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From Nuclear to Renewable, U.S. Energy Interest Changes Gears

by | published April 25th, 2011

In the wake of the Fukushima Dai-ichi reactor disaster in Japan, plans for new nuclear power projects are on hold in many countries. Even those currently on-line are subject to temporary shutdowns and expedited safety reevaluations.

Here in Germany – where I am traveling right now – the government has thus far shut down seven of the oldest operating reactors.

Germany is the European nation with the most powerful anti-nuclear political movement. And it may not stop there.

Already, questions are arising over what it will cost if these reactors stay off-line for very long.

Estimates vary. Greenpeace suggests each German household would pay only about 1.5 euros (or $2.18, according to current exchange values). However, the part public/part private German Energy Agency (DENA) has suggested that a closure of the plants would add a full 20% to the nation’s total electricity bills.

German Economy Minister Rainer Brüderle (who is facing a rising Green Party protest) said last week that ending nuclear power would cost the country 1.5 billion euros a year.

Meanwhile, the DENA (which is feeling pressure from the producers) said closing the seven oldest plants alone would cost more than twice that – 3.5 billion euros.

One thing is certain. Nuclear power is in for some tough political times.

Support Is Drying Up Almost Everywhere

The Vienna-based International Atomic Energy Agency (IAEA) reports that 64 new reactors are under construction worldwide, with 443 already in operation.

The nuclear commitment has been greatest in Asia. Throughout the region, government and markets regard nuclear power as an essential element for developing needed energy. Asia is the location for 39 of the new reactor construction projects.

Russia will continue an ambitious expansion, as will China (where 27 reactors are currently under construction, to join the 13 already generating power).

However, U.S. support for new nuclear reactor projects has dried up quickly after the Japanese developments. And some are seeing a parallel to the aftermath of the Three Mile Island meltdown near Harrisburg, Pennsylvania.

That 1979 event decimated nuclear power plant plans in the U.S. for almost three decades.

Now, in the U.S., 104 reactors provide about 20% of the electricity we consume. Both the Obama Administration and the industry had been touting nuclear power as an alternative to increasingly risky and expensive imported crude oil.

But already, the Japanese event is affecting the U.S. nuclear industry.

The most noticeable example came late last week, when NRG Energy Inc. (NYSE:NRG) halted all further activity at its South Texas plant, located 90 miles southwest of Houston.

NRG had been the dominant partner in a consortium that included Toshiba Corp. (OTC:TOSBF), the City of San Antonio, and Tokyo Electric Power Co. (TEPCO; OTC:TKECF) to build two new reactors at the plant to go along with the two already operating, which together produce 2,700 MW of electricity.

From a PR standpoint, it probably did not help that TEPCO was a party to the project… (The Fukushima Dai-ichi plant still under siege in Japan is a TEPCO operation.)

NRG also announced that it would take a first-quarter $481-million pre-tax write down for the funds expended thus far on the project, now five years old.

CEO David Crane probably understated the problem when he said, during an April 19 investor conference call, that the expansion project has “diminished prospects.” Still, the company took great pains to point out that, should circumstances improve, it could renew the South Texas project later.

For now, at least, the market has approved of the move. NRG was up 7% over the three sessions following the announcement of the project closure.

And it remains one of the most diversified alternative/renewable energy producers in the market.

[Editor’s Note: Kent’s Energy Advantage subscribers know exactly how to play this trend. Click here for more information.]

New Moves into Renewable and Alternative Fuel Sourcing

Nuclear may be slowing down, but elsewhere in the energy sector, things are heating up.

On April 12, Secretary of Energy Steven Chu announced a $1.2 billion loan guarantee for a solar energy project to be built by SunPower Corp. (NasdaqGS:SPWRA) and run by NRG.

Such guarantees serve as a promise by the government to make good on a loan if the company cannot. This typically enables the company to get better interest rates and lower costs for project financing than would otherwise be available. Most importantly, in what is still a weak credit market, the guarantees often make the difference between renewable energy projects getting the finance they need or stalling out in the commercialization phase.

The California Valley Solar Ranch farm is one of the largest DOE loan guarantees offered thus far.

Other big ones have included $1.45 billion to Spanish utility major Abengoa SA (OTC:ABGOY) for a large solar venture in Arizona and $1.6 billion to Oakland, California-based start-up BrightSource Energy Inc. for projects in the Mojave Desert.

