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Economics of nuclear power for rural Alaska Small nuclear reactors present new possibilities but capital costs uncertain and reactor capacity exceeds rural community needs Alan Bailey Petroleum News Staff Writer
The commercial availability of a small nuclear reactor core called a Toshiba 4S is raising some intriguing questions about the possible use of nuclear power for relatively small-scale electricity generation in rural Alaska. The self-contained core measures just 2 meters high and 1.2 meters in diameter and can provide 10 megawatts of energy for 30 years. At the end of its life the core can be swapped out of a powerhouse, rather like changing an oversize battery.
Could this type of electricity generation provide a solution to escalating energy costs in rural Alaska? The dependence of rural Alaska communities on expensive diesel fuel for electricity generation is motivating a search for alternative energy sources.
On Oct. 19 at a meeting of the Alaska Association of Environmental Professionals, Steve Colt, associate professor of economics at the University of Alaska Anchorage’s Institute of Social and Economic Research, spoke about the economics of nuclear power for remote Alaska locations. Potential in Galena A multi-disciplinary team funded by the U.S. Department of Energy has investigated the possible use of either nuclear power or coal for electricity generation for Galena, on the Yukon River in the Alaska Interior, Colt said. Galena is expected to use about 11,000 megawatt hours of electricity per year, with an occasional peak load of 1.8 megawatts. In addition to electrical power the community consumes more than 9,000 megawatt hours of energy to heat houses and other buildings. The Galena U.S. Air Force base uses the equivalent to 8,464 megawatt hours per year of energy for heating.
Using conservative diesel fuel pricing of $1.50 to $2.15 per gallon the Galena study projected future Galena electricity rates of around 30 cents per kilowatt hour, perhaps drifting up to 40 cents per kilowatt hour over a 30-year period, in 2004 dollars. The equivalent projection for nuclear power from the 10 megawatt reactor core showed a price in the range 10 cents to just over 20 cents per kilowatt hour, declining to a range of about 6 cents to 14 cents per kilowatt hour. The projected decline results from spreading a fixed operating cost over a gradually increasing demand for electricity.
However, these economics for nuclear power in Galena assume zero capital cost to the city for constructing the plant and then for later decommissioning.
“Somebody else, whether it’s the vendor or the government or whomever, because this would be the first reactor of its kind, would be paying the capital cost,” Colt said.
The economics do include operating costs, which for a nuclear plant largely consist of government-mandated security. Excess energy Because of the small population of the Galena area the 10 megawatt nuclear core would generate energy significantly in excess of current electricity demand, even when demand peaks in the winter. So, the team looked at various ways in which that excess energy might be used.
“We built into our economic studies also serving home heating needs, space heating needs with electricity and we did look at how you’d have to upgrade the distribution system (for that),” Colt said.
Colt said that the team also looked at the potential for heating the Galena air base using electricity or steam from the power plant, although the are base is earmarked for closure.
One use of the excess energy could be the generation of hydrogen, to replace the 90,000 gallons of gasoline used annually to power vehicles in the Galena area. However, after taking into account the need to liquefy the hydrogen and transport it in cryogenic tanks, the cost of hydrogen does not appear to compete with the cost of conventional fuels, Colt said. How about Bethel? Even in a larger community such as Bethel the power output of a small Toshiba nuclear core exceeds the demand for electricity. Bethel’s current electricity demand is increasing at a rate of 1 percent per year and peak demand in the city is about 6.7 megawatts.
Colt has looked at the economics for Bethel, including the capital costs of building the nuclear plant and eventual decommissioning.
“There’s a huge question since no-one’s ever built one of these things — how much would a 10 MW nuclear reactor actually cost?” Colt said. “… We really don’t know what the capital cost is of these things.”
So, rather than assuming a specific cost for the nuclear plant Colt calculated a breakeven capital cost at which a 10 megawatt nuclear plant would become competitive with diesel fuel. On the assumption of a net present value of $69 million for 30 years of nuclear plant operating costs Bethel could benefit from a nuclear plant at a capital cost somewhere below a range of $43 million to $112 million, he found. That range compares with a cost of $125 million that Toshiba has floated for a 50 megawatt reactor — the company doesn’t appear to have floated a cost for the 10 megawatt version, Colt said.
“I conclude that a place like Bethel is still a little bit small to take advantage of the technology as it seems to be envisioned,” Colt said. Electricity for mining However, the economics change dramatically if it’s possible to supply power to an electricity-guzzling mining operation. Colt ran some numbers for the proposed Donlin Creek gold mine. Donlin Creek’s expected year-round electricity demand of more than 50 megawatts is about 10 times that of a community like Bethel or Kotzebue.
“The economics of nuclear look a whole lot more promising when you jump up from the electric loads for even our larger hub communities … to the size of the industrial installations that are actually being proposed right now,” Colt said.
Using the estimated operational costs of a 50 megawatt Toshiba nuclear core and comparing the net present value of these costs with the net present value of diesel usage at just $1.50 per gallon, nuclear power would return a discounted present value savings of more than $850 million over 30 years. You’ve got this much savings potentially that you could use to buy a nuclear reactor and you’d still come out ahead, Colt said.
“Here the pure economics of avoided diesel verges on overwhelming,” he said.
But how about increasing the usage of a single nuclear power plant by distributing power to several communities in the same general area of Alaska? Unfortunately the economics of building long electrical transmission lines can become very marginal for small, scattered communities, Colt said. Very heavy Colt did not discuss the technology involved in building and operating a nuclear powerhouse. However, he did comment on the massive weight of even a small nuclear reactor. That weight would necessitate transportation by boat. And Donlin Creek, for example, is not close to navigable water.
“The thing is a little too heavy to move over land in its current configuration …even moving it from the Galena river bank about quarter mile/half a mile to the proposed site would be a significant engineering challenge,” Colt said.
Meantime Galena has accepted an offer by Japan’s Toshiba Corp. to install a small nuclear power plant free of cost and the city is in the process of investigating issues such as safety and security, as a precursor to a nuclear license application with the U.S. Nuclear Regulatory Commission. Marvin Yoder, the Galena city manager, has told Petroleum News that the city hopes to have a schedule for the project in the next couple of months or so.
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