Wednesday, April 5, 2017

Ecomodernist Podcast on "Campaigning for Clean Air"

I was recently invited to talk about my book, Campaigning for Clean Air, on the Ecomodernist Podcast.  The podcast was released, and here's the link.  I hope you will listen to it: I think you will enjoy the conversation.

The Ecomodernist Podcast:

Part of the podcast was talking about my book, There are many books about the virtues of nuclear power, but this is the first book (as far as I know) on how to support nuclear power in the public sphere.  It's the "then what" book:

"Now that I know about the importance of nuclear power, then what can I do to support it?"

My book is a major answer to that question.   I encourage you to read its excellent reviews on Amazon.

However, a good podcast goes beyond just discussing the book.  Gabriel Ignetti and Rick Maltese were great interviewers.

We discussed combustion versus nuclear energy for electricity. Specifically,  we discussed the nasty effects on air quality that are caused by nitrogen oxides from gas and coal-fired plants. Nowadays, carbon dioxide gets all the press, but nitrogen oxides are still out there, making smog and acid rain. We discussed  being members of environmental groups that are fighting climate change, and the importance of sticking up for nuclear within these groups.  Ignetti, especially, had good stories about his involvement in the environmental movement in Florida.  We discussed hecklers and people who really get "in your face" against nuclear, and possibly-effective versus certainly-ineffective ways to deal with them.

At the end of the podcast, Ignetti and Maltese have a short, separate section, sharing some research they did about how nitrogen oxides affect people's health, forest health, and even our sculpture and our buildings.

Ecomodernism

Painted trillium in Pisgah National Forest
A not-power-plant near a waterfall.
I was on the  "Ecomodernist Podcast," and now you may be wondering: what is "ecomodernism"?  Ecomodernism is a movement that started in 2015, with the publication of the Ecomodernist Manifesto. The ecomodernist goal is human prosperity and an ecologically vibrant planet.

This goal will be achieved by humans choosing technologies that can lift people from poverty and supply abundant energy, while using less of the of the world's area for human endeavors.  This means, for example, using compact energy sources like nuclear power, and leaving the ridges, the tides, the woodlands,  the pastures, and the streams to benefit the ecologies that need ridges, tides, woodlands,  pastures and streams.  In other words, giving nature room to breathe, while giving humans enough abundance to live healthy lives.

Ecomodernism hadn't been invented yet, in 2013, when I had an article in ANS Nuclear Cafe: Farmers, City Folk and Renewable Energy. But the idea in my article substantially the same: don't look at every woods and every waterfall as a source of energy, ready for "biomass" burning, or building a nice big concrete dam.

Let much of nature be nature.  Use compact sources of energy, rather than bulldozing the woods.

That is also a goal of ecomodernism.

Monday, March 27, 2017

Nuclear and the Trump Administration: Post at Nuclear Engineering International

NRC Chairman Kristine L. Svinicki and Commissioner Jeff Baran.
NRC photo from 2017 Regulatory Information Conference
Trump and Nuclear

Early this year, Nuclear Engineering International Magazine suggested that I write an article about the future of nuclear energy under the Trump administration.  (The magazine is based in Britain.)

This level of prognostication felt a little above my pay grade!

However,  I managed it, because I worked with an excellent co-author, Dr. Gilbert  Brown.  Brown is  emeritus professor/ director of the nuclear engineering program at University of Massachusetts, Lowell.  He is active in nuclear policy and was a Foster Fellow in the U.S. State Department.  Together, Brown and I wrote the article: Nuclear Power in the U.S.A.  It appeared in the March issue of the magazine.

I call the article "prognostication" because it was published in the March issue of Nuclear Engineering International, and written in February.  A  lot of things were in flux at that point. To quote the description of the article in the magazine itself:

President Donald Trump’s first few weeks in office have been a whirlwind of activity. When it comes to nuclear power, there has been some positive momentum with key industry appointments and initiatives for advanced reactors. What might the future hold? By Meredith Angwin and Dr. Gilbert Brown.

Why this article is different

Doctor Gilbert Brown
Though some parts of our article are now out-of date, most of the article is still relevant. In particular, we pushed some boundaries a little in this article. Many people who read nuclear industry periodicals expect to hear about DOE, NRC and EPA (we covered these agencies).

But many nuclear people are somewhat ignorant of FERC, the Federal Energy Regulatory Commission, which is the commission that oversees the grid as a whole.

Dr. Brown and I covered the effects of the vacancies at FERC.  We felt we needed to expand our article past the "usual suspects."  FERC has so many vacancies on its board right now that it can't hold important meetings or make certain types of rulings.