While it’s still a private company, BrightSource is a good one to watch.

It has successfully raised $160 million to date, including a $115 million Series C bond issuance. Investors include Google.org (the philanthropic arm of the tech giant), BP Alternative Energy, StatoilHydro Venture, Black River, VantagePoint Venture Partners, Morgan Stanley, DBL Investors, Draper Fisher Jurvetson, and Chevron Technology Ventures.

BrightSource also has heavy support from PG&E Corp. (NYSE:PCG) and Southern California Edison Co. (AMEX:SCE) for a series of high-profile solar projects on both ends of California.

The current moves by U.S. electricity generators like NRG, PG&E, and SCE, therefore, are toward renewable and alternative fuel sourcing, especially given the availability of government loan guarantees and other enticements.

But the renewable/alterative drive will not include a new emphasis on nuclear. Not anytime soon.

Sincerely,

Kent

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  1. dee ray
    April 25th, 2011 at 14:12 | #1

    are we to buy ?

  2. Ken trzecki
    April 25th, 2011 at 14:18 | #2

    In light of the alternate energy push I am interested in any thoughts you may have regarding the joint venture company Dynamic Fuels. Tyson Foods (TSN) and Syntroleum (SYNM) are partners. Do you think it will materially benefit either of the partners or possibly become an spin off/IPO?

  3. Roger that
    April 25th, 2011 at 14:45 | #3

    [(dee ray) are we to buy ?]

    Buy what? This is just some dilapidated news we all knew hours after the Japan nuclear accident. Nukes are basically kaput. Alternative fuels are in their infancy, no place to gamble with retirement money. Ethanol will die out….it takes more energy to produce ethanol from corn than the energy derived from it. Plus, any variety of corn can be used to feed “something”.

    Go to a new car dealership, how many cars run off gasoline? 98% of them. You want to buy a stock, buy oil companies with dividends. TOT, RDS.A, COP, CVX

  4. Lou Varljen
    April 25th, 2011 at 15:32 | #4

    My primary concern of investing in solar or wind power is the poor return on investment to the companies that are buying into these concepts. My understanding, based on a local project in SW FL is that the return is in excess of 15 years, at which time technology will require replacement or extensive maintenance expenditures. I would appreciate your input on thr ROI. My impression is that it is now somewhat of a “fad” to become “green” and the projects would not be justified without government incentives. (which are going to dry up with our economic problems in the USA) Your thoughts? Thanks

  5. kenneth viney
    April 25th, 2011 at 15:40 | #5

    Dr. Kent:
    i believe you are correct to assume LIGHT WATER REACTORS PROJECTS will be cancelled over the next few years however the GENERAL ATOMICS MC2 and HIGHT TEMP. HELIUM MODULAR REACTORS will get some traction if govt can give this technology some funding. How much money has the US Govt spent on this pie in the sky NUCLEAR FUSION PROGRAM. We worked on it for a while until funding was cut. Pebble Bed technology and the encasement of the fissel material makes this plant passively safe. Mr. Blue figures he can develop the MC2 plant with an investment of $ 1.7 billion and several years. I say it can be done in 3 to 5 years if good old fashion Yankee know how got to it. The Chinese today have a pebble bed pilot plant that is operating well and have plans to build 12 more plants using this same design.We sure as hell can do better than that.

    Where is the US leadership in this fine land? Asleep? No, 50 Billion USD to keep G.M. afloat was a waste. No leap forward here.

    Ken in Napa Ca.

  6. Antony Hing
    April 25th, 2011 at 16:50 | #6

    Hello Ken and fellow readers

    Ken I’d be most grateful for your views on Thorium in up-coming newsletters and I provide the following snippets…

    – THORIUM –
    may contain 40 times the amount of energy per unit mass of uranium without recourse to fast breeders:

    Here in Australia, talk is emerging (albeit delicately) of THORIUM as a substitute for Uranium.

    An article publised last October in our national newspaper The Australian, referred to a Parliamentary Report, drawing heavily from research privided by Nobel laureate Carlo Rubbia, of the European Organisation for Nuclear Research.

    In the Parliamentary Report it was noted that: “from an efficiency point of view, almost all the mineable thorium is usable in a reactor compared with only 0.7 per cent of natural uranium. Thus, thorium may contain some 40 times the amount of energy per unit mass than uranium without recourse to fast breeders”.

