of 7 cents/kwh. Deregulated/"Regulated... legalized theft!!

2)And that introduces the 2nd point: Regulation and/or Deregulation.

ATT was broken-up; a regulated monopoly guaranteed a 10% profit; but they kept adding so much unecessary cost to their basis [without any real competition], that they finally had to be destroyed due to poor regulation; yes, poor regulation. Dysfunctional. And there was also viable competition as proven elsewhere. Now, look how the ATT pieces regrouped after they shed the proven-without-any-dou... cost elements.

Deregulation at it's best is real competition.

Regulation at it's best is where there should not be unfair practices due to lack of competition or no desire or need for competion.

Today, some deregulation is working because real regulation is dysfuntional. We do not have clear thinking regulators. And much deregulation is really not working because of legalized theft.

What we have is collusion right before our eyes. And your BTU based energy pricing is exactly that: COLLUSION. So is the mythical practice of "you have to pay a lot to get the best".

Partial deregulation has provided benefit to consumers in some industries (Regulation and/or Deregulation should always be based on consumer benefit, not just the performance of the entity). It seemed to work w.r.t. the airlines, which is not a basic need and therefore competition is effective. Banks???? Look what happended.

For energy, a basic need, deregulation of utilities (which were created for providing power to it's local resisdents, and initially, by the local residents), seems foolish. As does market based pricing of energy.

Right-thinking, clear-headed regulation is a necessity, for the benefit of the consumer; greedy, powerful, capitalistic business be damned. And of course I am not talking about welfare. Just basic, unencoumbered, cost-based pricing for basic needs.

Yes, that wipes out all high and excessive CEO pay, bonuses, parachutes, stadium seats, counntryclub memberships, any "marketing" expenses (why are they necessary if the people created the entity for their own use, there is no competition required or called for, and certainly no selling of anything due.

And yes, regulation should wipe out market-based pricing of energy for the benefit of the people.

Mar 09 04:00 PM

[nakedjaybird:]

PS - Fred: to be clear, I hate regulation; but I hate legalized theft more.

Mar 09 04:42 PM

[aquaculture:]

Fran:

The point of the link was to show that technology progesses very rapidly as long as we continue to embrace freedom.

To answer your question.
Sirex (owner of the drilling technology) and Vlocity Holding inc. (a geothermal developer) have formed a U.S. consortium with an Indonesian investment firm (private equity) to build the world's first geothermic powerplant at lapindo, Indonesia where it will deliver power at 2-3 cents/kwh.
Several South-East Asian countries have either approved funding and permitting or are in various stages of commissioning.

The turbojack/vertical tunneling concept was invented/developed by the physicist Dr. Sieke who also invented the ramjet.

I myself invest in RZ (they have over 3 mln acres of geothermal rights) who have a different modular low temp. approach. They have completed their first plant.

According to Credit Suisse geothermal power is now cheaper than coal.

Best wishes,
Aqua

Mar 09 04:49 PM

[nakedjaybird:]

aquaculture - geothermal is cheaper than coal until it is market priced!

Mar 09 05:05 PM

[Stephen Str...:]

All the discussions about the greenhouse effect have obscured the pressing need for indigenous long term energy sources - ie not based on fossil fuels.

There are many cheap energy sources available - onshore wind in a windy location is one of the cheapest at around 2p/kWh - but like all solutions it has its limitations. In the UK, the superficially important issue of wind variability won't start to impact the Grid significantly until around 20% of electricity is wind generated. Once you start looking at less windy spots, and offshore wind generation, the price starts to rise - but still only to 4p/kWh.

But it would take a wind turbine the size of a twenty storey building on a windy day to power a single sports car at full throttle.

We have surely been spoiled by the presence of fossil fuels, which we are consuming at maybe 2,000,000 times their replenishment rate.

The biggest problems with nuclear may relate to Black Swans: en.wikipedia.org/wiki/...)

Only arrogance lets us imagine that we understand the risks of storing highly radioactive waste for thousands of years. How much energy will it take to keep it safe for 10,000 years? Hard to say when we didn't even have an Islamic extremists threat a mere 50 years ago. And 10,000 years ago we were in an ice age with "cave men" roaming Europe. Even 100 year ago, the cities were full of horses.