I think you will enjoy reading our article about nuclear under Trump.  When I linked to it on Facebook, a very knowledgable man commented that it was a GREAT high-level summary article, and more such articles will be required in the future.
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Endnotes about FERC:

In late March, long after we had finished the article, the Washington Examiner looked at possible FERC appointments in an article titled  The Politics of Fixing FERC.

Much of that article has an inside-baseball feel to it. Read it if you choose, but at any event, I think the title of the article ("Fixing FERC")  is an important  statement.  In my opinion, FERC has been  fast-and-free with its mandate, encountering little oversight and almost no press coverage. Most of FERC's actions have been either neutral or not-good for nuclear.

For example,  I keep meaning to write about FERC 1000, but I am every time I get ready to dive into that deep deep sinkhole, I remember that I wrote a book and I should spend  my time publicizing it.  If you want to know more about recent FERC actions, I suggest reading NESCOE's brief in its lawsuit against FERC: the suit is about FERC 1000.   Start reading the brief on page 4.

NESCOE is an association of New England states: New England States Committee on Electricity.  This association is made up of representatives appointed by the New England governors.  I consider NESCOE to be New England's attempt to defend itself against FERC.

NESCOE is rightly concerned that FERC's policy changes will cause states to be forced to pay for other states requirements for transmission lines--lines built for only for state policy purposes.  It is taxation without representation: one state votes in for a state policy, and other states pay for that policy. Before FERC 1000, states only shared the costs for transmission lines that were needed for grid reliability, not for state policy.

Oh heavens.  See what I mean?  I'm heading down the explaining-FERC sinkhole!  Okay! Done with that!  I'm climbing out now! I'll be okay!  Really...I will!

Endnotes about Nuclear Engineering International Magazine 

My most recent blog post based on a Nuclear Engineering International article is Pay for Performance on the U.S. Grid: No help to nuclear

Saturday, March 25, 2017

Pro-Nuclear Advocacy Post at ANS Nuclear Cafe

Great Days, right now.

These are great days for pro-nuclear advocacy. Many states are moving in the right direction to save their nuclear plants. Nuclear opponents are fighting desperately to get the states to stomp on nuclear. ("All you need is a few wind turbines to meet your carbon goals.  That's all you need. Pay no attention to the gas plant behind the curtain.")

In other words, pro-nuclear forces are winning, right now, at the state level! But we have well-armed opponents, and we have to keep fighting!

These are great days for pro-nuclear advocacy.

I have a blog post at ANS Nuclear Cafe about the importance of pro-nuclear advocacy, especially local pro-nuclear advocacy.  I encourage you to read it, and comment either here or at the ANS post.

ANS Nuclear Cafe logo

Pro-Nuclear Advocacy
by Meredith Angwin

Right now, in the United States, citizens have become active advocates on many subjects. Ever since the last election, congressional phone lines have been swamped. .....

However, the backlog on the D.C. phone lines is of little importance to pro-nuclear advocates. For pro-nuclear advocates, right now most of the action is not in Congress, but in the states.

Read the entire post here:
- See more at: http://ansnuclearcafe.org/2017/03/16/pro-nuclear-advocacy/#sthash.C7zs7nuz.dpuf

Monday, March 20, 2017

Nuclear Energy Weekly News Digest 351

Toronto Globe and Mail staff await news of D-Day
Nuclear Energy Weekly News Digest

This is an occasional summary of the best posts from the pro-nuclear blogging community in North America. This week’s collection comes from items submitted for the week ending March 19, 2016. The previous digest was posted on March 12, at Neutron Bytes.

Fukushima Commentary--Les Corrice

Fukushima 6-years-on: Part 1  Japan’s Press subverts Fukushima repopulation
Japan’s popular Press has effectively disrupted the efforts of Tokyo Electric Power Company and the Tokyo government to return the Fukushima evacuation zone to some semblance of normalcy. But one outlet – Fukushima Minpo – has been an objective ray of sunshine, posting more positive articles than the rest of Japan’s popular Press combined.

Fukushima 6-years-on: Part 2  Positive and negative Fukushima 6th anniversary articles
Fukushima accident anniversary articles literally flood the Japanese and international Press. In the past, nearly all focused on the dire and gloomy. This year, most of the reports were once again dedicated to the negative. However, some enterprising news outlets bucked the tide and took the positive approach.