    And for those worried about nuclear proliferation. According to another scientist at the Geneva-based nuclear research organisation, it’s difficult to make nuclear weapons using thorium because it emits too many gamma rays.

    And the UK’s Ambrose Evans-Pritchard wrote in an article in the UK Telegraph: Thorium-based molten salt reactor system have a built in safety mechanism. Professor Robert Cywinksi from Huddersfield University said thorium must be bombarded with neutrons to drive the fission process. “There is no chain reaction. Fission dies the moment you switch off the photon beam. There are not enough neutrons for it continue of its own accord,”…“If it begins to overheat, a little plug melts and the salts drain into a pan. There is no need for computers, or the sort of electrical pumps that were crippled by the tsunami. The reactor saves itself,” he said.

    “They operate at atmospheric pressure so you don’t have the sort of hydrogen explosions we’ve seen in Japan. One of these reactors would have come through the tsunami just fine. There would have been no radiation release.”

    Dr Cywinski, who anchors a UK-wide thorium team, said the residual heat left behind in a crisis would be “orders of magnitude less” than in a uranium reactor.

    As a happy bonus, Thorium reactors can burn up plutonium and toxic waste from old reactors, reducing radio-toxicity and acting as an eco-cleaner.

    BP’s disaster at Macondo should teach us not to expect too much from oil reserves deep below the oceans, beneath layers of blinding salt. Meanwhile, we rely uneasily on Wahabi repression to crush dissent in the Gulf and keep Arabian crude flowing our way. So where can we turn, unless we revert to coal and give up on the ice caps altogether? That would be courting fate.

    Dr Cywinski is developing an accelerator driven sub-critical reactor for thorium, a cutting-edge project worldwide. It needs to £300m of public money for the next phase, and £1.5bn of commercial investment to produce the first working plant. Thereafter, economies of scale kick in fast. The idea is to make pint-size 600MW reactors.

    Norway’s Aker Solution has bought Professor Rubbia’s patent. It had hoped to build the first sub-critical reactor in the UK, but seems to be giving up on Britain and locking up a deal to build it in China instead, where minds and wallets are more open.

    Cheers

    Antony Hing

  7. Brian Miller
    April 25th, 2011 at 16:56 | #7

    The United States is wasting time and critical available resources in its race to the bottom. Though I am in favor of all forms of energy research and development, we are deluding ourselves in not utilizing the bounteous resources based on petroleum which are available to us.

    To ignore development of the O&G resources available in our lands, coastal and deepwater offshore and ANWAR will ultimately deny to the United States control over the requirements of our own energy needs, leaving the nation vulnerable to destitituton and will even further imperil further the nations future. The true ultimate decision is whether or not this nation will remain viable or just slink away into the dustbin of once great nations.

  8. norman
    April 25th, 2011 at 19:04 | #8

    why does nobody mention the Bloom box?

  9. like it is
    April 25th, 2011 at 19:04 | #9

    GM paid the loan back, with interest. no alternative right now can produce the kind of power a nuke plant can. Advice, don’t build the thing where a tidal wave can destroy it. Burn $1 bills in your fireplace for heat, that is all they are worth.

  10. Sailor Jo
    April 25th, 2011 at 20:48 | #10

    The owners of nuclear power plants in Germany have funny ideas. Let’s assume they are right and shutting the reactors down would cost 3.5 billion Euro. They will have to shut those things down at some time anyway and the cost will be there no matter what. These shut down reactors are living on borrowed time because their projected life span is already gone. Any old equipment (think of your car engine or your toilet) will fail. I rather shut it down before something happens that may be uncontrollable.

    There are many options to conserve energy or produce it in different ways. It is just that the lobby does not want to hear that as they want to keep the money spigot open for their clients.

    It is barely ever mentioned how much public money went into development of nuclear power That money is always ignored when stating how cheap a nuclear reactor produces electricity. Leaving out facts is still a lie.

    As long as the waste issue is not solved no new nuclear power plant should be built.

  11. Al Roeder
    April 25th, 2011 at 21:18 | #11

    Why do we hear nothing about Thorium reactors as an alternative to uranium?

  12. Jeff Brindle
    April 26th, 2011 at 08:44 | #12

    Another option is Lightbridge. This is a company that has developed Thorium, a much superior fuel, reactors. This is a much better way to exploit nuclear energy.

