Tuesday, July 17 , 2018, 4:55 pm | Fair 73º


Tam Hunt: How Utility Came to See Energy Efficiency, Renewables As Better Deal Than Nuclear Power

Pacific Gas & Electric, California’s biggest utility, made big news recently by proposing to shut down California’s last in-state nuclear power plant: the Diablo Canyon power plant. The even bigger splash is that PG&E is arguing that replacing Diablo’s output with a mix of energy efficiency and renewables not only would cost less than relicensing Diablo but also would lead to a more reliable and flexible grid.

Diablo has a long and unfortunate history. It was first completed in 1985, after beginning construction in 1968. Its two reactors can put out as much as 2,200 megawatts of power. It produces as much as 18,000 gigawatt-hours each year, almost 23 percent of PG&E territory demand and 6 percent of California’s total demand.

Diablo was, however, mired in controversy from the outset after PG&E discovered in 1973 that it had built the plant near an earthquake fault line: the Hosgri Fault. Later, in the 1980s before completion of the plant, PG&E discovered that it had built part of the plant backwards — this is not a joke.

Then the Fukushima nuclear disaster happened in 2011, leading to the shutdown of Japan’s entire nuclear fleet for a number of years and yet another deep freeze for construction of new nuclear plants around the world. This accident, unsurprisingly, raised concerns anew about the safety of Diablo.

PG&E began the relicensing process for Diablo in 2009. But after going through the process for almost seven years, PG&E decided to change course in 2016 and instead seek a shutdown and replacement of any remaining required capacity with “preferred resources,” also known as energy efficiency, demand response and renewables.

PG&E announced this plan in June  and submitted a joint proposal with a number of other parties on Aug. 11 to the California Public Utilities Commission. The co-signers included the Alliance for Nuclear Responsibility, Friends of the Earth, the Natural Resources Defense Council, Environment California and the labor groups the International Brotherhood of Electrical Workers Local 1245 and the Coalition of California Utility Employees. This is a broad coalition but far from the full array of parties interested in Diablo.

(Comments and protests on the joint proposal were due to the CPUC on Sept. 12. My client, the Green Power Institute, submitted a protest that I helped to draft, but this article represents my own opinions and should not be connected to my advocacy for GPI.)

I have long been an opponent of new nuclear power plants for a variety of reasons, including the obvious danger of having an ongoing nuclear fission reaction in our backyard, the problems with disposing and storage of long-term radioactive waste products, ongoing leaks of radioactive material, the risk of terrorism, the costs of nuclear power (which generally have been far higher than projected), and in the case of Diablo the increased danger entailed from being near an active fault line.

The Fukushima disaster showed abundantly well that even the most advanced engineering nations can fail to plan adequately for potential disasters. We can never plan for all possible eventualities, and when a type of power generation is, by definition, as it is in the case of nuclear power, so concentrated it is also by its very nature extremely dangerous. So nuclear power’s strongest benefit — its ability to produce very large amounts of power in a relatively small footprint — becomes its biggest downside.

In sum, I’ve felt for some time now that nuclear power simply isn’t ready for primetime because of the dangers involved. There has been at least one major nuclear disaster a decade somewhere around the world since the 1970s, including, of course, the Three Mile Island disaster in 1979 and the Chernobyl disaster in 1986.

Attempts to mitigate the dangers posed by nuclear power have steadily increased the cost of nuclear power such that it makes no sense at all nowadays to build new nuclear power plants when we can achieve the same desired outcome more safely, more quickly and most cost-effectively with clean energy alternatives.

This is why the PG&E joint proposal is so historic: It makes many of the same arguments that nuclear power opponents have made for decades, and most remarkably it makes a strong case that it would be significantly cheaper to replace any remaining required capacity from Diablo with preferred resources rather than relicensing the nuclear plant.

What would it cost to relicense Diablo?

The joint proposal estimates a levelized cost of 14.9 c/kWh for power from a relicensed Diablo plant (PG&E Testimony, A.16-08-006, p. 3-9). This includes power produced from 2025 through 2045. “Levelized” means the average cost over this time period.

The comparable cost for preferred resources calculated by PG&E is just 9.8 c/kWh, and this includes energy efficiency and renewable energy. Keep in mind that these are wholesale costs only and don’t include transmission, distribution and other charges that we all pay on our bill. Typically, the wholesale component of our power bill is about half of the bill.