Fukushima 6-years-on: Part 3  Fomenting Fear, Uncertainty, and Doubt (FUD)
Fukushima FUD has plagued the internet since March, 2011. The frequency of antinuclear scare-mongering posts increases every year to “celebrate” the March 11 anniversary of the nuclear accident. We are identifying only a few of the disreputable postings concerning this year’s anniversary, rather than give all of them free publicity.

Nuke Power Talk-- Gail Marcus

Energy and Jobs: A delicate balance
At Nuke Power Talk, Gail Marcus discusses the issue of jobs lost when any major facility, be it a mine or a factory or a power plant, shuts down.  These job losses can be devastating for the individuals involved and for the communities that host these facilities.  She cites an article by someone who grew up in coal country who argues that plans to reduce the emissions from burning coal need to take a multi-pronged approach that includes planning for assistance to workers affected by these policy decisions.

Forbes--James Conca

NuScale’s Small Modular Nuclear Reactor Keeps Moving Forward
NuScale Power is on track to build the first small modular nuclear reactor in America, having been notified that their first-ever SMR Design Certification Application was accepted for full review by the NRC after only two months - light speed for our nuclear bureaucracy.

The Beguiling Promise Of John Goodenough's New Battery Technology
A new fast-charging battery technology from Jack Goodenough, the inventor of the Li battery, will again revolutionize electric vehicles and smart phones, using a glass electrode instead of a liquid one, sodium instead of lithium, having three times as much energy density as Li-ion batteries and doesn’t get hot.

ANS Nuclear Cafe--Meredith Angwin

Pro-Nuclear Advocacy
Historically, nuclear advocates have been effective when they take action in their own communities.  As Tip O'Neill said: all politics is local.  (Post includes links to several organizations that take local action.)

Neutron Bytes - Dan Yurman

Banner Week for Progress on U.S. Advanced Reactors
Four major announcements were made this week by developers of advanced nuclear reactors in the U.S. All of them indicate progress towards completing designs and engagement with nuclear safety agencies.

There are significant distinctions between them in terms of technical details of the designs and there are also a range of commitments in terms of the key success factor – paying customers.

Wednesday, March 8, 2017

Atomic Insights features Campaigning for Clean Air



Yesterday, my book Campaigning for Clean Air was featured on Rod Adams's Atomic Insights blog: How to Campaign for Clean Air While Eating Plenty of Brownies.

Here is a taste of what Rod had to say:

Like the best how-to books, Meredith’s little instruction book for budding nuclear advocates is punchy, filled with practical exercises, gives step by step instruction with options and provides pointers to additional sources of help and information. It’s well organized and motivating; there are times when you want to simply put down the book and take one of her recommended actions to see how it works and feels. 

Read the entire post

Monday, February 27, 2017

Sooner Rather Than Later, the NorthStar Decomm Plans: Guy Page Guest Post

NorthStar Decomm of Triga Reactor, Omaha
The advantage to Vermonters of the sale of Vermont Yankee to NorthStar can be summed up this way: sooner rather than later.

As early as 2021, NorthStar, would begin a decade’s worth of decommissioning. By comparison, the original decommissioning plan as prescribed by the U.S. Nuclear Regulatory Commission would begin no sooner than about 20 years from now, and more likely around 2072.

Economic Impact

This advanced schedule means that sooner rather than later, NorthStar’s plan can stimulate broad-based employment and prosperity for retail, food and lodging, housing, and healthcare sectors, as well as government spending on schools, roads, public safety and other vital services in Windham County and throughout the state. Total estimated economic impact: $781 million [Brattle Group study, 12/15/2016].

During regular operations, Vermont Yankee employed over 600 professionals in good-paying jobs. For a five-year period, NorthStar decommissioning will add approximately 1,000 jobs (onsite jobs and secondary spending combined) per year to the local and state economies.

Notably, the funding for decommissioning won’t come from local or state taxpayers, but from the Vermont Yankee Decommissioning Trust Fund, with more than $550 million in asset value. Properly managed with the oversight of the NRC as it has been to date, it will fund the entire decommissioning project, and the funds will begin to be unlocked much sooner with NorthStar.

Northstar Competency

Decommissioning is NorthStar’s core competency as an ongoing business. It has helped decommission more than 300 related projects, including four nuclear power plants in New England. NorthStar has also conducted NRC-approved decommissionings from start to finish for several nuclear reactors at universities and other institutions.

Before it can begin the work, NorthStar must pass the scrutiny of both the Vermont Public Service Board and the U.S. Nuclear Regulatory Commission. The PSB has already opened a docket on the case, and has invited public input through the submission of comments online or through public testimony at two anticipated public meetings this year.