  13. Ventureshadow
    April 26th, 2011 at 15:05 | #13

    @Al Roeder
    We hear nothing about Thorium reactors for the simple reason that developing the technology for commercial use is extremely costly. In other words, Other Peoples’ Money (e.g., Federal) is required–and lots and lots of it.

  14. Ellen Schug
    April 27th, 2011 at 01:37 | #14

    Right on, Sailor Jo! Nuclear waste storage is an important problem to be solved and point to be included in every discussion of further use of nuclear power.

  15. R. Squier Ball
    April 27th, 2011 at 18:27 | #15

    For the little guy: If such “new” efforts to generate electricity as Magnets4Energy are truly do-able, everyone and his monkey’s uncle should be working on their own project. By thus de-fanging the utility companies, a very big influence on local politics could be achieved, throughout the United States. Both utility companies and eco-idealists would lose their power. Plus, this would relieve pressure on American state governments to finance everything, at the precise moment when too many are bankrupt, or close to it.

  16. R. Squier Ball
    April 27th, 2011 at 18:30 | #16

    What more do I need to say? Sure, I have many extra things to say, but that would involve politics, where few dare to tred.

  17. R. Squier Ball
    April 27th, 2011 at 18:31 | #17

    I said my piece. Isn’t that enough?

  18. Gicu Constantin
    April 28th, 2011 at 12:18 | #18

    How much time need a nuclear reactor, in function, to be stoped completely? What’s the matter with the fision reaction of the atomic combustible?
    Thankyou!

  19. Malcolm
    May 1st, 2011 at 21:04 | #19

    Renewable energy sources are nowhere near capable of providing the electrical energy needs of the USA or any other nation for that matter. With the nuclear fleet in the USA getting older every day getting the 20% of US electricity requirements from renewables is nothing but a pipe dream. If nuclear is replaced it will be by natural gas or coal not wind or solar. The big players in the nuclear energy field France, Russia and China have not slowed their nuclear plans as a result of Fukushima where the only people that died were washed out to sea by the tsunami – not killed by radiation exposure.
    It is also ironic that while the Germans have (symbollically) idled a few nuclear plants it is the French nuclear power plants (coincidentally built right on the Franco-German border) who are making up the electricity shortfall. EdF – the French utility – is doing very nicely thank you.

    While a serious event, compared to the 30,000 people that were killed by the natural disaster, or the 4,000 killed by the Bhoipal chemical disaster in India, no-one will die as a result of radiation exposure.

    Malcolm

  20. Malcolm
    May 1st, 2011 at 21:16 | #20

    Just a couple of notes on Thorium reactors. Yes the above posts by various contributors are correct in that Thorium is a better fuel for nuclear reactors than Uranium however a great deal more work is required to take these designs from the drawing board to a commercial nuclear power plant. Reactors using Thorium salts are inherently more stable than those fuelled by Uranium 235 but Uranium is still required to get the process going and there are significant techn ological diffuculties to overcome. I am not aware of a prototype of such a reactor in operation let alone a commercial nuclear plant. So while I agree it may be a better way to go it Thorium plants are a long long way from commercial operation and many billions of dollars of investment will be required to get them to that point.

    Newer generation reactors are just as safe as Thorium reactors and depend on passive safety features like thermosyphoning as is already employed in Canadian CANDU nuclear reactors.

    Uranium stocks are an excellent buy right now and the Fukushima incident has hardly made a blip in the world demand for the material. With the agreement to end conversion of Russian Uranium into fuel for US reactors coming to an end in 2013 the current shortfall of 25% demand vs supply is going to have a large impact on Uranoium prices. Suggest you buy now while the prices are low. They will not be this low for very long.

  21. Sumflow
    May 13th, 2011 at 19:18 | #21

    Roger that: > Nukes are basically kaput .. Ethanol will die out….

    And you know this how?

  22. November 4th, 2011 at 04:35 | #22

    China’s success in wresting control of the solar industry is erasing an advantage for U.S. suppliers. China has significantly reduced the price of solar pv panels and solar themal panel. Though german companies are still ploughing along nicely.

  23. January 13th, 2012 at 03:12 | #23

    Great ideas and new, improved technology is coming to the renewable energy field at a fast pace. Even with the setbacks, alternative energy will soon overtake oil.

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