Skip to content

Deborah Yedlin: Natural Gas Rises After Nuclear Disaster

One industry’s disaster is another’s gift and nowhere is this more obvious than what has befallen the nuclear power world and how natural gas is perfectly poised to benefit.

Somewhere, in the last several years, nuclear power had morphed from being an anathema to gradually being viewed as a clean, viable option in the mix of electricity generation alternatives.

Increasingly, political leaders and electrical industry execs in North America had been including nuclear as being an important component in meeting long-term power needs. The rhetoric appeared to be shifting from the “build absolutely nothing anywhere near anyone” (banana) to some thing that was in the realm of possibility as long as all the concerns were fully addressed.

To the surprise of many of a certain generation, nuclear had become “clean” in recent years, with the inflection point likely coinciding with the growing concern over rising greenhouse gas emissions.

Just last week, at the oil and gas industry’s CERAWeek conference, chaired by Pulitzer-prize winning author Daniel Yergin, there were several discussions in which nuclear power was raised as one of the options to meet future electricity needs in the U.S.

In theory, nuclear makes sense because of its low carbon footprint. What worries many is how to store the waste fuel, and of course what happens when things go wrong, as they have in Japan.

Even so, U.S. President Barack Obama has not taken it off the table, saying as recently as Monday that his administration continued to support nuclear power as part of the country’s energy mix. This statement came as a host of countries announced they were reviewing their nuclear fleets, including China which announced Wednesday it would suspend approval of new projects and conduct safety inspections of all nuclear power plants under construction.

China has about 13 operational nuclear power reactors and is building more than 25, according to a report on the World Nuclear Association’s website quoted by Bloomberg.

Earlier, Switzerland said it was putting on hold its plans to refurbish its aging nuclear fleet, Germany announced it was postponing a decision on whether to invest in its nuclear plants to extend their lifespan and Austria was stress- testing its facilities.

Closer to home, one can’t help but wonder what the impact will be on the impending sale of Atomic Energy Canada Limited, not to mention Ontario, which gets half its power from nuclear sources.

But as compelling as nuclear is as a solution to the issue of rising emissions, the unfortunate events in Japan serve as an illustration of the risks of nuclear-fired power.

The other power generating alternatives – coal, natural gas, solar and wind – are unlikely to present the same dangers following an earthquake or other disaster as a nuclear facility does. Thus, of these four alternatives, the one that received the most airtime at the CERAWeek conference was natural gas-fired power.

According to John Rowe, the chief executive of Exelon, whose utility company runs 17 nuclear plants along with an assortment of solar, wind and hydro facilities throughout the U.S., here’s how the numbers stack up.

“Natural gas is cheaper and cleaner than any or all of the alternatives I know,” said Rowe during a lunchtime address during CERAWeek. “It costs about $100 per megawatt hour to build nuclear, and that’s with subsidies.”

Rowe went on to point out solar runs at about $200/MGW, carbon capture and storage isn’t economic right now and offshore wind is even more expensive.

In Rowe’s mind, there should be no question as to how the U.S. goes about replacing the 66 per cent of coal-fired plants that are soon to be retired; natural gas is the future. “We don’t need clean energy subsidies because natural gas is so cheap,” he said.

According to John Hess, chief executive of Hess Corporation, there are other factors, namely speed and cost, recommending natural gas over other alternatives.

“It would take two years to build a 1,000 MGW natural gas-fired plant for $1 billion, compared with three years for a coal plant at a cost of $3 billion and 10 years for nuclear power at a cost of $6 billion,” said Hess.

Using natural gas as the fuel of choice for electricity generation, said Hess, would decrease U.S. emissions by half while increasing demand for the abundant commodity by 40 per cent.

In other words, switching to natural gas as the fuel of choice for power – especially in light of what is being called the “shale gale” that has resulted in abundant supplies in North America – has become the proverbial no-brainer in less than a week.

No wonder, then, natural gas prices spiked on Monday as markets drew their own conclusions that nuclear is once again moving down the power generation food chain, much like it did following Three Mile Island in 1979 and the Chernobyl disaster in 1986.

Even if someone were to get the approvals to build a new facility tomorrow, or within the next five years, getting financing will be next to impossible and it’s not like there are many governments with the political will or the chequebooks fat enough to fund these kinds of projects.

What can only be termed a Black Swan event in the nuclear power world today is going to prove to be a positive inflection point for the natural-gas industry in the coming months and years.

Vancouver Sun, 17 March 2011