A major benefit that energy efficiency brings that neither renewables nor nuclear power enjoys is a lack of any additional bill components. There are no transmission or distribution charges required for improved energy efficiency. In this way, “negawatts” (improved energy efficiency) are about as good as it gets in terms of improving our current power system.

Comparing these figures, PG&E concluded after a detailed analysis that replacing Diablo with preferred resources would cost just two-thirds as much as it would cost to relicense Diablo.

The joint proposal doesn’t discuss how much the energy provided by Diablo to date has cost ratepayers; this has, unfortunately, always been an opaque issue. Ratepayers and policymakers need to know how much nuclear power has cost them so that we can learn lessons from this unfortunate episode in our state’s energy history.

Since relicensing costs don’t include the costs of construction, it is all but certain that the historical costs of power from Diablo have been higher than the 14.9 c/kWh estimated for the levelized costs from 2025 to 2045. And anything in this range of costs is all but certain to have been far more expensive historically than power from other types of generation.

The joint proposal does call, however, for a report looking at the historical costs of power from Diablo and whether the policy decisions to build and operate Diablo were “prudent and reasonable.” That report should include detailed historical cost information in a format that makes it easy to understand and compare to the costs of power from other sources.

The benefits of preferred resources

Energy efficiency and renewables come with none of the downsides of nuclear power. There is no radioactive waste to store for literally thousands of years, there is no terrorist target because renewables are so distributed geographically, there is no ticking time bomb waiting for an earthquake to trigger it. There is, however, a much larger footprint for renewables such as solar and wind, but many countries around the world are demonstrating now that these resources can reach high penetration levels without despoiling views, impacting wildlife overly much or taking up too much land.

Another benefit of shutting down Diablo that PG&E highlights in the joint application is the ability of PG&E’s grid to better absorb increasing amounts of renewable energy. Diablo is a very large, nonflexible “baseload” resource. It can’t be turned up or down to accommodate variable renewable resources — it’s either on or off. And as we push toward the current 50 percent renewables by 2030 goal, which is now mandated by law (SB 350), we need more flexible resources to accommodate an ever-increasing share of renewables.

Moreover, having such large inflexible resources on the grid requires their own share of backup power, because if Diablo experiences a scheduled or unscheduled outage, such an outage generally would require replacement resources to make up for this loss. Renewables such as wind and solar get a lot of negative attention for being variable and needing some grid backup, but this problem is actually far worse with very large inflexible generation assets like Diablo. By shutting down Diablo at the end of its current license, system reserve requirements actually would be reduced.

How to avoid further nuclear boondoggles

The recent shutdown of the San Onofre Nuclear Generating Station (SONGS) in Southern California turned into an extremely contentious battle over a number of issues, but primarily over who should bear the cost of this extremely expensive power plant.

PG&E’s joint application may entail some similar issues as it requests a full reimbursement of all costs for the plant to date, without specifying exactly what those costs will be. As described above, however, the net cost of replacing Diablo with preferred resources would be about one-third less than the equivalent cost of relicensing Diablo.

That said, PG&E will need to present more information about the full costs of the shutdown, including the costs of decommissioning. With respect to SONGS, the total shutdown and decommissioning costs became a major issue. To avoid a similar fate, PG&E should be as transparent as possible as early as possible.

Is California about to be nuclear-free?

California won’t be nuclear-free even if Diablo is shut down. This is because we will still receive significant amounts of nuclear power from the massive 3.3-gigawatt Palo Verde nuclear plant in Arizona, which is owned in part by Southern California Edison and a number of municipal utilities in California.

Palo Verde was just relicensed for 20 years in 2011 and will operate through 2047, so unfortunately, the precedent that PG&E’s joint proposal creates won’t be applicable to California’s last nuclear plant for quite some time. Then again, SONGS was shut down very unexpectedly after major issues were found with its retrofits, so there is no guarantee that Palo Verde will operate through its currently licensed lifetime.

In closing, I applaud PG&E and its partners for completing the joint proposal to shut down Diablo and replace any remaining required output with energy efficiency and other preferred resources. Congratulations are due — but the devil is in the details, and stakeholders and the CPUC should remain vigilant with respect to safeguarding ratepayer interests and avoiding further undue enrichment of PG&E’s shareholders.

— Tam Hunt is a lawyer and owner of Community Renewable Solutions LLC, a renewable energy project development and policy advocacy firm based in Santa Barbara and in Hilo, Hawaii; co-founder of Solar Trains LLC, and author of the new book, Solar: Why Our Energy Future Is So Bright.​ Click here to read previous columns. The opinions expressed are his own.

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