Getting the Details Right
Charles Bayless recently retired as President and Provost of the West Virginia University Institute of Technology. Previously he was Chairman, President, and Chief Executive Officer of Illinova Corporation and its wholly owned subsidiary, Illinois Power Company. Prior to joining Illinova Corporation, he was Chairman, President, and Chief Executive Officer of Tucson Electric Power Company.
The future of our electric production and supply is complicated.
It has become the topic du jour on television. You can't miss it on the news with the political pundits taking on climate change issues but perhaps not really knowing as much as they should about the technicalities of what it means to supply energy to a diverse nation like the United States.
So PUF asked an industry veteran, Charles Bayless, for his take on where this is all going. He has been around awhile and seen a lot. It is an important topic that matters to us all. What do we do with the old yet reliable methods of generating electricity while we implement the new? Carbon matters. The debate rages on.
The complex interaction of all our energy supply options and how they interact in the end will affect jobs, lives, public health, and bottom lines. Bayless uncovers some cold, hard facts. Enjoy the discussion.
PUF's Steve Mitnick: We want to talk about how nuclear is central to combating climate change. Give us an overview. Some people don't see nuclear as being essential. Why is it?
Charles Bayless: There are several reasons. First, let's look at a perfect world, one where it's all renewables. Maybe we get there in thirty years, but I'm not talking about that world. I'm talking about the world we live in and the path that we have to take to get there. You might close down nuclear in thirty years if we had a perfect world but closing it down now will only increase carbon.
Solar and wind always dispatch if they're available. If the sun is out or the wind is blowing, the solar is going to dispatch. Shutting down a nuclear plant and replacing it will not bring up more solar and wind. They're already running all the time.
If you close nuclear right now, a couple of things will happen. It will dramatically increase carbon, because when you shut down the nuke, there are several units right now that are not dispatching. They're just past the price point. Those are the less efficient units. If they were more efficient units, they'd already be dispatching.
Let's say you've got a twenty thousand-megawatt load, there are units out there in your stack that are twenty-three, twenty-four, or twenty-five thousand and they're fairly expensive. If you shut a nuke, solar and wind aren't going to increase one megawatt, because they're already out running. You're going to bring those units on. They're less efficient, and they're more expensive. All you're going to do is raise prices across the board for everybody, and you're going to increase carbon.
One of the interesting things about shutting down nukes is it will have dramatic price increases in some places. In other places it won't be as much. But look at Texas where we're running on a razor thin seven percent reserve margin. That's going to just trash prices in Texas.
You're going to see some prices that will surprise you. The Texas ERCOT is designed without a capacity market and those prices are supposed to bring new generation in, but that'll take a while. So, if you do close the nukes down, you're going to raise those prices and you're going to have more carbon.
But a side effect of that is, coal plants are shutting down because they're uneconomic. There's no law against coal plants yet. I'm co-chair of the Climate Institute and a climate nut, and I think we need to shut them down. We need to start coming back on gas as far as I'm concerned. But if you shut down the nukes, you're going to raise prices and allow coal plants to run longer.
PUF: Some on the anti-nuclear side would say that's what we want. If the nukes shut down, prices will shoot up and that'll provide an economic incentive for more renewables. What do you think?
Charles Bayless: I'd say if we want economic incentives like that, we should target them, because I would agree prices will go up, but it will also produce an economic incentive for more coal and more gas. Clearly it will produce an economic incentive for more gas, and it will allow a lot of marginal coal plants to keep operating. If you're going to have an all renewable system, we need massive advances in battery technology.
My view of the utility of the future is the grid as the platform on which everything else runs. It's like a computer platform and we've got to be able to handle all the variability. Once you get into an all renewable future with all the variability, you've got to worry about ACE, balancing, frequency control, ramp rate, and baseload.
I joke that the difference between running a conventional system and an all renewable system is the difference between running your grid with four, thousand megawatt elephants or one thousand, four megawatt cats. It's got a lot more variability if you're running the grid with the cats and that's where we're going.
Clearly the solar and wind grid will cost more. People think it won't. They're looking only at the cost of energy. At the cost of energy, a new thousand megawatt and wind farm in Arizona is cheaper than a coal plant. There's no doubt about it. But when you start throwing up the static VAR compensators, ancillary services, backup, reserves, and batteries that you've got to have, it's not cheaper.