The NorthStar sale also would mean that sooner rather than later, low-level radioactive waste will be safely shipped out-of-state. NorthStar‘s plan to move this material out of state pre-processing – known in the industry as “rip and ship” – will get low-level waste out of Vermont promptly. This removal by no later than 2030 compared to up to 60 years is most welcome. Also, NorthStar proposes to build an eight MW solar farm onsite as soon as 2026, according to the Brattle Group study.

Using the Site Again

The NorthStar sale would also mean that Vernon, the rest of Windham County, and the State of Vermont can benefit from the presence of a new employer on the Vermont Yankee site. This employer – possibly an energy producer or computer data center,  for example– will mean, high-quality employment, with the resulting private and public sector economic benefits.

Perhaps even more important for Windham County and Vermont, a strong, good-paying employer can help create an attractive atmosphere to attract more jobs. Economic development experts say the big problem with Vermont is that not enough high-demand managers, engineers, and IT professionals want to live here - at least, not outside of Chittenden County.

Our cultural, educational, medical and other “quality of life” resources pale in comparison to many other states. This reality may hurt our Green Mountain pride, but many people prefer the lifestyle in places such as Chapel Hill or Austin.

A large, blue-chip employer is a quality-of-life cornucopia: from it will come better schools, more arts, and more attractive neighborhoods. If we want Windham County and Vermont to draw highly-skilled young Vermonters or transplants, we must cultivate employers who will provide economic opportunity for us, our children, and our grandchildren.

Speedy Decomm is a Win for Vermont

Here is a winning scenario for Vermont—the sale of VY to Northstar and a speedy transition to start decommissioning the site.   Let’s embrace the opportunity to advance the timeline for the plant’s decommissioning. It will provide much greater benefits much sooner, and that’s a good thing for Vermont.

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Guy Page is the Communications Director of the Vermont Energy Partnership, a coalition of businesses, trade and industry groups, not-for-profit organizations, labor unions and individuals committed to clean, safe, affordable and reliable power policy in Vermont. Entergy-Vermont Yankee is a VTEP member.  He has frequent guest posts at this blog: his latest post was Wind Power in Vermont, After the Election.

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Some notes by Meredith Angwin

I was reluctant to publish much about the decomm  sale on this website because of my concerns with the current workers at VY.  My concern was that their employer would be gone with the sale, and their pension benefits might well be affected.  Happily,  IBEW local 300 has filed to be an intervenor in the Public Service Board case about the sale to Northstar, so my concerns are at least partially alleviated.

I have always thought that a specialized company should do the decomm, as I noted in my blog post Facts and Opinion on Entergy Sale of Vermont Yankee.

To write your own comment to the PSB about the sale, use this link: http://epsb.vermont.gov/?q=node/32

Friday, February 24, 2017

Campaigning for Clean Air featured on Neutron Bytes



Neutron Bytes banner


Recently, my  book Campaigning for Clean Air was featured on Dan Yurman’s Neutron Bytes blog. Here is a taste of what they had to say:

“In her book, Campaigning for Clean Air, Meredith Angwin presents clear and well-referenced reasons for supporting nuclear energy. These sections of the book are based on her years of experience in energy research and on-site problem solving.”

Read the entire post

Thursday, February 9, 2017

Now Available: Campaigning for Clean Air: Updated

Front Cover of Campaigning for Clean Air


Campaigning for Clean Air: The book is available!

My book,  Campaigning for Clean Air: Strategies for Pro-Nuclear Advocacy, is now available on Amazon!  You can buy it as a Kindle, or you can buy it as a paperback.   It should also be available for order in most bookstores (Ingram-Spark distributor).  Here's my summary:

Pro-nuclear people can make important contributions to the energy debate. This book will help you make your voice heard.  Advocates appreciate the importance of nuclear power for clean air and for our planet’s future.

In this book, award-winning author Meredith Angwin guides you in your advocacy:
• Support nuclear energy while simply sitting at your computer
• Support nuclear energy in public, using the same techniques as professional speakers and communicators
• Speak at a public hearing or be invited to speak to a legislative committee
• Learn how to deal with your own emotions in a world saturated with anti-nuclear messages
• Find other nuclear supporters and have fun together.
Campaigning for Clean Air features anecdotes, examples and insights from many pro-nuclear advocates. This book will inspire your work for a clean energy future.

Update: A wonderful announcement of the book at Dan Yurman's Neutron Bytes blog! Campaigning for Clean Air & Nuclear Energy.   Thank you, Dan!

Why this book?

