Climate targets need market reform, says NEA's Magwood
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Magwood highlighted one of the three objectives of the Harmony initiative - a level playing field for all clean-energy sources of electricity. The others are harmonised regulatory processes, and an effective safety paradigm.
“This is something we’ve been looking at the NEA for the last couple years and it’s very clear to me that the markets don’t work very well,” Magwood said.
“The electricity markets were designed in the middle of the last century for a system that doesn’t actually exist anymore. We see repeated in many parts of the world electricity prices that are either near-zero or are actually negative in certain parts of the day, and some countries with relatively old hydroelectric facilities are losing money.
Referring to the Paris Climate Change Agreement, which entered into force in November 2016, he said: “In Paris, the world claimed to be concerned about climate change, but hydro facilities are losing money. No serious person can look at that situation and think it makes any sense. That is probably one of the biggest challenges that we have: How do we adjust the energy markets to do what we need to be done around the world?”
He added: “And as we adjust those markets we will find that how we compare energy technologies is really completely inadequate.”
The NEA has highlighted the fact that the market price of electricity from renewable energy sources does not include transmission and system costs.
“You really need to compare all the costs, the full cost of all the energy technologies, on an equal basis and we absolutely don’t do that and we should,” he said.
“The second thing is that even if energy markets worked, nuclear costs too much,” he added.
“Whenever you bring in renewables, whether subsidised or not, whenever you bring in natural gas, it shows that, over a long period of time, nuclear loses because the costs are too high.”
Mingguang Zheng, president of Shanghai Nuclear Engineering Research and Design Institute and senior vice president of State Nuclear Power Technology Corporation, had told delegates earlier in the conference that China is building plants now at about USD3000 per kW.
Magwood said: “That’s pretty competitive and it’s important to point out that plants don’t have to cost USD8000, USD9000, USD10,000 per kW if you know what you’re doing, if you have the infrastructure, if you have people who know how to build the plants, if you have a robust supply chain. I’m not sure you could get quite to USD3000 per kW, but you can get reasonably competitive.”
Construction of units 3 and 4 of the Vogtle nuclear power plant in the USA are a good example of “practice makes perfect”, he said. “Vogtle-3 is very expensive and is taking a long time, but Vogtle-4 is progressing so well that it’s actually catching up with Vogtle 3. There was supposed to be a year’s gap between them.”
As long as the design of electricity markets fails to acknowledge the benefits of nuclear power as a low-carbon source of power, however, “nuclear is going to cost too much and we have to bring the costs down”.
“We have to start looking at the technology a bit differently. The answer might be SMRs, the answer might be Gen-IV technologies,” he said. “But if we are aiming to avoid a certain technology in Country A, and another in Country B and a third in Country C, then we’re doomed. We have to build technologies for the whole market. If we don’t do that, we’ll never be cost-effective and we’ll never see the type of nuclear construction we need to meet the low-carbon and energy security goals.”
Magwood has led the NEA since September 2014. He was appointed a Commissioner at the US Nuclear Regulatory Commission in 2010 after previous roles including director of nuclear energy at the Department of Energy. He is recognised as a strong advocate of international technology cooperation, having served as chairman of both the Generation-IV International Forum and the OECD's steering committee on Nuclear Energy.
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