So a little humility and an open mind is in order.

There's an interesting book (downloadable free) for those interested in renewables: www.withouthotair.com/

Again UK based, in it a physicist analyses the viability (even in principle) of maintaining current energy consumption from wholly renewable resources. Basically, in the UK, we'll have to cut our energy consumption. You may be luckier in the US, as it is so much bigger, but at least the UK has many of the cheap renewable options such as wind and tidal. The government is going for these and also nuclear, but as usual, too little too late.

Mar 09 06:03 PM

[aquaculture:]

But naked: it IS market priced. The only remaining issue is interest rates, but this leaves Raser (RZ) even in a better position: they allready have the financing (in addition to the utc technology, the land rights and since last week, a working powerplant!)

sciam.com/article.cfm?...

Best wishes,

aqua

Mar 09 06:06 PM

[nakedjaybird:]

Aqua - your Scientific American article referenced did not include the cost of exploration and drilling for the geothermal sources, nor operating and mainteneace costs w.r.t. length of life (1/2 that for coal, as stated), so the total capital cost and/or fanancing must be doubled at a minimum to compare to coal, and then you have to take the 1.9 cents/kwh subsidy out.

After all that, then one must consider how the capital equipment/construction market will price their capital/services to the ultimate buyer/operator for the equivalent of 40 nuclear power plants that operate 60-80% of the time while contending with very dirty corroded pipes, etc. to provide power at cost plus a little reasonable profit to the ultimate energy user.

I'm not worried about cooling the earth.

I am worried about smart madison avenue marketing pricing geothermal generating facilities such that ultimately there will be no favorable ecconomic benefit for the final power producer to provide electricity to the final user at a price below what can be provided from coal, oil, gas, nuclear, solar PV, wind, etc.

Why? Because they are in cahoots (called collusion) to survive, maximize their margins and keep a relatively equivalent energy price based on BTU content to the final market user.

That's one reason electric transportation has not beaten fossil fuel transportation for 40 years. We are still waiting for the two energy cost lines to cross and those with the power are continuing to prevent that from happening (in the US).

To actually lower their prices of capital and also provide means to provide cheap power to the final user would cause "unfair" competition, and someone would have to go out of business: like coal, oil, and gas as it costs them more and more to explore, dig, drill, or mine their energy source, process, transport, reclemate, reduced subsidies for R&D, depletion, etc., etc.

My goodness: solar PV with no moving parts, no energy cost and avaiable forever, simple in not near zero maintenance, and on and on..... that with some energy storage capability for production/load leveling is a no brainer.

I'd go for geothermal near Yellowstone. Where it's at the surface. And when you have to explore and drill; I'd go solar and wind. As we entered exploration and drilling time is the time when we should have stopped focusing on oil and gas, not to mention when we could no longer put coal in a bucket at the surface.

We have very workable alternatives. Even growing wood. Or growing biofuels. Very replaceable. But we have to get rid of ultimate market pricing and do real cost pricing. Including life-time cost analysis. And yes, some buggy whips are going to go out of business. That's capitalism. And yes, WITHOUT GREED.

Mar 09 07:51 PM

[Ferdinand E...:]

I wonder what is happening in the world and on this site, since I am very satisfied with these comments.

Mar 10 10:18 AM

[nakedjaybird:]

Fred - now you have me worried. Which side of the coin are you on??

Mar 10 02:07 PM

[scoobydoo:]

What has happened to Valcent, have they gone bankrupt yet?


On Mar 09 03:20 PM PHL wrote:

> I've been reading "Game Over" by Leeb, which is also complementary
> to this article.
> It seems it's not a matter of *which* energy source is better at
> the moment, but the need is to ramp up and develop just about every
> energy source we can to get us through the coming oil crunch, and
> in the process determine which sources can continue with a net positive
> energy return.
> If the entire world were to go nuclear, the building of the power
> plants and mining equipment would consume a chunk of our now-limited
> mineral resources, and there is only so much uranium to dig up. Nukes
> are probably a large part of the energy bridge to the future, but
> they are not the final solution.
> Me, I think small scale, self-sustaining algae farms hold some hope
> (eg Valcent). Problem is, the self-sustaining technology isn't up
> to speed yet..:-(

Mar 21 05:01 PM