Happily, more and more books are appearing to describe the advantages of nuclear power.  Power to Save the World, Climate Gamble, The Non-Solutions Project, Thorium, Energy Cheaper than Coal, and After Fukushima: What We Now Know.  Buy all of them! (I did.)  And this is far from a complete list of excellent pro-nuclear books.

But whichever of these books you buy, please also buy my book.  It's a little different.  It's about getting the pro-nuclear word out to the world.   My fear is that with all the pro-nuclear books, pro-nuclear people will read the books and enjoy the books and then....Then what?

We pro-nuclear people have to raise our voices to support nuclear power. That is why I wrote Campaigning for Clean Air.  This book is about how to support nuclear energy, with some discussion (of course) about why to support it.

As one of my friends said: "Your book is a guidebook, a sort of how-to."  Exactly right.  How to write a letter to the editor.  How to organize a rally.  And everything in between.  Campaigning for Clean Air has the subtitle: Strategies for Pro-Nuclear Advocacy.  I  might have subtitled it: Advocacy the Easy Way, or maybe Activism for the Shy. 

More on this later but meanwhile: Buy the book!
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 P.S. If you want to read what others are saying about the book: 

Some wonderful endorsements are scrolling on this page of my new website: http://www.meredithangwin.com/book/

Monday, February 6, 2017

A Perfect Storm for Natural Gas Prices. Nick Escu Guest Post

Recreated Rembrandt: Christ in the Storm
Art by Ankur Patar: Original was stolen

The  Three Storms 

The movie  The Perfect Storm was about two monstrous storms which come together, out in the ocean, and destroy a very solid fishing vessel.

Today, three storms have come together as a Perfect Storm for nuclear energy.

The Westinghouse Storm.

Toshiba’s $4 billion dollar purchase of Westinghouse, in 2006, was hit with
  • the March, 2011 tsumani in Japan.  
  • the  2012/2013 Toshiba accounting problems, and 
  • the merger of Westinghouse with CB&I, while building 4 new AP1000s in the US and 4 new AP1000s in China.  
This perfect storm is forcing Toshiba to possibly auction off Westinghouse.

The Areva Storm

AREVA's headaches as the step child of EDF were initially looked at as a “Begging Session.” Areva wanted to keep operating under French direction. However, French leadership wants to reduce nuclear power by 50%. This is very strange since almost 80% of all France’s power comes from nuclear energy.

But unquestionably, AREVA Nuclear Fuel is now being used by more and more operating companies.  So the stepchild is doing better than expected.

The Henry Hub Storm

Finally, the Henry Hub natural gas price in February, 2016, went from $1.71/MMBTU to $3.44/MMBTU yesterday. That is just over 100% increase in 11 months. But why? Because the Cheniere Liquid Natural Gas plant came on line and exported the first LNG ship overseas. But Cheniere is only the first of the 17 Approved LNG Permits. The others will be coming online this year, next year, and thru 2020.

The world prices at $20/MMBTU clearly show the profits to be made. So what does this have to do with nuclear energy? When nat gas reaches $4.75/MMBTU, nuclear power becomes standalone profitable. AND when nat gas reaches $6.10/MMBTU, even coal power becomes profitable.

My two previous posts on the subject were:
Nuclear vs Gas Economics, a Three Year Projection
Nuclear vs Gas Economics Part 2

After the Storm?

So here we are. With the ability to buy or merge Westinghouse and AREVA, at rock bottom merger prices, while the world hasn’t woken up yet to the natural gas prices climbing to new heights.

But the opposite is also possible.

Westinghouse could be broken up into saleable divisions. Same for AREVA, and then only GE would have their ESBWR or their ABWR to sell throughout the world.

For American nuclear exports, many 123 Agreements are in place, but the  Ex-Im Bank also needs to be funded for foreign sales to increase.

This year will decide the fate of many companies, as well as determining whether existing US plants have a lifeline.

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Nick Escu is the pen name of a person with long experience in the power industry.  He is a frequent guest blogger at this blog.

Friday, February 3, 2017

Vermont Renewable Mandate (video)

The "90% renewables" solution

Vermont has an energy policy that requires that 90% of Vermont's energy come from renewables by 2050. This policy includes all of Vermont's energy, including heating and transportation.  Such a change can most generously be described as "unlikely."  I have at least two blog posts on this subject:  What 90% renewables would look like in Vermont,  and Vermont's renewable plan is wishful thinking   These posts are from 2013.

The renewable policy might become a law

So far, this renewable policy is not law, but it might become law.  The legislature is in session, and, as Mark Twain said: "No man's life, liberty or property are safe while the legislature is in session."  Bills are being introduced to make this policy into an actual law.

