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LQD - GE CEO: nuclear uncompetitive against wind without subsidies

by Jerome a Paris Mon Nov 19th, 2007 at 04:18:39 AM EST

I thought this was worth flagging...


GE chief urges incentives to fuel nuclear switch

US government hopes that hundreds of nuclear power plants will be built to boost national energy supplies will be dashed unless the power industry is given strong financial incentives to switch away from fossil fuels, said Jeffrey Immelt, chief executive of General Electric.

Mr Immelt told the Financial Times that large-scale nuclear construction would go ahead only if a high enough cost was placed on carbon-dioxide emissions. The US administration backs large-scale investment in nuclear power to strengthen energy security and curb greenhouse gas emissions. But Mr Immelt said only five to 10 US nuclear power projects were likely to go ahead unless there was a carbon-pricing framework to create incentives for utilities to build more.

So far, so good. You'd expect then the discussion to move towards the competition from coal, and the fact that it's extremely cheap, and available in supposedly huge quantities safely at home...

Nope. After describing the current status of GE's nuclear business, and stating that simply replacing the existing fleet of nuclear reactors will require a huge investment effort (which is not likely to happen yet), the complaint about the competition comes:


If US utilities were making investment decisions without any additional government incentives, he said, they would choose to invest only in gas-fired power stations and in wind farms.

Mr Immelt added that the only way to change that would be for the US to put "a meaningful price" on carbon-dioxide emissions, preferably through a cap and trade system of emissions permits.

I'm stunned. Not by the fact, of course, as I know the numbers. But that it is finally percolating through to big business and the business press.

One more winter of ultra high gas prices and nothing but wind will be built in the US!


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Well, GE leads on the US wind turbine market, so he is the one big business figure who should know...

*Lunatic*, n.
One whose delusions are out of fashion.
by DoDo on Mon Nov 19th, 2007 at 05:05:05 AM EST
Well, pardon me if I read this wrong but... a carbon pricing would do precisely nothing to change the relative values of nuclear and wind. Neither generates any meaningful quantity of CO2.

So I don't see how this particular kind of subsidy will change much if right now, cities would truly choose gas and wind. You can't have only nuclear and wind -because nuclear produces pretty much the same all the time, and you can't have all consumption peaks on windy days. It seems that the carbon pricing (which I would welcome) would just mean that you would only use your gas as a complement to your fleet of wind and nuclear turbines, rather than as a complement to your fleet of wind turbines. But the quantity of wind power should remain the same. Am I missing something?

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Nov 19th, 2007 at 05:39:12 AM EST
What I expect he means is that he needs (i) carbon taxexs to be competitive against coal and gas, and (ii) other government guarantees (on waste, liability, etc...) to be competitive against wind on a price basis.

The baseload/intermittency issues are skipped over in that short article.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Mon Nov 19th, 2007 at 06:25:29 AM EST
[ Parent ]
I think that the degree to which energy demand in the US is inelastic, specifically with reference to home electric and gasoline for transportation has just begun to dawn on US policymakers.

Now when demand is that damned inelastic, you can tax it to the moon, and still not cause consumption to drop.  Which of course means that it's an excellent revenue source for the government.

When the government finally realized this about cigarettes, state governments started to ramp up taxes on them to create a new revenue source.

This is important to remember in US energy debates.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Nov 19th, 2007 at 10:30:50 AM EST
[ Parent ]
This is fairly counterintuitive indeed.

If you gasoline consumption indeed doesn't drop, cet. par. you still end up with less money to spend. Should we expect a backlash from other actors of the car industry if taxes were to be raised? The other thing may be that cars allows for the creation of a constituency.. and so any attempt at raising gas taxes may allow you to be undercut electorally.

Rien n'est gratuit en ce bas monde. Tout s'expie, le bien comme le mal, se paie tot ou tard. Le bien c'est beaucoup plus cher, forcement. Celine

by UnEstranAvecVueSurMer (holopherne ahem gmail) on Mon Nov 19th, 2007 at 10:47:37 AM EST
[ Parent ]
It probably depends on what the money's used for.

Smokers are a minority in American society, and political cost of sticking it to them on taxes is fairly low.  The thing about people who complain about taxes is that they are most often the least engaged in politics, and the least likely to vote.


And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Nov 19th, 2007 at 11:29:39 AM EST
[ Parent ]
I think that the degree to which energy demand in the US is inelastic, specifically with reference to home electric and gasoline for transportation has just begun to dawn on US policymakers.

Well at some point it's going to have to become a lot more elastic

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Mon Nov 19th, 2007 at 10:55:49 AM EST
[ Parent ]
Don't you know that the market will provide?  Once gasoline becomes expensive enough, then ethanol, oil shale, and coal to gas will become competitive.

