WUEG April 2015 Newsletter

whartonundergradenergy

WUEG

April 2015 Newsletter

Sasha Klebnikov is a Junior studying Mechanical Engineering and Applied Mechanics. His passion is

nuclear energy, and for this he has been awarded the Best Opinion Article for 2014 by PubCo, the

consortium of Penn print magazines. Below is this very article, featured in the most recent issue of

Penn Sustainability Review.

The Fallacy of Nuclear Evil

Anti-Nuclear Desires Defeating the Anti-Carbon

Movement

Sasha Klebnikov – akleb@seas.upenn.edu

Chernobyl. Fukushima. Radioactive Wasteland.

Death Industry. The lexicon of the anti-nuclear

movement evokes powerful and scary

reactions. Electricity generated using the

world’s most dangerous explosive hardly

seems to be an environmental choice. After

numerous steam pipes started vibrating

excessively and broke, ‘Environmental’

Advocates closed San Onofre Nuclear

Generating Station near San Diego. Japan and

Germany are shuttering their plants while

halting new nuclear construction to perform


additional environmental impact studies.

Nuclear seems to be a bad source of

electricity, and the industry is waning.

But why? A growing movement sees nuclear as

the most cost-efficient solution to climate

change. Advocates point to new designs and

materials increasing accident safety to the

point where more people die from fires on

wind turbines than in nuclear plants. Waste

volumes continually decline as our knowledge

of plasma physics improves. New fuels like

Thorium or ‘Thermal’ reactors lead to a 99%

reduction in nuclear waste. Nuclear provides

reliable power 24 hours a day, 365 days a year.

These arguments are strong – yet why is

nuclear still on the decline?

Even as operating costs plummet, nuclear

power plants are insanely expensive to build.

Two of the most recent projects, Finland’s

Olkiluoto Station and George’s Vogtle Power

Plant, each cost approximately $14 billion. This

is comparable to the annual GDP of Cambodia

or Iceland. These plants cost more than the

newest, fanciest Aircraft Carrier, the Gerald R.

Ford. For $14 billion, one could build five

comparably sized natural gas power plants. Or,

using Solar Panels, we could build

photovoltaics that produce ¼ of the electricity

generation of nuclear.

Not only is the cost high, but investment is also

risky. Nuclear plants require a massive capital

investment, but then low costs to maintain,

compared to natural gas or coal, where the

plants are cheaper to build, but the fuel is

expensive. Because nuclear plants take ten

years to plan, license and build, the price of

electricity (and thus the profits for a plant) can

change significantly during construction.

Recently, the combination of cheap natural gas

due to fracking and government subsidies for

wind and solar power has driven electricity

prices down far faster than the industry had

predicted. This altered market means many

nuclear plant construction plans have been

cancelled, as the future is deemed too

unpredictable. A company making a $14 billion

investment is effectively betting its entire

financial future on their venture, a venture that

will only start paying off in 10 years time. With

an uncertain electricity market, public

opposition to nuclear, and shareholders’

clamour for immediate profits, constructing

nuclear plants is not common for private

companies. Currently the majority of growth is

led by strong central governments like Finland,

India, South Africa and China; private

companies can no longer build plants

themselves.

The USA once led the world in constructing

nuclear power plants. Throughout the 1960s

and 1970s, the US government offered giant

loans to private utilities to build over 100

nuclear plants. Today, these nuclear plants

provide 20% of our electricity. However, after


twenty years of federal subsidies, solar panels

produce only 0.23% of our generated

electricity, 1% of the total generated by nuclear

energy.

The current US government is not interested in

financing new nuclear construction.

Conversely, emerging nuclear energy giants

India and China encourage growth. India has

5.3 giga-watts of electricity (GWe) of nuclear

capacity installed (the USA. has 99 GWe

currently installed), but is planning to expand

their capacity by 1600% to 80 GWe by 2050 –

an ambitious goal of having a new plant come

online every two months. China is less open to

sharing their plans, but similar growth is

expected. In contrast with the USA, these

countries see the value of nuclear power plants

as a steady, price-independent, carbon-free

form of energy.

Nuclear plants in the USA are closing quickly.