The Ethan Allen Institute recently made a video on the folly of 90% renewables for Vermont.  I appear briefly in the video.  I hope you enjoy it.


Saturday, January 7, 2017

Ending the Fear of Nuclear Energy (video)

My friend Michael Shellenberger delivered a TEDxCalPoly talk: How Fear of Nuclear Ends.

This is a terrific talk, tracing opinions on nuclear energy from the days when the Sierra Club policy "Atoms not Dams, (because of the huge ecological impact of hydro plants).  Then he describes  the controversy and confrontation within the Sierra Club as subgroups pushed against nuclear power. The quotes from the early anti-nuclear people are very telling: these people are basically against clean power because it would lead to population growth or economic growth or both.

Shellenberger talks about how anti-nuclear fears were nurtured by a small group of people, and how anti-nuclear fears will end.  One reason they will end is because everyone wants---a better world for our children.


Wednesday, January 4, 2017

Pay for Performance on the U.S. Grid: No help to nuclear

Happy New Year to everyone, and especially to readers of this blog!  

 I plan some posts on nuclear power and grid policies.

This post shows how instituting  Pay for Performance does not help nuclear plants. The post is an expanded version of my article, Pay for Performance on the U.S. Grid, at Nuclear Engineering International, February 2016.   I am grateful to Nuclear Engineering International for permission to use their graphics.

No Help to Nuclear: Pay for Performance on the U.S. Grid

The United States electric system contains both traditional (vertically integrated) and “liberalized” markets.  In the “liberalized” markets, RTOs (Regional Transmission Organizations) and ISOs (Independent System Operators) operate the grid, using free-market auctions.  The RTO areas are the most challenging for the American nuclear fleet. All the nuclear power plants that are in danger of shutting for economic reasons are in RTO areas.
RTO Areas, from FERC

Neither RTOs nor vertical integration are perfect systems for pricing electricity. RTOs are relatively new (started in the 1990s) and are still evolving their policies.  In particular, some RTOs are planning to reward more-reliable plants by instituting “Pay for Performance,” starting in 2018.  Unfortunately, despite the hopeful name, this change is not likely to help nuclear plants.

The RTOs were designed to lower costs for consumers by giving them the benefit of free-market pricing: electricity is bought in an auction. When the ISO needs power, plants “bid in.” ISO chooses the lowest price power first, moving up the bids until all the power needs are met.   Power plants and utilities can also negotiate Power Purchase Agreements (PPAs) at mutually agreeable prices, and a great deal of electricity is sold in this manner. However, in many markets, investor-owned utilities are prohibited from entering into long term PPAs with conventional generation sources. At any event, PPA electricity prices tend to follow grid pricing, though sometimes with a major lag time.


The Missing Money

Actually, there are two auctions: the energy auction (electricity) and the capacity auction (power plant availability).  (See Sidebar below.)

Search for the Missing Money
James Bride, Energy Tariff Experts
Unfortunately for the energy auction theory, the real-time energy auction plan immediately ran into the first “missing money” problem.  Why should owners of higher-priced plants maintain their plants? Their plants are not guaranteed a price (while on the grid) nor are they guaranteed a number of hours that the grid is sure to call on them, and for which they will be paid.

It became clear that paying only for energy (kWh) might not provide enough money to maintain all the plants that are needed for reliable grid operation.

At a recent meeting of the Consumer Liaison Group for ISO-NE, James Bride of Energy Tariff Experts provided excellent graphics on this subject. (See slides 9 and 10 of presentation below, one of which is included above.)
http://www.iso-ne.com/static-assets/documents/2015/10/clg_james_bride_keynote_presentation_10_9_2015.pdf

The Second Auction and the Capacity Payments

To pay plants to be available, plants now bid into a second auction, an availability auction called the Forward Capacity Auction.    As you can see in the following chart (prepared from ISO-NE data by Entergy, and used with their permission), the Capacity Auction made it possible for gas turbines and peaking plants to make up enough money to keep operating.  The capacity auction found the missing money for some of the plants.

As you can also see, nuclear plants get most of their money from energy payments, not capacity payments.  That is because nuclear plants make so many kWh, compared to other types of plants with the same nameplate capacity rating.  Ultimately, of course, the grid is all about kWh delivered.

(See the sidebar below for sample calculations.)
Revenue streams for different types of plants
Courtesy Entergy and Nuclear Engineering International

Problems with Capacity Auctions

Capacity auctions did not completely solve the reliability problem. They find some missing money, for some types of plants. But what happens when the plant receives the capacity money, but then---later---when called upon to run by ISO, the plant doesn’t run?

