Reliability of Energy Sources

The reliability of an energy source is an important economic factor. Since large sums of electricity cannot be stored at a time, energy supply must meet energy demand in real time. This means that when the most electricity is being used, the most electricity must be simultaneously created, and vice-versa.

This creates an interesting and constantly changing problem facing energy companies. They not only need to predict electrical output throughout the year, but also throughout the day. After predicting the energy needed, they will need to actually produce it. If their prediction is wrong or they are unable to create the energy needed, ratepayers could experience a shortage or the energy company could waste a lot of money via wasted electricity.

Since this is the case, extensive research has gone into electricity usage over time. Looking at a figure provided by the U.S. Energy Information Administration, we can see that electricity usage on October 22, 2010 in New England peaked at 8 in the morning, called the morning ramp, and 6 to 7 PM, which is the peak demand time. This data follows a regular pattern of electrical use. High use when people get up in the morning, and high use right when they get home from work. These are times when the most electrical supply is needed.

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This kind of data is also collected on a month to month basis. As seen in the figure below provided by the U.S. Energy Information Administration, electrical use goes in cycles with low use in the springs and falls and high use in the winters and summers. This is generally due to the use of heaters and air conditioners during these months.

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With this, the reliability of energy sources must be considered. Nuclear, natural gas, and coal are all time independent. You can always burn coal or natural gas, and you can always run nuclear reactors no matter the time of day or time of year. For renewables like wind and solar, this is not the case. The wind doesn’t always blow and the sun doesn’t always shine.

For solar, there are many parts in the country, including Colorado, in which the sun doesn’t shine during peak energy usage.  At 7 and 8 AM in Colorado in the winter time, the sun has hardly risen. By 5 PM, the sun has completely set in the winter thus completely missing the peak hour of usage. Furthermore, what if we experience large cloud cover or storms during times of high energy demands? Surely, there will be a shortage.

For wind, the story is similar. Luckily, the wind isn’t as variable upon seasons as the sun is, thus giving wind more chances of possible electrical generation time, but definitely not guaranteed time. There is no way to guarantee a satisfactory amount of wind will be blowing to ensure it will meet energy demands, thus making it unreliable.

Due to how unreliable renewable energy is, many countries, like Germany, are paying to keep coal generators in reserve in case the wind isn’t blowing or the sun isn’t shining. In the case of Germany, the government is paying billions of dollars to keep inactive coal generators in reserve. However, not only is it expensive to keep up the maintenance of these inactive coal generators, it is also expensive to flip these generators on and off (Porter).

A similar story occurred in South Australia. South Australia became heavily dependent on wind energy, though due to its unreliability, prices were unstable and surged frequently. The surges placed prices as high as $14,000 per megawatt-hour, frequently surged above $1,000 per megawatt-hour, and averaged at about $360 per megawatt-hour. The electrical prices seen in Victoria, Queensland, and New South Whales are around $50-$60 per megawatt-hour. Due to the surging prices, the South Australian government is begging and incentivizing gas-powered stations to begin operation again as reserve.

Cost of Energy Delivery

The cost of delivery is how effectively each energy can be transported to people, particularly high population areas. Since line loss, energy dissipating from electricity lines, occurs, it is important to put electricity generators close to the market it is intended to serve. The closer it is to the market, the less electricity is lost. Furthermore, putting up electric lines and the infrastructure associated with electric lines comes at a cost which is preferably avoided. This means the cost of delivery is highly dependent on where an electricity generator may be put.

Nuclear power plants are very flexible in where they can be placed. According to Lydia DePillis, an energy writer for Slate, the three factors considered in building a nuclear power plant is “state laws, geography, and the disposition of the local community.” Since the dispositions of the local community and state laws are variable and can be changed over a short period of time, they will not be considered in economic analysis, but will be examined further in the political implications section. When it comes to the geography factor, nuclear reactors need to be placed near large bodies of water, whether it is the ocean, a large river, or a large lake. The water source is used as a coolant for the reaction.

Since coal and natural gas are also thermoelectric power, meaning they create steam to spin electric turbines, they have similar requirements as nuclear energy. They require large amounts of water as a coolant, meaning they need to be placed near water sources. In Colorado, this limits us to the natural lakes, reservoirs, and rivers that can be seen in the provided figure. While reservoirs can be created specifically for nuclear, coal, or gas plants, this is an expensive and preferable option. However, there are water features spread out across Colorado, making it possible to construct these plants essentially anywhere.

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For renewables like solar and wind, farms must be placed where they will be most effective. The wind doesn’t blow at the same rate everywhere and the sun doesn’t shine equally across the United States. Solar farms must be placed where they will get the most sun and wind farms must be placed where they will get the most wind. Looking at the map provided by the National Renewable Energy Laboratory, we can see where the sun shines most intensely in the United States and least intensely.   This map shows that the south western area of the United States has the most ideal sun exposure for solar energy, and the north eastern area of the United States is one of the least ideal areas for sun exposure. A majority of Colorado rests in 5.5-6.0  kWh/m2/day. While a lot of Colorado rests in a higher area of sun exposure, some of the most populated areas in Colorado, specifically Denver, Boulder, and Fort Collins, do no fall into, or barely fall into, the higher sun exposure areas, thus creating a higher cost of delivery for solar energy in Colorado.

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For wind, The National Renewable Energy Laboratory provides a map giving the average annual wind speed at 80 meters above ground level. This map shows that the central United States has the highest average wind speeds, making it more favorable to wind farms as compared to coastal areas. Most of Colorado ranges on the lower end of wind speeds from less than 4 meters per seconds to 5.5 meters per second, though the eastern side of the state ha pieces that can range 8.5 to 9 meters per second. These eastern areas would be the most ideal for wind farms in Colorado, but they are also far away from Colorado’s population centers like Denver, Boulder, and Colorado Springs thus creating a higher cost of delivery for wind energy.