When you include climate change, it switches back to being much cheaper than coal. It all depends. I joke that people in the fossil fuel industry don't recognize climate change externalities, and people on the renewable side don't recognize the externalities of the grid. I say both sides suffer from S-E-R-S which is selective externality recognition syndrome, where you're blind to the externalities that affect you.
PUF: It's claimed that with the cost per unit of solar panels coming down, and the cost per unit and effectiveness of these great wind turbines, renewables have become cheaper. But you point out, it's not. Plus, you probably can't have a big solar farm in Central Park.
Charles Bayless: Well, look at New York. This is a made-up number. But if you were to cover New York City in solar panels and put a windmill in every building, my guess is you would generate less than ten percent of its electricity.
I may be wrong. It may be eighteen. I don't know what it is, but clearly you can't furnish it without the grid. You've got to have the grid to bring it in from every other place. Likewise, without the grid, you're going to have days when the solar farm here isn't working, and in Pennsylvania, because it's cloudy. Maybe you can bring it in from somewhere else.
We had microgrids a hundred years ago, and that's all we had. Every little city had its own grid. One of the big reasons that big grid was made was to cut down reserve ratios. If you had a little city and had two, fifty megawatt plants, you needed another one in reserve.
If you hooked in the next city that had two, fifty megawatt plants, and the next, you may find out in the end you have ten, fifty megawatt plants, but you only need two in reserve. So, the grid allows you to share reserves, and the same would be true from wind. Wind needs a lot more reserves than a fossil fuel plant, which is dispatchable and has a much higher availability factor.
We've got to have the grid. Nuclear right now still provides better than half of our carbon free electricity. My goal is carbon. We've got to reduce carbon and it makes no sense to shut down what is producing fifty percent of our carbon free electricity. Maybe in thirty years, fine. But again, I'm more worried about the path to get there.
PUF: It's important when you said your goal is carbon, because a lot of the political statements, and in the media, and even renewable targets are that a certain percentage of electricity production will be by renewables. It puts carbon as an indirect result. But when you say a hundred percent carbon, that says a lot about the importance of nuclear.
Charles Bayless: If you don't believe in climate change, you probably should go back and retake freshman physics. It's that simple.
Now on the effects of weather, we can't predict what's going to happen. But just because we can't predict it doesn't mean nothing's going to happen.
The same is true with climate change. We can't predict exactly what's going to happen, but the heat content that we're adding to our atmosphere every single second is the equivalent of three World War II nuclear weapons.
If you go back, and it's 0.6 watts per square meter at the top of the Earth's atmosphere, that's the Delta between incoming and outgoing. You integrate that around the entire earth and divide it by the average between the Hiroshima and the Nagasaki bombs and you find out it's over three nuclear weapons every second. So, you know it's there.
We've got to cut carbon. It just makes no sense to decrease right now something that's providing fifty percent of our carbon free electricity.
PUF: You talked about how to have a hundred percent renewable requires massive storage. What gets lost in the public dialogue is it's not enough to have electric energy storage for three hours. If you have a week of cloudy weather in Pittsburgh, to store it that long, is massive.
Charles Bayless: What people don't realize is you've got to consider what I call the Cleveland effect, because they have such lousy weather. Sorry Cleveland. Let's assume five yucky, cloudy, non-windy days.
It's just overcast, drizzling, and sleeting with no wind, followed by one glorious sunny, very windy day, followed by five more really yucky days. What most people don't know is you need five days of batteries, but on that one day you need six days of generation. You've got to charge all those batteries. That's just untenable. That's totally uneconomic.
The batteries are great for about a day. Clearly in Arizona, you're going to do a much better job of approaching grid reliability with one day of battery than you are in Cleveland. In just a couple of years, hopefully in Arizona just with a couple of days of battery, you can get to grid reliability. But you're not going to do it in Cleveland. So, what we're going to need, rather than do something like six days of generation is, we're going to have to rely on gas units. Now the more renewables we get, the less these gas units will run.
That's what we're going to end up with. We're not going to end up with pure renewables. Unless we get, as I had an op-ed with some other people in the Wall Street Journal, a nationwide high-voltage DC grid.