In the San Onofre Nuclear Generating Station

(SONGS) a small miscalculation resulted in

steam pipes leaking, causing the plant to shut

down. Instead of fixing and relicensing the

plant, the company decided the bureaucracy

of California and bad press was not worth it –

even though running the plant was considered

financially and ecologically viable. Forbes

journalist James Conca writes “a strong antinuke

ideology beat a strong anti-carbon

ideology by exploiting a minor, but easily

resolved, engineering flaw.” The effect of this

decision? $13.8 billion of natural gas plants are

being built to replace the single plant, causing

a net 10% increase in California’s CO2

emissions—equivalent to the level of emissions

from wind and solar production over the last

twenty years. So much for the flagship state of

American environmentalism.

The closing of Vermont’s oldest and most

profitable power plant, Vermont Yankee, is also

heavily debated. While the public worried

about the potential for meltdown, it had been

providing emissions-free electricity to three

states (Vermont, New Hampshire and

Massachusetts) for 42 years. Recently

relicensed in March 2011 by the Nuclear

Regulatory Commission for another 20 years, it

has been scheduled for decommissioning due

to pressure from the same anti-nuclear

advocates in the case of SONGS. Department

of Energy licensing auditors are not only

nuclear experts but have a massive incentive to

stop any disasters, yet anti-nuclear advocates

said their report was not comprehensive or

safe enough. Now residents in all three states

are expecting to see their electricity bill

increase between 37% and 50% due to a single

plant closure.

Do other countries have better records?

Germany’s ‘Energiewende’ is projected to cost

some $4.5 trillion, or around 2.5% of GDP for

fifty years straight. This investment made

headlines this summer, when solar provided

50% of electricity on a few peak summer days.

But this is 50% of ‘electricity capacity’, or

instantaneous power – solar energy produced

half of all the energy in Germany for a few

minutes around noon. ‘Electricity Production’,

the far more important metric, is the energy

created over a day, where solar provided only

4.6% on those days. Nuclear, by contrast, has


an 84% capacity rate, so power plants are

producing at full capacity almost all the time.

In addition, having such a massive portion of a

country’s electricity occasionally be generated

by solar is damaging to other forms of power

production. When a single source varies from

50% of production to nothing at night, other

plants need to compensate. This cycling of

plants means nuclear (which varies its

production over multiple days) cannot be part

of the energy mix, so the other 95% of total

daily production must come from gas and coal.

The growing international consensus is that

“Energiewende is the worst possible example

of how to implement an energy transition. The

overzealous push for the wrong generation

technology has hurt citizens, businesses, and

the environment all at the same time.” The

German investment plan has caused higher

energy imports, Germany’s highest coal usage

in twenty years, and its highest electricity prices

ever.

We must instead follow China’s lead. The

Chinese Academy of Sciences (CAS) has built a

new nuclear research center in Shanghai with

450 Scientists, with 300 more to be hired over

the next year. Comparatively speaking, Penn

currently has 113 faculty in the engineering

school. CAS’s mission is not to build existing

nuclear reactors, but innovate with novel fuels

(Thorium), coolants (liquified salt) and plant

designs (putting reactors underground, or

floating on the ocean). China’s focus on solving

their electricity problem is commendable, and

will make China the intellectual leaders on

nuclear power for years. Meanwhile, the US

government instead is reducing grant

programs to develop new low cost ‘Small

Modular Reactors’.

Nuclear poses a moral dichotomy. Humans can

now split atoms in half, unleashing massive

power that we harvest in giant, complex

reactors. The energy harvested drives our

industry, our offices, and our homes. Should

this complex process go wrong, the entire

country suffers, yet in the history of the world,

only three reactors have malfunctioned.

Advocates state that in terms of deaths per

kilowatt, Nuclear is considered the safest form

of energy available to the world. The

argument states that proliferation risks are

reduced due to new fuels and international

protocols. They cite the tiny amount of

radioactive waste, and increasingly effective

storage techniques as making the waste point

moot. Power produced from nuclear reactors is

incredibly cheap and reliable over the entire

lifetime of the plant.

More importantly, the spectre of climate

change looms large. As the battle between

anti-nuclear and anti-carbon advocates rages,

carbon dioxide is rapidly causing the earth to

alter its basic processes. Nuclear power offers

a simple, easy solution to this problem, directly

replacing gas and coal plants with carbon-free

electricity production. Solar and wind are a

useful part of the energy mix, but nuclear

power could be the country’s solution. Public

apathy and misinformation are fueling the antinuclear

contingent. Scientists and


environmentalists offer research but ultimately

the fate of the battle lies in the common sense

of Americans.