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Looking at these geographic implications, we can assess the relative cost differences of the energy sources for delivery. Natural gas, coal, and nuclear all are very versatile, as their only requirement is that they need to be near a water source. Wind and solar energy are less versatile and require higher levels of wind and sun exposure. However, sun and wind exposure do not always line up with areas of population, thus increasing its relative cost of delivery.

Cost of Development for Energy

Cost of development, also called overnight capital cost, is the cost of building the infrastructure and development for different energies. For nuclear energy, nuclear reactors must be built. For natural gas and coal, burning generators must be built. For renewable energy, wind and solar farms need to be built. These costs are not universal, though, and can depend on location and management. Under bad management or inopportune locations, costs can be higher than normal. Under perfect conditions, costs can be lower than normal. Furthermore, what is exactly the “normal” cost of development is difficult to determine precisely since there are so many factors that can go into this cost. To determine costs of development, recent projects for wind and nuclear will be examined as well as data from the U.S. Energy Information Administration for all sources.

In 2016, the first nuclear reactor in 20 years was built in the United States. The reactor, Watts Bar Unit 2, is overseen by the Tennessee Valley Authority and took 44 years to be constructed. However, there was a long hiatus of no construction for 22 of the 44 years. The reactor cost as total of $4.7 billion, and will add 1,150 megawatts of electrical capacity to Southern Tennessee. For every dollar spent on capital in this project, about 0.0002446 kilowatt hours are added in capacity. According to the U.S. Energy Information administration, the overnight capital cost of a dual unit nuclear plant is $5,530 per kilowatt. The fixed operation and maintenance cost is $93.28 per kilowatt-year. Nuclear energy has the most expensive capital and development costs out of the examined energy sources.

In Colorado, Xcel Energy is constructing its first wind energy farm, the Rush Creek Wind Farm. The wind farm is located east of Denver, and is estimated to be finished October of 2018. The wind farm will cost a total of $1.1 billion and will add 600 megawatts of electrical capacity to Colorado. For every dollar spent on capital in this project, 0.000545 kilowatt hours are added in capacity. According to the U.S. Energy Information Administration, the overnight capital cost of an onshore wind farm is $2,213 per kilowatt. The fixed operation and maintenance cost is $39.55 per kilowatt-year.

Coal and natural gas have multiple types of generators that can be used. For coal we will examine a single unit advanced pulverized coal generator and a single unit advanced pulverized coal generator with carbon capture and storage. For natural gas, I will examine a conventional combined cycle generator and an advanced combined cycle generator with carbon capture and storage. How these generators specifically operate is unimportant to this analysis, and only their costs will be looked at.

For a single unit advanced pulverized coal generator, the overnight capital cost $3,246 per kilowatt. The fixed operation and maintenance cost for a single unit advanced PC is $37.80 per kilowatt-year. For the same kind of generator with carbon capture and storage, the overnight capital cost is $5,227 per kilowatt. The fixed operation and maintenance cost is $80.53 per kilowatt-year.

For a natural gas conventional combined cycle generator, the overnight capital cost is $917 per kilowatt. The fixed operation and maintenance cost is $13.17 per kilowatt-year. For an advanced carbon cycle generator with carbon capture and storage, the overnight capital cost is $2,095 per kilowatt. The fixed operation and maintenance cost is $31.79 per kilowatt-year. Natural gas has the lowest capital and development costs out of the examined energy sources.

Lastly, for a photovoltaic, solar array, generator, the overnight capital cost is $4,183 per kilowatt. The fixed operation and maintenance cost is $27.75 per kilowatt-year. With these numbers, it can be seen that nuclear energy has an extremely high overnight capital cost, and a high, though comparable, fixed operation and maintenance cost.

Nuclear: Cost of Source Mining

This post will compare the spot prices of the mineral resources that go into different energy sources, and compare them to the price of uranium, U3O8. The sources that will be looked at are coal, natural gas, oil, and rare earth metals, which are used in renewables like solar energy. Since prices change depending on market conditions, it should be implied that the price indicated is an approximation of what the source fuels cost.

The price of natural uranium, U3O8, is $25.50 per pound, according to Ux Consulting Company. The ten year price ranging from $19 per pound to $139 per pound. The price of coal is $52.05 per short ton. The ten year price ranging from $50 per short ton to about $125 per short ton. The price of natural gas is $3.30 per million BTU. The ten year price for natural gas has ranged from $2.00 per million BTU to $12.00 per million BTU. Indium and tellurium are both rare earth elements that are frequently used in solar panels. Indium costs about $720.00 per kilogram, and tellurium costs about $51.34 per kilogram.

However, these units are all different from each other, and need to be converted to a comparable unit, which will be in heat content measured in BTUs. According to the Energy Information Administration, a short ton of coal produced about 20.16 million BTUs. According to the World Nuclear Associate, one pound of natural uranium in a light water reactor can produce 214,961 million BTUs. Since solar power is a renewable source, it is difficult to figure out how much heat content 1 kilogram of tellurium or indium will provide via energy generated. Not only is the source renewable, but it is also incredibly variable, as it depends how much sun is shining, what kind of solar array is being used, and what kind of maintenance is performed on the arrays.

With the numbers provided, the heat content provided per dollar spent on a fuel source can be calculated. For every dollar spent on coal, about 387,320 BTUs are produced. For every dollar spent on natural gas, about 303,030 BTUs are produced. For every dollar spent on uranium, about 8,429,843,137 BTUs are produced. It is worth noting that this is not the full price of generating this heat content, but just the price spent on fuel only. However, when considering fuel prices, nuclear energy is without a doubt the cheapest source.