Wednesday, October 19, 2011

Indian Points

One of the biggest issues coming around in New York these days is the relicensure of the Indian Point Nuclear Reactor by the NRC. Indian Point is coming under attack by the environmental movement in NYC, and they haven't been afraid to raise the Specter of Fukushima over and over again. The very fact that this license renewal is coming at a low-water mark for nuclear energy makes it one of the more hotly contested fights in recent years.

As part of the opening salvos, the NYC Department of Environmental Protection commissioned a study by Charles River Associates, an economics and management consulting firm, and the NRDC and Riverkeeper Inc. fired back with another by Synapse Energy Economics, an energy economics consulting firm, both of Cambridge, MA. Not trusting the news reports, whose science and economics journalism pretty much sucks, I went ahead and read both of them.

Some disclosures are in order: First, I do not hold a degree in electrical engineering and know very little of the technical details of grid management. I know a whole lot about power plants and some broad outlines of how the electrical grid works, but that's not quite the same thing. Second, when I was looking for a job in consulting not so long ago,  I wanted to work for both CRA and Synapse, and applied to both (alas, fruitlessly). Third, I am favorably disposed to nuclear energy in general, although this does not mean that I support the US nuclear industry and means even less about the case of a specific power plant. Finally, I live maybe a half-hour's drive away from Indian Point, and spent my company picnic across the river from its reactors.

Now that that's out of the way, let's focus on the impressions and substance of the two reports.

Executive summaries aside, there's an obvious difference between the two reports: their length and depth. The CRA report goes into great detail about their methodology which I found rigorous and, in some cases, to a depth beyond which I really cared to go - a good sign. By contrast, the Synapse report is very clearly a response paper, since it references the CRA report frequently and is just over 1/3 the length of the CRA report, containing almost no methodological explanation. It's possible that the NRDC cut out most of that, so I'm not counting it against them. However, it's also worthwhile noting that CRA employed what looks like at least two consultants and four analysts on the project, while Synapse worked with three people, probably only one of whom is a principal.

The CRA and Synapse reports largely agree on the facts - that is, the publicly available NY ISO reliability planning data, output of the plants and the grid connections and robustness of the NY electricity system. 

The two reports disagree on the relative levels of alternative electricity supply and demand options available in the event of a closure of Indian Point. Skipping most of the technical details, I'll just tell you that CRA covers three scenarios, including the construction of modern gas-fired power plants, or the cost of purchasing an offshore wind power plant and a new transmission line to Canada, and continues with calculating the costs of these options, concluding that the replacement would cost roughly $11bn - $14.2bn over 15 years in NPV costs. Synapse's report counters that this is too limited and presents demand-side options in addition to greater renewables capacity as a contrast to CRA's options, though it offers no firm costs.

I think this is the real meat of the dispute. CRA has largely presented conventional options while Synapse has been less conservative with its projections. At the heart of it is whether or not people's electricity bills will increase as a result of Indian Point's shutdown - or at least, this is what Synapse seems to want to focus on, while CRA doesn't take into account costs external to power industry because in their plans there basically are none.

In the end, I think Synapse's assumptions are pretty heroic and ultimately undermine themselves. Synapse claims that NYS has the available reliability required in the short term (~2020) to replace Indian Point.
CRA's report decisively disagrees. The difference is mainly made up of Synapse's assumptions about renewable energy projects. I ran some of the math on what they came up with; they assume roughly 50% of current proposed renewable energy investments will complete, and then assume that the rated capacity will be available. While I'm comfortable with the first assumption, the second is wildly optimistic. The unreliability of solar and wind resources should be obvious, and the lack of energy storage capacity in New York State is woefully clear to anyone with cursory knowledge of grid operations. It's true that the nameplate capacity of the renewables being built in New York State - much of the solar PV parts of it of doubtful economic value due to the ridiculous China-style 50% subsidy for installation that expired in 2010 - is enough to clear the 15.5% over peak summer demand threshold for capacity mandated by NYS ISO. What's not true is that the nameplate capacity is at all representative of the power that might need to be delivered and is not at all reliable. NY ISO does not consider renewables to be players in the "spinning reserves" market, or what's called installed capacity (ICAP), which is what's brought online to stabilize voltage levels; in fact, voltage fluctuations are more likely to be caused by renewable energy than mitigated.