Sources:

Environmental Science and Technology

The Breakthrough Institute

The Augusta Chronicle

Energy Information Administration

World-nuclear-news.org

Atomicinsights.com

Forbes

Rhodium Group

The Energy Collective

Mark Lynas, “Germany’s Energiewende – The Story So Far”

Bloomberg

The Economist

Nuclear Energy Institute

Emissions Trading: Ontario Joins California

and Quebec

Thomas Lee – senior member, Academic Committee

Ontario, with 40% of the population and 24%

of greenhouse emissions in Canada,

announced on April 13 th that it plans to join the

California-Quebec cap-and-trade system, one

of the largest emissions trading schemes in the

world. Policy details are expected to be

disclosed before year's end.

California (the second largest emitter among

the states) launched its emissions trading

system on January 1 st , 2013 as part of the

state's AB32 or Global Warming Solutions Act

of 2006. On the exact same day, Quebec (11%

of Canadian emissions) started its own

emissions trading program. The two regional

schemes were linked in 2014, as coordinated

by the Western Climate Initiative. Based on

economic principles, cap-and-trade ensures

that California and Quebec (and now Ontario)

meet their carbon mitigation goals in the most

cost-effective way. Moreover, revenues from

permit auctions have been directed to


programs like public transportation

infrastructure and low income housing

weatherization.

In addition to Quebec, other Canadian

provinces have a mixed record with climate

policies. For example, British Columbia

pioneered its carbon tax on fossil fuel

consumption in 2008 (still the only carbon tax

in North America). Since then, per capita fossil

fuel consumption decreased 16% while it

increased 3% for the rest of Canada.

Furthermore, since the carbon tax revenue is

used solely to offset other taxes, British

Columbia has "the lowest personal income tax

rate in Canada and one of the lowest corporate

rates in North America" according to The

Economist. Economics literature refers to this

usage of carbon pricing to both lower

emissions and reduce distortionary taxes—like

income taxes—as a "double dividend".

On the other hand, Alberta is endowed with

natural resources and emits the most

greenhouse gases among the provinces. As a

result of lackadaisical regulation over Canadian

tar sands development, Alberta increased its

greenhouse gas emissions from 2005 while

almost every other province reduced

emissions. In fact, of the three provinces with

emissions increases, Alberta saw the largest

pollution increase (14%). Unfortunately and

expectedly, Alberta has no plans for any

carbon tax or trading policy. This disparity

between the climate action taken by different

provinces (especially compared to Ontario

which has a sizable emissions volume) clearly

illustrates the fossil fuel extraction lobby's

strong influence in obstructing economically

and environmentally efficient policies.

Elsewhere in the world, cap-and-trade is under

attack by fossil fuel lobbyists. For example,

Tony Abbott's administration, which has coal

industry ties, abolished Australia's emissions

trading scheme last summer. Similarly, while

super-majors like Royal Dutch Shell and BP

verbally support governmental carbon pricing,

the fossil fuel industry's actions reveal

hypocrisy. For example, Shell and BP refineries

are members of the Western States Petroleum

Association, which is now actively lobbying

against Washington Governor Jay Inslee's capand-trade

legislation proposal. A leaked slide

deck reveals WSPA’s strategy to destroy AB32

itself.

It is in this context that Kathleen Wynne's

Liberal provincial government in Ontario is

announcing its cap-and-trade proposal.

Interestingly, Ontario actually first committed

to the Western Climate Initiative system back

in 2008 but backed out along with other

jurisdictions (with Quebec and California

remaining). From a game theory perspective,

any new jurisdiction joining carbon pricing

helps to signal commitment to climate action

and counteracts concerns about trade

disadvantages. Thus, in the months leading to

the Paris COP, Ontario's decision to join WCI

builds up the ‘network effect’ for carbon

pricing both amongst Canadian provinces and

around the world.