ISO-NE and other ISOs were aware of this potential problem, and began designing Pay for Performance incentives. These incentives were to start in 2018.  However, meanwhile, the shale gas boom happened, and the grid became more and more dependent on natural gas. The ISOs needed something for winter reliability, something they could put in place more rapidly then Pay for Performance.

Capacity Auctions Mislead the Grid

Prices during a Polar Vortex
In many ways, the capacity auction results misled ISO about the amount of electricity that would be available to the grid in crisis situations.  During cold snaps, much less electricity was available than had been bid into the capacity auction. Natural gas power plants rarely have firm gas transportation contracts with pipelines.

The gas plants made firm capacity commitments to the grid but did not  have firm delivery commitments for natural gas supply. The Polar Vortex laid bare this problem.

In winter, the ISOs needed a quicker winter fix than Pay For Performance, so they started “winter reliability programs.”  These programs were started just in time. During cold snaps, gas plants not coming on-line was driving the grid closer to the situation where it would have to “shed load” in a cold snap.

The Winter Reliability programs were complex, including new types of auctions.  Basically, however, they supported plants to keep oil, CNG and LNG onsite to burn when gas was not available.  ISO paid for oil, or paid storage costs for unburned oil. FERC (the Federal Energy Regulatory Commission) approved the Winter Reliability programs on a temporary basis. But FERC disapproved of the fact that the reliability programs were not fuel-neutral, and ISOs are supposed to be fuel-neutral.  Therefore, FERC and ISO look forward to 2018, and PFP.

Pay for Performance

Pay for Performance (PFP), which will start in 2018, is supposed to be fuel-neutral. PFP is supposed to find yet another kind of “missing money.”  It is supposed to provide the economic incentive that would encourage power plants to come on-line when dispatched during tight situations on the grid.

Sadly, PFP isn’t actually market-based.  It is a complex regulatory system, basically jury-rigged, that satisfies FERC requirements by supposedly being fuel-neutral.

 PFP is a transfer mechanism from poor-performing plants to high-performing plants.  If a plant bids in capacity, but then does not provide energy (electricity) when called upon, it will have to forgo part (or maybe all) of its capacity payment for that month.  The loss of this money is a sort of penalty for the plant. This lost-money will be added to the capacity payments of plants that do perform during a high-load period, as a sort of bonus.

With PFP, a plant might well lose its entire capacity payment for a month if it doesn’t go on-line when it is needed. It might even owe ISO-NE money beyond its capacity payment. This would be quite a blow for a plant that depends on capacity payments, such as a natural gas plant. An ISO-NE hypothetical example shows a 100 MW plant losing or gaining $50,000, $150,000, and $350,000 dollars in a month, under various scenarios.  http://www.iso-ne.com/committees/comm_wkgrps/strategic_planning_discussion/materials/fcm_performance_white_paper.pdf

Nuclear plants may get some extra payments from PFP, but these payments would be part of their capacity payments.  For nuclear plants, capacity payments are a small portion of their revenue stream, and PFP will not make much of a difference to their pay stream.

The major effect that PFP seems to have had is to encourage all new gas-fired plants to be dual-fired, so they can keep oil on-site and keep their capacity payments.

As ISO-NE in their statement about Pilgrim closing: “Most of this new gas-fired generation is seeking to become dual-fuel capable, meaning they will be able to switch to use oil if natural gas is not available, or if the cost of oil is lower than that of natural gas.”
 http://www.iso-ne.com/static-assets/documents/2015/10/20151013_pilgrim_retirement_request.pdf


PFP Problems for Steam Plants

Steam turbine
With PFP, there’s a lot of devil in the details.  One issue is that it does not distinguish between various types of plants, and could penalize plants that raise steam.  PFP depends upon a complex formula which is the result of many debates on how to structure incentives for plants to be online.  The amount of the penalty/transfer payment depends on this formula, and the formula partly depends on the situation on the grid.

There is considerable concern that some of the PFP transfers will be random--power plants will be penalized or rewarded for situations they can do very little about. A representative from NEPOOL had harsh testimony against PFP. (NEPOOL is a voluntary association of New England energy market participants. It was founded about twenty years before ISO-NE.)  http://www.nepool.com

To quote Elin S. Katz, office of Consumer Counsel in Connecticut, testifying behalf of NEPOOL:  http://elibrary.ferc.gov/idmws/file_list.asp?document_id=14178339  (Katz testimony, available only by download.)
PI (PFP) creates excessive investment risk because.... PI’s substantial penalties would impact capacity suppliers that are not operating during particular five- minute intervals regardless of the reason why they were not operating. PI would ignore the actual operating characteristics of a power plant when levying penalties. 

