DOE chief reinforcing ‘nuclear power dream’

By Myrna M. Velasco – April 12, 2017, 10:01 PM

from Manila Bulletin

The Department of Energy’s (DOE) fascination with its “nuclear power dream” is not fading with time, as Secretary Alfonso G. Cusi re-stated recently the weekend the development path they will be pursuing on this sphere.

He said it is among the action plans that the energy department will be working on, along with the investment framework that shall be cast for the liquefied natural gas (LNG) infrastructure chain.

Nevertheless, beyond public acceptance that the DOE has yet to triumph on for nuclear, the country may also need to confront hurdles on market of such asset’s massive-scale capacity, especially in a competitive and private-sector driven electricity sector like in the Philippines.

Energy Undersecretary Felix William Fuentebella has indicated that the department will be finalizing “national position” on nuclear power within the two-year stretch, with studies and information campaign being dealt with in the 2017-2019 timeframe.

“We have to be open to it (nuclear), we have to look into it especially the new technologies also,” he said, stressing that connected concerns on safety and waste disposal are similarly being studied and fleshed out seriously.

“We have to be very open because we have to be technology agnostic – looking into the demand profile of what we need,” Fuentebella noted. What has been missing in the DOE’s pronouncements, however, are on prospects of off-taker or capacity buyer of the electricity output from nuclear facilities – because to investors, that entails viability.

Even in more mature power markets, it has been indicated that electricity generated from nuclear plants cannot flourish or compete yet in a merchant market, or the set-up where its capacity is not covered by guaranteed off-take (supply agreement) or its cost of construction not shielded by loan guarantees.

Maria Korsnick, president and chief executive officer of US-based Nuclear Energy Institute (NEI) had emphasized that even in the more mature power markets of the world, there is no successful business model yet that points to nuclear thriving in merchant markets.

“Right now, there is no business case that proves success in a merchant market for nuclear – that is why, you see the new nuclear plants being built in a regulated market,” she stressed.

She qualified that in many power markets around the world, the capacity of nuclear plants being built are often underwritten with guaranteed power supply agreements (PSAs) sanctioned by State or government edicts. Constructions of such facilities, she said, are also generally supported by loan guarantees underpinned by governments or state entities.

The questions on “market” for nuclear capacity as well technology viability are the same concerns being thrown into the Philippines plan of repowering its long-mothballed 600MW Bataan nuclear power plant (BNPP), which the Duterte administration has been pushing for.

Korsnick said there is no problem re-powering an old nuclear fleet, so long as the entities or governments in-charge would have “very deep culture of safety” in their operational practices.

Further, she indicated that power markets are now tugging their way into the realities of “merchant market” for nuclear – but several conditions are needed still to secure nuclear power’s place into the competitive realm of electricity sectors.

“I do foresee in the future being able to create a climate for that – meaning, if you’re valuing the product that’s being brought to the market – so that means valuing the energy, its impact on energy security and the clean air benefits …in the future it might make sense,” Korsnick added.

To build a new nuclear plant, it has been noted that the cost may hover at US$3.0 billion for a 600-megawatt facility. It is the upfront investment cost that makes it extremely expensive, although the price of generation factoring in fuel cost alone is considerably cheaper than other technologies.

For nuclear to become competitive in the market – or in an electricity sector significantly driven by tough competition among private sector players, it was stressed that State edicts and energy regulatory agencies must provide the rules and environment for that.

The NEI chief executive noted that even in the United States, the place of nuclear in competitive electricity market remains a regulatory experiment still being sorted out by its Federal Energy Regulatory Commission.

“Until that business climate is created, nuclear would still struggle finding its way in the market…I would say, that it might still probably take several years for nuclear to show itself in the marketplace,” she stressed.