Sources:

The Wall Street Journal

Reuters

The Economist

The Seattle Times

Bloomberg

California Environmental Protection Agency

Environment Canada


Dr. John Vohs is a Chemical and Bio-molecular engineer who has received numerous awards for his

research in fuel cells and energy. He earned his BS in Chemical Engineering from the University of

Illinois and his PhD in Chemical Engineering from the University of Delaware. Our interview explored

biofuels and energy storage and what the future holds for making these technologies viable.

Charles Gallagher – Vice President, Academic Committee

Charlie Gallagher: What is your area of

research?

Dr. John Vohs: My area of research is mostly

in the energy area but I do fundamental work

on how molecules absorb and react on

surfaces, which is important in transformation

of organic molecules for everything from

making fuels and chemicals to making soap—

you name it. One project I’m working on:

biomass as a renewable carbon source

as opposed to fossil fuels. To do that, you

have to convert the organic molecules in the

biomass to something that looks more like

gasoline. Several transformations have to be

done to do that.

CG: What are the most promising biofuels?

JV: The problem with biomass is that you have

to have fast-growing plants that you can

harvest the biomass from—you can’t take trees

that take 50 years to grow. In Brazil, they have

an ethanol economy where they’re using sugar

cane to make ethanol. They live in a place

where they can grow it year round. But in

the US you can’t grow that year round. The

other challenge facing biomasses is that oil

and natural gas can be easily transported,

but with biomasses the picture is not so clear.

You’re lucky if you break even [both

economically and in carbon emissions].

Biomass as a long-term viable method to make

sustainable fuels? Probably not; not many

people believe that.

CG: So, hypothetically what would the solution

look like?

JV: If you can only provide 1% of your energy

needs, who cares? Economically it will never

scale or make sense. You need

technologies that can provide at least

10% of your energy needs. And you have

to look at the end uses. So right now liquid

hydrocarbon fuels are used for transportation.

If you want fuel range, you need liquid

transportation fuels. That’s where biomass

might play a role: for transportation fuels.

CG: Let’s switch to energy storage and fuel

cells.

JV: I do a lot of research on fuel cells. Fuel

cells could be used as energy storage. So for

example I could hook up a hydrogen fuel

cell to a wind or solar installation. When

I’m making excess electrons and want to store

this electricity for nighttime use, I could run the

fuel cell in reverse—called electrolysis—where I

use the electrons to dissociate water and make

hydrogen and oxygen. And then at night when

I need [the electricity] I run it in the other

direction to convert back to electrons.

CG: What is the efficiency of that process?

JV: Hydrogen fuel cells are efficient when

generating power—probably 65% efficient.

Which is excellent as far as energy

technologies go. The electrolysis side—the


storing part—is not nearly as efficient. Some

fuel cells are better than others. You can live

with smaller efficiencies because you still need

electricity at night [when the sun isn’t shining].

It’s better than nothing.

massive amounts of storage. It’s got to be an

integrated system. Some smart grid

technology has to be in there. It’s an enormous

control system.

CG: So would this energy storage technology

be at the residential level or large-scale?

JV: Large-scale. You wouldn’t do that at your

house.

CG: So what do you think are the greatest

challenges in terms of informing policy?

JV: For policy, you have to look at two things.

You need some sort of smart-grid

technology because what we have now with

fossil fuels and nuclear and hydro-electric

thrown in, electricity demand goes up and

down, which means I have to crank things in

and out pretty quickly. You can do that with

different power plants—the way they’re

designed, like some natural gas plants are

designed to top off [when electricity demand is

peaking]. The renewables like wind and solar—

I can’t really control that. The wind stops

blowing or a cloud moves in, you couldn’t have

the whole grid based on that unless you had

I think for policy, with research funds and

things we support to develop new

technologies, I think we have to cast a wide

net. Trying to pick the winning technology

often doesn’t work. What you don’t do is look

at fun things that don’t make any sense and

that don’t seem realistic, but I think sometimes

the winning technologies do come out

of left field somewhere. So you need to

not just pick one technology; let’s pick six or

seven promising ones, try and develop them,

and see which one wins.


A Big Deal in LNG: Shell Buys BG Group

Arthur Chen – Senior Member, Academic Committee

In the biggest M&A deal since the Exxon-Mobil

tie-up in 1999, Royal Dutch Shell will acquire

BG Group in a $70 billion deal, combining the

world’s two biggest producers of liquefied

natural gas (LNG).