Katz gives an example in which a steam power plant bids into the day-ahead market, is not selected for that market, but then it turns out that ISO-NE does need its power.  Steam plants cannot come on-line very quickly, and ISO-NE PFP assesses penalties on a five-minute basis. The problem in this case is actually the result of ISO’s imperfect prediction capabilities, but the fines will be paid by the steam power plant.

 PFP and Burning Oil

Well, PFP is messy, and PFP may be unfair.  Let’s ask another important question, though. Will PFP help nuclear power?  Will PFP finally reward nuclear plants for their reliability?

The answer is No.  PFP will not help nuclear plants. The main result of PFP has been for natural gas plants to commission or recommission dual fuel capabilities so that they can burn oil.

Nuclear plants get most of their revenue from energy payments, not capacity payments.  Nuclear plants may get some higher capacity payments through pay-for-performance, but this will not make a big difference to them. The pay-for-performance transfer will make a difference to the peaker plants, which will have more of an incentive (however oddly arranged) to become dual-fuel or make other arrangements to be able to come on line when called.

Are RTOs really a market?

The whole RTO situation is getting pretty far from “a market,” as markets are usually considered.  Nuclear power plants in RTO areas of the United States are not well valued for their steady performance and PFP will not change that.  Meanwhile, the RTO market-solution is becoming an increasing series of tweaks and attempts to keep the grid operating smoothly. The tweaking in RTO areas (including PFP) is interesting and complex, and it becomes more complex all the time.

Complex markets become complex as they are regulated to achieve certain goals.  In general, RTO markets favor plants with low capital costs, high fuel costs and low utilization compared to plants with high capital costs, low fuel costs, and high utilization.  This is the outcome of the current market design.

 In other words, RTO markets are unfavorable to nuclear power. Whether this outcome was a goal of the design (a feature) or an unintended consequence (a bug) is not clear.  At any rate, despite all the tweaks, RTO markets allow local grids to move to heavily to natural gas, despite problems with gas delivery. Except for dual-fueled plants, Pay for Performance will make little difference.

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RTO auction sidebar: Doing the math for capacity payments

RTOs generally run two types of auctions: a real-time energy auction, and a Forward Capacity Market auction.  Both auctions work basically the same way: Plants bid in to supply either kWh right now (energy auction) or capacity availability some years in the future (Forward Capacity Auction). The auction requirements fill from the bottom--the least-cost plants are selected first.  In both auctions, plants usually bid the lowest price they can bid, to be sure they are chosen.  The RTO has to fill its needs, however, so it cannot just choose a few low-price plants.  At some point, with higher-priced plants, the RTO requirements are filled. In both auctions, all the bidders get the payment for the highest price plant that is accepted into the queue.  The auctions are meant to move prices in synch with demand, and always provide the lowest price that meets the demand.

Where do different plants get their revenue under this system?

Let’s look at an overly simplified example:

Let us assume that we have a price on the grid of 4 cents per kWh, and a capacity price of $3 per kWmonth. (This is a very rough approximation to the situation on the New England grid recently.)

We imagine a 500 MW nuclear plant and a 500 MW combined cycle gas plant.

  • They will both get the same capacity payment of $1,500,000 per month, because they have the same capacity.  
  • The nuclear plant has a 90% capacity factor, and earns approximately $13 million for energy payments. 
  • The combined cycle gas plant capacity factor is about half of that of the nuclear plant (around 40-50% capacity factor, according to EAI, I am assuming 45%), so it makes half the electricity as the nuclear plant. It earns approximately $6 million in energy payments. 

In this highly simplistic case, the capacity payment for the nuclear plant is about 10% of its revenue stream, but it is 20% of the revenue stream for the gas plant.  If the gas plant were a “peaker,” running about 10% of the time, it would receive the same capacity payment as the other two plants. However, it would earn only $1.5 million in energy payments. For a "peaker" plant,  capacity payments could be about half of its revenue.

One way in which this analysis is overly simplistic is that the gas-fired plants are likely to only be on the grid when the grid prices are running higher than average.  Nevertheless, this gives a high-level overview of capacity and energy payments for various types of plants on the grid.

For a nuclear plant, even a small decrease in energy prices can override a modest increase in capacity payments. This is the main reason why PFP will not affect nuclear economics very much.