Of course, maybe standard economics is bunk because it supposes that consumers have a choice in the short term about how much they spend on gas.  It's not like buying a new car, or moving to another house closer to work is something that can be done overnight.  These sorts of repsonses to the market occur only in the long term.

And the problem isn't just one of creating demand, it's one of supply.  It's much more difficult to purchase a fuel efficient car in the United States than in Europe.  Now that's going to change as Detroit retools and the GM Volt plug in hybrid and other vehicles come out.  But those cars aren't going to start coming off the factory line until 2009 or later.  

Secondly, the patter of urban sprawl in America means that walking or taking the bus simply isn't a choice in most American cities.  And in larger cities, older urban neighborhoods that are walkable often have little or nothing in the way of grocery stores and other basic commerical services.  Tesco has announced that it's going to enter the US market, and try to establish itself in the small store urban market.  However, the other big problem is that many of these urban neighborhoods are desprately poor and have horrendous crime rates.

Do you really think that families with small children are going to move to neighborhoods where there are open air crack markets and drive by shootings because the price of gasoline has gone up?  Of course not, you'd have to be on crack to believe that.

But then orthodox economists seem to believe that this is the way that the world works.  I'll let you draw your conclusions from that.  

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Mon Nov 19th, 2007 at 11:42:25 AM EST
[ Parent ]
I think the non-elasticity of U.S. energy demand is overstated. It's easy enough for practically anybody to carpool, which can quadruple your effective MPG with hardly any effort. Today's bus service is horrible in most places, but that can be fixed by buying busses.

Crack neighborhoods turn into regentrified neighborhoods when the value of the housing changes. This certainly doesn't happen overnight, but it can happen in, say, a couple of years.

In the 1970s there was a huge push for energy-efficient houses and cars, and if the adjusted price of energy goes up again, there will be another such push. The technology for off-grid or nearly off-grid housing is available and not tremendously expensive.

From a technical viewpoint, this is not an impossible problem to solve. From a political viewpoint, it probably is impossible, though.

by asdf on Mon Nov 19th, 2007 at 11:20:17 PM EST
[ Parent ]
Home energy demand is far more more elastic than gasoline demand. Driving the car to work or not is a binary choice, but home energy consumption, whether it's the temperature of the thermostat or how often the lights are turned on, is not. Also cutting back energy use at home isn't necessarily a loss of status as it can often be hidden from your peer competitors.

you are the media you consume.

by MillMan (millguy at gmail) on Mon Nov 19th, 2007 at 12:56:07 PM EST
[ Parent ]
from another article:


US utilities sceptical over nuclear plants

"If you were a utility CEO and looked at your world today, you would just do gas and wind," Mr Immelt says. "You would say [they are] easier to site, digestible today [and] I don't have to bet my company on any of this stuff. You would never do nuclear. The economics are overwhelming."

The US government has tried to win over nervous utilities by combining what were two separate licensing processes for building and operating nuclear plants.

NRG Energy is seeking a single licence to build and operate, which may take four years. Under the old system, the process could take 11 years. It was possible for a power company to get a licence to build a plant but then fail to obtain approval to operate it, after pouring billions of dollars into construction. Many in the industry recall a $5.3bn New York plant that, once completed in 1984, could not overcome public resistance and be brought on stream.



In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Mon Nov 19th, 2007 at 01:01:17 PM EST
[ Parent ]
This is the way I see it too.

A reactor is just a too big an investment for most companies in a deregulated market. Screw it up and the entire company might go down the drain. It's even worse as you don't have to screw it up for it too fail. Things far out of your control, like gas prices, might destroy your business.

The modularity of wind and gas (you can't build 200 MW of nuclear) is a great competitive edge as long as the State refuse to regulate the market. Even if nuclear might produce cheaper power than wind or gas on a per kWh basis.

With a carbon tax or cap, the nuclear investment becomes more profitable, making the higher risks more worthwhile. So would loan guarantees. But what's really needed is either a reregulated power market or loan guarantees, or preferably both.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Nov 19th, 2007 at 09:00:59 PM EST
[ Parent ]
What's also interesting is that Energy secretary Bodman was complaining that only 30 new US reactors were being planned. He said something on the lines of "we don't need 30 new reactors, we need 130 or 230."

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Mon Nov 19th, 2007 at 09:02:42 PM EST
[ Parent ]
One more winter of ultra high gas prices and nothing but wind will be built in the US!

I doubt that Jeffrey gets his own contradictions, or he would not state them publicly.  What makes you think that these people will get the point?

Our knowledge has surpassed our wisdom. -Charu Saxena.

by metavision on Tue Nov 20th, 2007 at 02:02:57 PM EST


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