The timing of the deal comes at an interesting

moment in the natural gas market. The drop in

crude oil prices since mid-2014 has been

heavily documented, but less has been made

of the decline in natural gas prices. Crude has

dropped 45% in the past nine months,

compared with 35% for natural gas. In some

ways, this deal can be viewed as a big bet by

Shell on an LNG-laden energy future for the

world. As global energy needs have soared,

LNG has proven a useful commodity. The

process involves supercooling natural gas into

a liquid that can be more easily transported on

barges around the world. In just the last

decade, Shell has invested $56 billion in

cooling plants, terminals, and other LNGrelated

facilities.

This is also a transition point for Shell, which

has struggled to benefit from the fracking and

shale boom in the US while competitors like

Exxon and Chevron have done well. The

Anglo-Dutch company has been offloading

many of its interests in America as well as

pulling back development in Europe and Asia.

Furthermore, the company has been planning

to significantly curb capital spending for the

next few years.

Therefore it makes perfect sense for them to

buy BG. The purchase would give Shell access

to their prized offshore interests in Brazil,

undeveloped resources in East Africa, existing

projects in the Caribbean, and a huge LNG

project ramping up in Australia this year. Even

more fortuitously, BG’s shares have dropped

about 30% in the past year, so Shell could

swoop in with a bid at a significant discount.

That is not to say that this deal is without its

flaws, first of which is the price Shell has to pay


for BG. The $70 billion valuation is a 50%

premium on BG’s previous close, giving

shareholders pause. Of greater fundamental

concern is the future of LNG prices, which are

under pressure from weaker-than-expected

demand growth in Asian markets such as China

and South Korea. Moreover, LNG projects

require tremendous upfront capital costs,

which will be subject to greater scrutiny under

Shell’s capital reduction plans moving forward.

M&A activity has been intensifying in the past

year or so across sectors, such as Kraft-Heinz in

food products and Halliburton-Baker Hughes

in oilfield services. With uncertainty abounding

in the oil and gas markets, one should expect

to see more consolidation taking place

upstream, midstream, and downstream. First

Halliburton, then Shell. What will be the next

domino to fall?

Sources:

The Wall Street Journal

The New York Times

Vortex Bladeless

Connor Lippincott – Senior Member, Academic Committee

This is the last in a series of articles on sustainable startups I’ve done this semester. The first one

covered OxiCool, a Philly-based company launching a clean energy refrigeration system. Last month,

I took a look at Solar Grid Storage, a solar energy storage provider, which had recently been acquired

by SunEdison. For April, I am investigating a brand new wind energy start-up, Vortex Bladeless.

Vortex Bladeless is a completely novel

technology in the field of micro wind turbines

and the first to do it without any blades. Micro

wind turbines are defined as having a capacity

of 1 to 5 mega-watts per turbine. For

reference, the largest wind turbine in the world

is the Vestas V164, at 8 MW per turbine. The

Vortex Bladeless falls into the smaller category,

starting with two products: the Gran at 1MW

and the Mini at 4kW. The Gran is meant for

commercial use where the mini is meant for

domestic or smaller scale industrial use.

The Bladeless is exciting because it makes

improvements on a couple of the oftencriticized

areas of wind technology. Because it

is bladeless, the chances of killing birds (which

are often exaggerated as it is) are now zero.

Therefore, the impact on the local ecosystem

would be next to none. The more important

improvements, however, are in the operations

& maintenance costs. One big drawback of

wind turbines is the fact that they are often


placed in extremely remote locations, requiring

heavy use of energy simply to produce and

transport the parts. Further, the energy

required to get technicians back out to the site

for maintenance purposes is not negligible.

The Vortex, which has no moving parts that

interact with each other, requires no

lubrication. It reports 80% lower maintenance

costs and 53% lower manufacturing costs.

Overall, this results in a 40% reduction in the

carbon foot print.

Going forward, Vortex Bladeless has gotten

interest from Harvard University, SunEdison’s

TerraForm Power renewable energy unit, and

Dat Venture, a startup incubator. As long as

the company continues on its current path, I

could see this becoming a very important

move forward for the wind energy sector.

