The Future of Energy: Nuclear, Gas and Coal-based Generation

Nuclear power plant with yellow field and big blue clouds


Today’s guest post by Whaleoil reader Bruce Alan Forbes is part of an article he wrote called The Future of Energy with predictions for 2040. As it is an in-depth analysis I divided it into six posts so that we could discuss each part separately.

Nuclear, Gas and Coal-based Generation

Nuclear power stations operate at high capacity factors and generate large amounts of CO2 – free electricity. They have enormous potential for achieving major reductions in emissions of CO2. Unlike intermittent and unreliable renewable sources, they do not need the inefficient, fossil-fuel burning, backup power stations to maintain output when the wind does not blow or the sun does not shine. Statistics show convincingly that nuclear power is by far the safest form of large-scale electricity generation.

In contrast, coal-fired power stations are responsible for the deaths of thousands of miners worldwide each year and hydropower stations have also killed thousands of people.

At present, nuclear power is typically more expensive than gas or coal-fired power generation in the U.S. and Europe. This is due to the long construction times resulting from bureaucratic regulatory hurdles. Eventually, nuclear power stations will become the main source of clean, low-cost electricity; particularly in non-OECD countries.

The EU presently has the highest capital cost for nuclear power at about $8 billion for a 1 GW nameplate plant, followed by the US at $7 billion, China at $4.5 billion and South Korea at $3.5 billion. Nuclear power generation is the only currently available large-scale technology that would be able to achieve substantial CO2 emissions reductions.

Nuclear power is overall cost competitive with other forms of electricity generation, except where there is direct access to low-cost fossil fuels. Once capital investment costs are effectively “sunk”, nuclear generators operate at very low costs and are effectively “cash machines”. US figures for 2012 published by the NEI, show the general picture, with nuclear generating power at 2.4 c/kWh, compared with coal at 3.3 cents and gas at 3.4 cents.

Despite its significant advantages, nuclear power is under attack, particularly in Germany. The cost to replace German nuclear generation with renewables has been estimated by its government as ?1 trillion – without any assurance of reliable electricity output. Such an undertaking would require increasing reliance on coal, especially lignite. Over the last decade, presumably well-intentioned policy makers in Germany and other European countries have created renewable energy policies with generous subsidies. These policies have subsequently revealed themselves as unsustainable, resulting in profound, unintended consequences for all industry stakeholders.

While the policies have created an impressive rollout of renewable energy resources, they have clearly generated disequilibrium in the power market, resulting in significant increases in energy prices to most users, as well as value destruction for all stakeholders: consumers, renewable companies, electric utilities, financial institutions, and investors. Nevertheless, in 2012 there were 66 nuclear reactors under construction around the world, of which 54 were in non-OECD countries. This total included 26 in China, 11 in Russia and 7 in India.

More Efficient Coal-fired Generation

Modern coal fired stations have minimal emissions of dust, soot and harmful gases such as sulphur dioxide and nitrous oxide. This is because electrostatic precipitators and scrubbers can effectively remove all of these pollutants before they get into the atmosphere. The main environmental impacts of coal-fired generation are related to the requirements for cooling water and large areas to store the waste ash. Most modern, large coal-fired stations operate at supercritical steam pressures, which results in a substantial increase in efficiency compared to older stations. Coal is widespread and cheap, so coal-fired generators provide one of the cheapest ways of generating large amounts of power. Poorer countries need low-cost electricity to develop their economies. The rapid growth of coal-fired electricity generation in Asia particularly has been a major factor in the continuing increase in atmospheric CO2 concentration.

According to the 2013 BP Statistical Review, proven world reserves of coal are sufficient to provide 112 years of production at current levels. The World Resources Institute has reported that over 1,200 new coal plants with a total capacity of 1,400 GW are being built or planned. These new plants are not only in developing nations. In Germany, a country with extremely influential Green politicians, power utility companies have announced plans for the construction of 25 new coal-fired plants. These stations are needed to avoid a looming power shortage caused by decommissioning nuclear power plants that have operated safely for many years. Many German coal-fired plants burn brown coal (lignite) which produces the highest per kWh CO2 emission levels of any hydrocarbon-based fuel. More than 25% of Germany?s electricity is already produced from plants of this type.

Switching from Coal to Gas

It is apparent that converting from coal-fired generation to gas-fired generation would result in substantial reductions in CO2 emissions at virtually no cost to economies or to consumers. If countries tap into the very large and widespread resources of cheap shale gas known to exist, gas-fired generation will be favoured. In non-OECD countries, where nuclear capital costs are half those in Europe, nuclear will be competitive with supercritical coal-fired stations.