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at the Calvert Cliffs Nuclear Plant in Maryland by

Unistar. The NRC panel decided that the applicant,

Electricite de France (EDF), was ‘‘foreign-owned’’

and could not be granted a COL to build and

operate a nuclear plant under the prevailing U.S.

law. When Unistar applied for its COL in 2007, the

company was a joint venture between Maryland-

based Constellation and French company EDF. The

decision puts the fate of two other proposed

reactors in Texas, which are partly owned by

Toshiba America, in doubt.

In April 2011, shortly after the Fukushima

disaster, New Jersey-based NRG Energy, the

majority owner and operator of the South Texas

Project (STP), pulled its financial support to build

two new advanced boiler water reactors (ABWRs)

in Matagorda County, Texas. NRG said the

Fukushima crisis had ‘‘diminished prospects’’ for

the STP. NRG’s withdrawal left Toshiba in the

driver’s seat and the recent NRC ruling makes the

project less viable.

According to Robert Eye, an attorney for the

SEED Coalition, which has intervened in the

licensing process for the two-reactor STP

expansion, ‘‘From a regulatory perspective, the

(NRC ruling on) Calvert Cliffs decision shows that

the prohibition against foreign ownership (of

nuclear plants) means what it says. This could be a

major setback to the nuclear industry if foreign

capital is unavailable for U.S. nuclear projects.’’

With a few exceptions, U.S. investors appear

reluctant to finance future nuclear plants.

Yet another nuclear setback may be the

permanent shutdown of the San Onofre Nuclear

Generating Station (SONGS), which is 80 percent

owned and operated by Southern California Edison

Company (SCE). The plant experienced tube leaks

and has been in limbo for some time. Some

observers believe the cost of fixing the problems

may exceed the gains. If shut down, it will leave

Pacific Gas & Electric Company’s two operating

reactors at Pismo Beach as the only remaining ones

in California.

In mid-September 2012, the Canadian province

of Quebec’s newly elected Parti Quebecois

government announced that it would shutter the

ovember 2012, Vol. 25, Issue 9

30-year-old Gentilly-2 nuclear plant near Montreal.

The decision by the recently elected party, which

has advocated for national sovereignty and

secession from Canada, is mostly symbolic since

the 675 MW plant accounts for a mere 2 percent of

Quebec’s generation, and nuclear power is not a

major issue in hydro-rich Quebec.

In contrast to Quebec, in August 2012, Canada’s

Nuclear Safety Commission (CNSC), the country’s

nuclear regulator, issued a reactor site preparation

license to Ontario Power Generation (OPG) for its

Darlington nuclear site in neighboring Ontario. The

granting of the license, the first of its kind in

nearly 25 years, was heralded as an important

milestone in Canada’s nuclear history, at least by

those who cherish that history. Canada, like the

U.S., has had a blemished experience in building

nuclear reactors on schedule and budget. Many in

Ontario would rather not repeat that experience at

any cost.

CNSC issued the license after a 17-day public

hearing where OPG, 14 government departments,

and more than 260 interveners were heard. A 2008

tender for proposals to build two reactors at the

OPG site attracted submissions from France’s

Areva for the European Pressurized Reactor (EPR),

Westinghouse, and others. Westinghouse is

preparing a detailed construction plan and cost

estimates for two AP1000 reactors for the

Darlington site. &

http://dx.doi.org/10.1016/j.tej.2012.10.016

Journal Gets It All Wrongon Renewables Subsidies

In many countries around the world, renewables

compromise a significant component of new

generation capacity being added to existing

networks. And in most cases, the growth is

pushed by generous subsidies, pulled by

mandatory requirements, or benefits from a

combination of the two. California’s 2020 target for

33 percent renewable energy, and others like it, are

examples of what is driving the renewable

bonanza.

1040-6190/$–see front matter 3

4

As noted by the latest data from the

Energy Information Administration (EIA),

new U.S. renewable capacity additions for the

January–June 2012 period were highest in

California, Washington, and perhaps surprisingly,

Oklahoma. With the exception of Illinois

(mainly coal) and Texas (mainly petroleum/other),

new capacity coming on line these days is

either renewable or natural gas-fired. The latter

makes perfect sense given the currently low

natural gas prices and the fact that natural gas

plants make perfect companions to intermittent

renewables.

As charted by EIA, during the first half of

2012, 165 new electric power generators with a

capacity of 8,100 MW were added in 33 states.

Of the 10 states with the greatest capacity

additions, most of the new capacity uses

natural gas or renewable energy sources. In fact,

most new plants built in the U.S. over the past 15

years are powered by natural gas or wind, a trend

that is expected to accelerate. That trend is not

limited to the U.S. either, as European and other

countries compete in the race for renewable

supremacy.

There is little disagreement that the rapid

penetration of renewables would not be possible

without government subsidies and/or mandatory

targets, such as renewable portfolio standards

(RPS). The questions are: Are renewables worthy

of subsidies, are the subsidies well-spent, and

what form of subsidy or mandate delivers the best

bang for the buck?