This is not to bash renewables (though the PV subsidies are pretty stupid), but to show that Synapse is comparing apples to oranges, since Indian Point provides baseline power generation capability, and solar and wind constitute intermittent resources that cannot feed into the grid at will when needed, which is what is needed from the reliability threshold. Synapse should know better.

Synapse also makes a bunch of other assumptions about non-renewable capacity, the largest of which depend on additional state incentives to fund small-scale combined heat and power systems and replace old infrastructure. I find this puzzling and disingenuous. While Synapse focuses on electricity bills, it explicitly works into its projections a series of measures that directly affect state taxes.

The other dispute centers on additional renewables capacity and energy efficiency. CRA approaches needed future capacity from an industry perspective, proposing largely centralized solutions.   Synapse proposes the use of additional renewables (ultimately following through with the same heroic assumptions about renewable energy as before) and the use of demand-size energy initiatives. In fact, most of Synapse's projected low-cost effective capacity increases centers on the use of subsidy incentives to promote energy efficiency.

There are many fishy things with claiming that this reduces effective energy use. First and foremost, there's the issue of practicality: while CRA's solutions have a low impact and are centralized, any energy efficiency effort is distributed and depends not on the state but on private citizens. Markets are troublesome things, and they don't always do what you want them to. Nowhere is this more clear than in energy. This leads to the second point, which is that Synapse hasn't taken into account the electricity usage increases that result from increased energy efficiency.

It's worth noting that while they also accuse CRA of not taking them properly into account, CRA explicitly assumes 50% energy efficiency incentive uptake. CRA also doesn't present an overtly pro-business front: it assumes a carbon tax in effect by 2018, for example.

I'm going to be honest here, the contrast between CRA's report and Synapse was stark. Synapse's analysis is much less well thought out, and it's clear they're not bringing an engineering perspective to their work. From a consultant's perspective, it also looks as if the Synapse report is closer to a $35,000 job while CRA's is around $75,000. It's just not as well thought-out. I encourage you to read yourself and look at the contrast.

So what does this mean? Does it mean Indian Point isn't dangerous and is worth keeping around? No. What it does mean is that NRDC and Riverkeeper have a weak argument on the economics of energy, true to form. Their main appeal has been emotional and plays to the overestimation of risk by the general public following a signal event (Fukushima) and the inherent characteristics of radiological risk. Since radiation is invisible, and too science-filled for the general public and considered "un-knowable," and a nuclear accident is by its nature acute, people carry an overinflated mental estimation of nuclear power's risk already. Ultimately, that's what will make-or-break the NRDC and Riverkeeper's case: how well they can take advantage of hysteria. It's dirty politics and scientifically dishonest, which is one of the main things that makes me froth at the mouth about most anti-nuclear activists.*

Indian point has been around since the 1970s and has been chugging along since then. Despite my support for nuclear power, I'm uncertain if it should remain in operation. The ideal solution would be to replace Indian Point with a modern design centered on today's best practices and technology. In 1970 computers that fit only into a room were a huge innovation. That should not be the technology that represents the nuclear industry. Furthermore, the longer these plants remain in operation beyond their original design lifetimes, the greater the likelihood of an accident. It's still miniscule, and I'm willing to stake my life on it - after all, I'm one of the first ones roasting of the reactor goes critical - but the chance that anyone could be hurt from a comparatively minor accident can still be minimized by a modern design.

Leaving around Indian Point in some ways also makes radical environmentalist arguments about nuclear power's safety record something of a self-fulfilling prophecy. This is the kind of scenario I'm talking about: "Alright, so that power plant there that's operating 20 years beyond its design lifetime on antiquated technology because we wouldn't let them build a new and safer one is going to blow! We need to ban nuclear power now!" I shouldn't have to tell you how dumb that idea is.

There's really little else I can say about the issue until a real risk-analysis study is done of the plant by its operators and published as part of the consultation. Despite my preferences the decision to make is not whether or not to replace the plant with a new one, but whether or not to keep it on or not. The overall attitude to nuclear technology shouldn't figure much into that specific case - no matter what NRDC and Riverkeeper want.

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