Sources:

CleanTechnica.com

Vortex Bladeles

Eliminate the Regulatory Need for Small

Modular Nuclear Reactor “Emergency Core

Cooling Systems”

Josh Haghani – Senior member, Academic Committee

Across the world, Nuclear Reactors can be built

only after satisfying a long list of regulations.

The majority of these regulations are

important, as they make reactors safer and

more efficient. Currently, regulations are

identical for all types of nuclear reactors; this is

hampering the development of Small Modular

Nuclear Reactors. In particular, Small Modular

Reactors’ “emergency core cooling systems” is

completely unneeded. This one regulation has

stopped Small Modular Nuclear Reactors from

being built.

The world is about to have a nuclear

renaissance. As of early 2012, over 30 countries

ran 443 nuclear reactors. China is building 27

new plants, with an additional 50 planned, and

an incredible 110 more proposed. The World

Nuclear Association (WNA) estimates that by

2060 there will be 3500 GW of nuclear capacity,

compared to just 373 GW today. Among many

good reasons for this renaissance, nuclear

power has high fuel supply security, close to no

environmental damage, strong economic

benefits, and high grid stability. Nuclear power

faces two large obstacles to large-scale

development: public perception of reactor

safety and high capital costs. These two are

closely related, as much of the capital costs are

driven by regulation, which is driven by public

perception of nuclear safety. Small Modular

Nuclear Reactors solve both of these problems

by being inherently safe and less costly.

However, governments need to eliminate

“emergency core cooling systems” regulations

for development of these reactors to begin.


Small modular reactors produce only 300 MW,

compared to the more typical 1 GW reactors.

These small reactors require less capital

investment largely because of simple safety

innovations. Recently with the developments of

generation III and IV reactors, these small

reactors do not require elaborate and

expensive safety systems that once made small

reactors impractical. Generation III and IV

reactors are modular. If energy demand is

higher, several of these reactors can be used

together to provide the required energy. If

energy demands grow, additional reactors can

be added to an area.

Toshiba designed the 4S (Super-Safe, Small

and Simple) reactor that can produce 135 MW.

The reactor is buried underground, and can

almost be thought of as a nuclear battery

because the reactor needs almost no attention.

The only reactor control is a set of reflectors

that move in response to an increase or

decrease in the speed of the reaction. If the

reflectors move far from the reaction, the chain

reaction slows. The 4S cools the turbine and

reactor by using liquid sodium coolant. Liquid

sodium is a metal that is pumped through the

reactor by electromagnetic pumps.

Electromagnetic pumps have no moving parts.

If the pumps were to fail, the reactor would

start to overheat. However, the reflectors

automatically adjust, slowing the chain

reaction. Thus, Small Modular Nuclear Reactors

do not need to have an operator. Another

more fundamental reason why these reactors

are so safe is that the reaction moderates itself.

Because Small Modular Nuclear Reactors do

not control the neutrons, as the fuel heats up,

the neutrons and uranium atoms will increase

in velocity. The fuel, U-238, is more efficient at

absorbing neutrons when its velocity increases,

so hot U-238 absorbs more neutrons than cold

U-238, allowing for the chain reaction to slow

down and even stop. These reactors are

inherently safe—far safer than the more

complicated, traditional reactors.

Another advantage Small Modular Nuclear

Reactors have over traditional reactors is that

waste by generation III and IV reactors contains

less plutonium. Plutonium is created in every

reactor because the neutrons stick to the U-

238. However, the Small Modular Reactors

burn U-238 for 30 years without the need to

change fuel. This leads to almost all of the

plutonium produced by the reaction to actually

be fissioned away, leading to less plutonium at

the end of the fuel life.

Due to the extra safety and lower capital cost

of Small Modular Nuclear Reactors, these

power plants can be built in areas that are

removed from the electrical grid, or areas that

are experiencing electrical shortages. By

allowing the development of these reactors

globally, we can start to make a meaningful

dent into dirty electricity production in a safely,

economically, and quickly. Governments need

to rethink nuclear power regulations. Starting

in 2012, the U.S. department of energy has

been reviewing domestic regulations for Small

Modular Nuclear Reactors. The DOE has

created the Small Modular Reactor Licensing

Technical Support Program that aims to have

licensing completed for these reactors in 6

years, costing the government $452 million.

Sources:

Energy For Future Presidents

World-Nuclear.org

Energy.gov

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