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.

CoalNatGasElecGenMatches

 

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.

USwind300dpe4-11

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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.

Current Energy Production and Consumption in Colorado

Colorado is a leader in the United States for energy production. The state ranks 7th in total energy production with 3,042 trillion BTUs produced in 2014. Of this energy production, a large majority of this production comes from oil, which the state produced 9,200 thousand barrels in November of 2016, and natural gas, which the state produced a total of 1,704,836 million cubic feet of in 2015. There is no nuclear energy produced in Colorado.

For total electricity generation, Colorado ranks 27th with 4,332 thousand megawatt-hours generated in November of 2016. By source, the large majority of this electricity is produced by coal at over 2,500 thousand megawatt hours generated in November of 2016, meaning coal provides Colorado with over half of its electricity production. This is followed by nonhydroelectric renewables, which produced 985 megawatt hours, and natural gas fired generation, which produced 722 megawatt hours.

Colorado’s electricity prices rank 25th highest in the country at an average retail price of $0.1216 per kilowatt-hour.

For consumption, Colorado is not as significant compared to other states as they are with production. Colorado ranks at 34th most energy consumed with 276 million BTUs consumed per capita. According to the US census, the Colorado population was roughly 5,349,648 in 2014. In total this puts Colorado consumption at a total of 1.476 quadrillion BTUs.

Breaking this consumption down by source, the most significant sources of consumption are natural gas and coal. In 2014, natural gas accounted for 497.2 trillion BTUs consumed. Coal accounted for 350.5 trillion BTUs consumed. Gasoline for motors, such as cars, trucks, etc., accounted for 250.3 trillion BTUs consumed. All renewables, biomass, hydroelectric, solar, wind, etc., put together account for 131.4 trillion BTUs. Nuclear energy accounts for none of the energy consumed in Colorado. By sector, the most significant sectors of consumption are industrial and transportation, which account for 29% and 28% respectively. Residential accounts for 24%, and commercial accounts for 19%.

Nuclear Energy: Why Does Colorado Have None?

With the first nuclear reactor, Tennessee Valley Authority’s Bar Unit 2, being connected to the grid on June 3rd since 1996, nuclear energy may be making a comeback. According to the Colorado Department of Natural Resources in 2006, the US produced more than 60% of the world’s nuclear energy production with 103 nuclear reactors, all of which were created before 1996. Compared with all other forms of energy sources (fossil fuels and renewables), nuclear energy sources makes up 20% of electricity generation in the United States.

With Colorado ranked 6th in natural gas production and 7th in total energy production, it would be expected that Colorado would be one of the leaders in nuclear energy production, especially with it being emission-free in production. However, Colorado falls completely flat on this expectation, as it currently does not have any nuclear power plants. Colorado is one of twenty states that does not have a nuclear power plant.

This hasn’t always been the case. Colorado use to have a nuclear power plant, named Fort St. Vrain, near Platteville, Colorado which was built by General Atomics Company and owned by the Public Service Company. The station began construction in 1968, and started generating electricity for the grid in 1976. The station was an early prototype of a high temperature, gas cooled reactor (HTGR). It was the first commercial reactor for electricity to use this gas cooling method, and one of four early HTGRs that used a thorium fuel cycle. All four that used this method have been shut down. According to Tony Kindelspire, writer for the Boulder Daily Camera, “problems plagued the plant from the start.” The plant was shut down in 1989, and has since been made into a natural gas plant.

So why doesn’t Colorado have a nuclear power plant now? In the United States, nuclear power is regulated by the Nuclear Regulatory Commission (NRC), but under the Agreement State Program, which Colorado is one of them, the NRC will relinquish portions of its regulatory jurisdictions to the state. However, a lot of regulatory power is still retained by the NRC. According to the National Conference of State Legislators, Colorado is not one of fifteen states that has regulations or laws against nuclear energy development or production. So it must not be regulatory barriers holding back Colorado’s nuclear potential.

This must mean it is just not economically feasible to create such energy in Colorado. Perhaps it is that the market currently does not favor this kind of production naturally, and energy producers should look elsewhere for energy production.

Nuclear power plants are actually pretty expensive to build. According to the Union of Concerned Scientists, costs rose from 2002 to 2008 from between $2-$4 billion to around $9 billion. However, the cost for the new Bar Unit 2 reactor was at $4.9 billion, and expects to add 1,150 megawatts to its grid. Compare this to the Rush Creek Wind Farm proposed to be built in eastern Colorado which costs $1 billion dollars, plus an additional $443 million accumulated from taxpayers from Production Tax Credits (PTC), and can only produce 600 megawatts if winds were blowing at exactly the correct speeds for 24 hours a day.

While the power plants might be quite expensive to build, the use of nuclear power plants to generate power is relatively cheap. According to the Nuclear Energy Institute, “in 2015, the average total generating cost for nuclear energy was $35.50 per megawatt-hour.” Furthermore, if the plant had more generating units per plant the price could get considerably lower. Compare this to wind energy, which has a generating cost around $40 per megawatt-hour, nuclear energy has cheaper generating costs.

Below is a graph provided by Energy Information Administration comparing the generating cost of different energy sources. Take note that the numbers represented are millions per kilowatt-hour, the hydro-electric category consists of both conventional hydroelectric and pumping storage, and the gas-turbine section is a conglomeration of gas turbines, internal combustion, wind, and photovoltaic. The cost is a total of fuel cost, operation cost, and maintenance cost. The full graph can be found here.

EIATotalGeneration cost

 

If it is the case that nuclear energy is simply too expensive to be a feasible method of producing electricity then so be it. However, it is evident that markets in Colorado are currently unfairly favoring wind and solar energy through subsidies and tax credits. Thus making it unclear if nuclear energy is truly unfavorable in the current market or is just being crowed out by government intrusions on the market. Perhaps skewed markets are the reason we do not see any nuclear power in Colorado. It is a question worth addressing.