REPOWER FAQ

Is the GKG plan for the US Grid really feasible?

Figure 1. German installed capacity and CO2 emissions for should-cost nuclear and a range of CO2 cost.

The President's REPOWER plan rests on four pillars:

1) Replacing all subsidies and mandates with a CO2 fee, which shall be set by Congress.

2) A grid of ratepayer owned coops which provide local power distribution and backup power.

3) Coops or consortia of coops contracting with merchant providers for the bulk of their power, or possibly building their own base load plants.

4) Unshackling nuclear from a regulatory system based on the Two Lies. Nuclear's remarkable energy density, combined with competition will drive the cost of nuclear down to its should-cost of less than 3 cents per kilowatt-hour.

The end result will be a largely nuclear grid, backed up by local fossil generation and supplemented in some areas by hydro, wind, or solar.

This plan raises a number of questions, including:

1) What should be the value of the CO2 fee?

2) Is local backup affordable?

3) What should the contracts between the coops and the outside providers look like?

4) The plan envisions a large investment in fossil. Aren't we trying to get rid of fossil?

The Value of the CO2 Fee

Sweden has had a carbon tax for over 30 years. Currently, it is set at $130/Mg (metric ton) of CO2. Sweden has both a strong economy and low CO2 emissions. For the last two years, the price of EU emissions allowances has fluctuated between about $60 and $100 per ton CO2. The EPA has been using a social cost of CO2 of $50/Mg, but now is arguing for $190/Mg. For now, let's assume Congress settles on $100/Mg real, and see where it takes us.

Is Local Backup Affordable?

Thanks to major advances in turbine technology, backup capacity in the form of open cycle peaker turbines is surprisingly affordable. Table 1 shows that a 20,000 person Coop could have 10 days of 1000 watts per person capacity for about $100 per person per year. That seems a reasonable price to pay for resilience.

The Coop has a wide range of options when it comes to the amount of backup capacity it invests in. It can range from covering just essential services to average load or more. We can expect coops in wealthy areas to opt for more insurance than those in poorer areas.

Buying Outside Power

In the US, thanks to fracking, this backup capacity can be combined with gas to give the coop sustained power generating capacity. This will allow the coop to negotiate with outside providers from a position of strength. They won't need to buy rarely used peaking power, or somehow insure themselves against price spikes. It will also allow them to purchase intermittent power from wind or solar or spot markets when that makes sense.

A $100/Mg CO2 fee translates to 4 cents/kWh for a Combined Cycle plant and 7 cents/kWh for an Open Cycle plant. This opens a window for low CO2 providers, which will have a much lower CO2 cost. But what should the contracts with outside sources look like, especially contracts with intermittent sources?

When a coop buys outside power, it has to consider:

1) The quality of that power, frequency stability, power factor, and the need for rolling reserve. To a large extent, this can be specified in the contract. A wind or solar source will probably have to install some combination of batteries and synchronous condensers to comply. Otherwise those costs will fall on the coop.

2) The costs of responding to the generator failing to deliver the amount of power called for in the contract. This includes not just the fuel and the CO2 fee, but also the start/stop wear and tear on the coop's machines.

There is a technologically neutral way of handling this. The contract shall require the provider to deliver the called upon amounts of power on time and on spec. Period. The coop shall keep track of the costs it incurs due to the generator's failure to live up to those terms, and bill the provider for those costs. The outside provider will have to build in his estimate of those costs in deciding on his offer price. A generator who is confident that he will almost always provide the power he has agreed to will need to jack up his price a lot less than someone who does not have that confidence. The same basic contract can be used for all sources.

A nuclear generator will have to think hard about this one. A well run nuclear plant will have an availability of well over 90%. The USA Unplanned Capability Lost Factor for 2021-2023 was a remarkable 0.9%.[IAEA, PRIS] But fission island problems can be difficult to repair. A major failure could take the plant offline for years. That will get expensive. Suppose the nuke's price is 4 cents/kWh. The plant goes offline. Suppose the coop's local generation cost including the CO2 fee is 7 cents. The coop charges the generator 3 cents. The nuke loses 4 cents in revenue and 3 cents in coop extra cost. It is in the nuke's interest to make sure the probability of such a failure is very small. And he's the best guy to figure out how to do that.

REPOWER CO2 Emissions

The REPOWER plan has been criticized on the grounds it not only does not get rid of fossil fuel, it requires extensive expansion of fossil fuel capacity. The goal here is reducing CO2 emissions, not eliminating fossil fuel capacity. And we must reduce CO2 emissions in a way that uses the planet's resources efficiently. If we end up in a situation where we could have both less CO2 and less cost, we are being criminally stupid.

REPOWER will result in nuclear at a naive LCOE of less than 3 cents/kWh. That makes drastically reducing grid CO2 emissions so easy it's almost automatic. Figure 1 summarizes the results of a study of the German grid in which nuclear's overnight CAPEX was set at $2000/kW. (In the 1960's, we were building nuclear plants at less than $1000/kW in today's money.) This figures makes a number of points.

1) Even at very high CO2 cost, it pays the model to install about 20 gigawatts of CCGT and OCGT, and then use that fossil very sparingly. 20 GW is about one-third the average load. This is a reflection of gas's low CAPEX and low fixed CO2. The alternative is more nuclear; but the marginal capacity factor of that nuclear is so low, it's better to have gas capacity sitting around than nuclear. This is from a model which knows nothing about unplanned outages and gives zero weight to resilience against grid blackouts. In an importance sense, we get the first 30% of local backup for free.

2) Once the carbon cost gets above about $300/Mg, most of the CO2 is being produced by nuclear. Nuclear's fixed or embedded CO2 intensity of 131 kg/kW installed is far above CCGT's (19) and OCGT's(12). (Solar (997) and wind (619/1141 onshore/offshore) are still worse.) At extremely low capacity factors, the so-called zero carbon sources produce more CO2 emissions than low embedded CO2 sources. Using GKG base case assumptions, CCGT produces less CO2 than nuclear below a capacity factor of 0.0018; OCGT produces less CO2 below 0.0012. (Numbers corrected 2024-05:16:27).

3) As the cost of carbon increases, the grid cost of electricity increases more rapidly and the reduction of CO2 slows to a trickle. The $100/Mg CO2 grid has an extremely low CO2 intensity of 19 gCO2/kWh. That's 20 times less than current German grid emissions. With should-cost nuclear, we could cut this to 5 gCO2/kWh; but the grid cost would have to go up about 0.5 cents/kWh. The only way we can decarbonize a serious portion of currently off-grid markets is with super-cheap electricity. A 0.5 cent/kWh increase in the cost of electricity will make a substantial difference in our ability to electrify those markets.

Currently, the grid is producing about 25% of man-made CO2 emissions. If we cut that by a factor 20 with should-cost nuclear, we are down to about 1% of the total. At that point, we are far better off going after the other 99%, then expending resources on further reducing the 1%.

Takeaway

Unless we have cheap electricity, decarbonization in going nowhere. The Good News is we can have both very low grid emissions and cheap electricity. All we have to do is:

a) Put the ratepayer in charge of the grid.

b) Let the underwriters balance nuclear safety and cost.