People say, well, you're not going to bring solar from wherever to wherever. Yes, we can. If you go back in history and look, today there are thousands of megawatts of power plants that are bringing energy from a place where fuel is cheap, like Western Kentucky to Chicago to New York.
We've always done that. We've gone out and said, okay, we'll put the power plants here and then ship the energy. The AEP 765 KV system is bringing energy from Kentucky and West Virginia to Chicago. So why don't we do the same thing we've always done with solar and wind?
Put the solar and wind in North Dakota, or Texas, where they're best, and then have a nationwide grid that can get it out of there, because you're going to have a much better capacity factor. But if someplace else has twice as much wind, you're going to cut your costs in half basically. So, put it there and do just what we've always done. This is nothing new. We've been doing that for years. We've put hydro stations in the West and built the whole WAPA grid and Bonneville to get that hydropower from where it was to the cities.
PUF: There are some folks in the country that say keep gas in the ground. They want to block any more pipeline development.
Charles Bayless: In the short term, if we shut down nukes, we're going to use more gas and we're going to make the coal plants economic. So, it's best not to do it now. As far as keeping the gas in the ground, you've always got to look at the second and third order effects. One of the really bad effects now of blocking the pipelines, is look at them, you can look in the Bakken or look down in the Eagle Ford, and they're flaring it.
What happens is, let's assume I'm totally making this up, that they need butane or isobutane or propane or some natural gas liquid in St. Louis. They need so many barrels of it. We've blocked the pipeline. So, they still produce it in the Bakken, and they flare it.
Then they bring in other butane and propane into St. Louis and they burn it. We haven't shut down the burning of it. We've raised prices, we've made it more economic and we're flaring. We're burning it twice basically.
As you look at the future, I think the grid is the platform. It's just like a platform where everything runs like Windows or Linux or Unix or something. Everything is running on that platform. Up at the top we've got generation, solar, wind, and batteries coming down the road. We've got self gen, small self gen, rooftop, solar, all of this stuff. But we have to make the grid so any of it can work. Sempra does a good job of this. They're pretty much a wires company now.
Down below that on the customer end, it's chaos down there. You've got EVs coming, and I'm a hundred percent in favor of EVs. Let's get rid of combustion cars. I like EVs. Okay, but energy efficiency has got to be our first line of defense, and we're doing that. We're decreasing demand with energy efficiency.
But at the same time, you've got EVs, energy efficiency, distributed generation, and distributed storage. All of this stuff makes it more variable, but we've got to handle all of that.
PUF: What's the future of the nuclear fleet over the next twenty years?
Charles Bayless: First, it's an absolute shame that we're closing units down for economic reasons. The reason is we're using an energy market to make decisions when there's so much more involved than just energy. Solar, wind, and gas, the nuclear plants can't compete with that, because the nuclear plants clearly have a lot of costs that others don't. It costs a heck of a lot more to run a nuke than it does a gas plant because of all the technical people, the safety mechanisms, and things, but they're neglecting carbon.
If you look though at the total cost, solar clearly has zero cost in energy, but there's a lot of ancillary costs. Those ancillary costs for VAR support, frequency bias, and the ACE balancing, are much higher than for a nuclear plant, but this is like deciding on a car based solely on its gas mileage. That's the only thing you look at. Then you find out that you got a million-dollar Bugatti. I don't want a million-dollar Bugatti.
I always use the analogy, if you're going to optimize the human body and you make the heart start beating as fast as possible and the adrenaline gland is pumping out adrenaline as fast as possible, you'll be dead in about five minutes. You don't optimize the overall system by optimizing the individual components.
The future is the small modular reactor like we used to build power plants, and every power plant was sort of a one-off design. It was built specifically for that plant and you had a zillion engineers running around.
Imagine what happens if United wants a new airplane. If they tried to design it and build it on the runway at O'Hare, it would cost six billion dollars, but they called Boeing. What the gas turbine did for us, is it suddenly gave us the ability to buy standardized plants, and it cut the cost immensely. You don't have to design it and build it and it's a one-off and put out RFPs for all this stuff. You call up somebody, GE and place an order. So, they radically cut the construction costs.
The same can be true with nukes. If we can build the small modular reactors, we can have them all licensed, we can build them in a factory, they're all the same. That makes maintenance much easier, and you can swap out parts. That is where we need to go.