NEW NUKE & COAL POWER TOO COSTLY, NEW ENERGY IS THE WAY

Study targets costs of Duke energy plans
John Downey, March 31, 2009 (Charlotte Business Journal)

SUMMARY
North Carolina’s Energy Future, a new report from environmental group N.C. Waste Awareness and Reduction Network (NC WARN), says the state's major utilities' plans to build new power plants instead of emphasizing New Energy and Energy Efficiency will increase state power rates at least 50% by 2024.

The reason: The high cost of building new coal, natural gas and nuclear power plants. It is a commonly repeated truism that existing fossil fuel and nuclear sources of power are at present cheaper than New Energy. But, as the North Carolina report highlights, that is not the whole story. While it is true that EXISTING fossil fuel and nuclear plants produce cheaper electricity than NEWLY BUILT New Energy installations, it is NOT true that NEW coal and nuclear plants are cheaper.

The report’s authors are former Duke Energy economics department head John O. Blackburn and NC WARN attorney John Runkle.

Paige Sheehan, spokeswoman for Duke Energy, one of the dominant North Carolina utilities, disagrees with the report’s conclusions and claims Duke has plans for New Energy and Energy Efficiency that will keep costs in control. She cited Duke’s Save-A-Watt efficiency program and Duke’s unprecedented rooftop-solar initiative.

NC WARN opposes the Save-A-Watt program as inadequate and has instead proposed NC Saves, its own, more comprehensive plan. The environmental group continues to oppose Duke Energy and Progress Energy plans for new coal plant and new nuclear plant proposals, claiming only the mega-utilities' inflated demand projections make it seem the new plants are needed.

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Sheehan pointed out that state regulators have so far agreed with Duke that new plants are required and said the report distorts the numbers.

The report suggests 4 steps that would eliminate the need for new plants and slow rate increases: (1) A stronger required efficiencies program; (2) More New Energy; (3) Implementation of demand-response practices and technologies to reduce peak load stresses; and (4) More cogeneration (combined heat and power) retrofits at big industrial facilities.

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COMMENTARY
NC WARN has completely turned the tables on anti-New Energy conservatives with this report. For years, the most effective argument fossil fools could muster against measures designed to incentivize and subsidize New Energy was that reliance on it would cause ratepayers’ utility bills to soar. Funny thing about that. Turns out it’s the other way around. WITHOUT New Energy, power prices can be expected to jump.

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The predicted increase in the cost of electricity generated from new fossil fuel and nuclear facilities is based on currently rising construction costs which could, in a greenhouse gas (GhG) emissions-constrained world, climb even faster than expected, making the increased cost of power from big coal and nuclear plants even more expensive.

NEW coal and nuclear plants have very high construction costs. They also require very long construction periods that delay returns on expensively-borrowed capital. NEW New Energy installations typically go online within 9 to 18 months from the beginning of construction. They are less materials-intensive and therefore cheaper to build, though they have comparable life spans. They are significantly less expensive to operate and require no fuel.

Most importantly, the costs of coal and natural gas plants can be expected to go up as the costs of their GhGs goes up. In addition, water - a diminishing resource required in large quantities by fossil fuel plants - will inevitably become more expensive.

Nuclear plants use even more water than fossil fuel plants. And nuclear power generation will sooner or later have to include the enormous costs, now foisted on the unsuspecting taxpayer, of dealing with radioactive waste.

New Energy, on the other hand, is only just beginning to achieve the economies of scale that will bring its retail costs down. And it requires no fuel, generates no emissions, requires little-to-no water and creates no radioactive wastes, so its cost advantages will grow with time.

Perhaps even more indicative of the way of the future than the report’s major conclusion is the response to it from Duke Energy. Instead of contradicting the premise on which the report was based, the utility spokeswoman said Duke is planning to control costs by building New Energy and driving Energy Efficiency. In other words, the report is right.

NC WARN’s objections to the Save-A-Watt program as inadequate may be valid but the concept is exciting. The utility would perform and fund retrofitting and efficiency upgrades to ratepayers’ homes and take repayment from the difference in monthly bills between the pre-efficiencies bill and the new savings. NC WARN fully approves of this concept.

The report says (1) 20 other U.S. power providers have proven efficiency programs can grow at least 1% per year through 2023; (2) 7.5% of North Carolina electricity generation can readily come from New Energy sources at affordable prices now and those prices can be expected to come down; (3) It will only take “modest” load control improvements (using demand-response technology) to “soften” peak demand stresses; (4) Cogeneration (Combined Heat and Power) is a proven energy-saving measure that is “largely untapped” in North Carolina.

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According to NC WARN, these measures can reduce state consumption 3,700 megawatts within 15 years.

QUOTES
- Paige Sheehan, spokeswoman, Duke Energy: “Duke welcomes critics to the table, but when N.C. WARN continues to misinterpret the numbers, it concerns us…”
- From North Carolina’s Energy Future: “Our analysis of recent filings by [Duke Energy and Progress Energy] shows that even with a growing population, North Carolina can eliminate the need to risk $35–40 billion on new plants. This can be accomplished through modest increases in energy efficiency, cogeneration and renewable power sources, and if necessary, by using a large oversupply of electricity in the Southeast. This approach will generate thousands of jobs statewide and allow retirement of over one-quarter of the existing coal generation capacity — the equivalent of 7 to 9 sizeable plants…”

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- From the report": "Electricity from new nuclear plants will cost three to five times as much as the power now being generated by Duke Energy and Progress Energy. Even the lower end of that range is much more costly than energy-saving programs, and the nuclear price tag makes all forms of renewable energy attractive in North Carolina, especially because many of them enjoy declining costs. Upcoming carbon regulation will also drive up the price of coal-fired power, giving even more impetus to efficiency programs and new renewable energy…”
- From the report: “In early 2008, Wall Street lenders insisted they will not finance new [nuclear] plants without 100% loan guarantees by taxpayers.
State law requires protection of customers against the overbuilding of power plants. One reason the new plants are being proposed is that the utilities have considerable influence in state legislatures and Congress…”