There are many ways to answer this

question. One simple, but misleading, approach

would be to ask how much subsidy goes to what

form of energy or fuel and how much are we

getting back in return – an approach employed

on the Aug. 17, 2012, editorial page of The Wall

Street Journal. The editorial quoted President

Obama in a campaign speech in Iowa saying, ‘‘. . .

my attitude is let’s stop giving taxpayer subsidies

to oil companies that don’t need them, and let’s

invest in clean energy that will put people back to

work right here in Iowa. That’s a choice in this

election.’’

1040-6190/$–see front matter

The chart on this page using fiscal year 2010

data measured where federal subsidies totaling

$37.16 billion (not counting state subsidies) were

employed and the accompanying bang for the

buck, measured as dollars spent per MWh

generated. The message the WSJ sought to convey

is that subsidies to oil, gas, and coal deliver low-

cost electricity – and therefore represent a better

use of taxpayer money. But do they?

The main problem with this line of argument is

that oil, gas, and coal technologies – with the

possible exception of R&D on carbon capture and

sequestration (CCS) – are mature and low-cost

technologies. Why on earth should taxpayers be

subsidizing oil, gas, or coal companies in the first

place? The same applies to hydro and nuclear –

the latter appears to be rejected by investors no

matter how much is offered in the form of

subsidies and loan guarantees.

Subsidies only make sense for emerging

technologies that have not reached a mature and

commercially viable stage, where they can compete

with existing technologies. That is the argument for

subsidizing wind, solar, tidal energy, advanced

batteries, and so on. In our view, the bang for the

buck argument misses the point entirely.

There is a second possible flaw: the identity of the

group that ginned up the numbers presented in the

WSJ table, the Institute for Energy Research, which

is not broadly known for supporting renewable

technologies. This editor is not in a position to say

The Electricity Journal

N

that the numbers were fudged, but foundations

receiving support from industry do their best to

keep the donors happy. But back to the main flaw.

Taking the numbers at their face value, on a

per MWh basis, natural gas, oil, and coal

received 64 cents, hydropower 82 cents,

nuclear $3.14, wind $56.29, and solar a whopping

$775.64, using the editorial’s own word. To

some this may appear odd, but that is precisely

what the subsidy is for – to help new and

non-competitive technologies become

competitive. Why would you subsidize fuels

and technologies that are already commercial

and profitable, say, hydropower? That is

like arguing that the government should

not have subsidized semiconductor research

because, at one time, money funneled to makers

of mechanical adding machines would have

garnered a better immediate return.

The WSJ apparently missed this point, or

decided to ignore it. It said, ‘‘So for every tax

dollar that goes to coal, oil, and natural gas, wind

gets $88 and solar $1,212.’’ In our view, that is

precisely as it should be.

Obviously missing the David vs. Goliath aspect

of the conventional vs. emerging technologies, the

California Makes Headway Tow

Continued from page 1

ovember 2012, Vol. 25, Issue 9

editorial said, ‘‘After all the hype and dollars, in

2010 wind and solar combined for 2.3 percent of

electric generation—2.3 percent for wind and

0 percent and a rounding error for solar.

Renewables contributed 10.3 percent overall,

though 6.2 percent is hydro. Some ‘investment,’’’

it concluded.

If the aim is to promote renewables, create green

jobs, and reduce carbon emissions associated with

power generation, then the government policy

should favor renewables. According to the

Congressional Research Service, an independent

arm of Congress, in 2009 fossil fuels accounted for

78 percent of U.S. energy production but received

12.6 percent of tax incentives. Renewables, on the

other hand, accounted for 11 percent of energy

production but received 77 percent of the tax

subsidies. How else would we switch the numbers

around, assuming that is the ultimate goal, but

with subsidies?

Like many others, particularly on the right,

the WSJ does not seem to get it. Renewables need

the subsidies; conventional fuels and technologies

don’t. &

http://dx.doi.org/10.1016/j.tej.2012.10.017

ard 2020 Renewables Target

(WECC), the 14 states west of the Rockies, and

generated from wind, sun, geothermal, biomass,

biogas, fuel cells powered by renewable fuels, hydro

(so long as it is less than 30 MW), municipal solid

waste (so long as its meets stringent requirements),

and wave or tidal energy.

California, the most populous – and by some

measures the most prosperous – state in the union,

is home to 23 retail electricity sellers and 46 publicly

owned utilities (POUs). The latter include the

country’s biggest, Los Angeles Dept. of Water &

Power (LADWP) and Sacramento Municipal Utility

District (SMUD), the state’s third- and fifth-largest,

respectively.

California’s supply mix, which was 48 percent

non-carbonated in 2010, will be getting significantly

greener by 2020. While the original RPS did not

include the POUs, the 2011 law does, meaning that

the RPS target must be met over time regardless of

who is the retail seller.

As it turns out, the POUs have been under

considerable pressure to reduce their dependence

on coal, as a result of other state mandates.

Natural gas and renewables have been the

primary beneficiaries of these requirements. Given

the state’s considerable appetite for power,

developers in neighboring states have benefitted

from California’s insatiable appetite for more

renewable energy. &

http://dx.doi.org/10.1016/j.tej.2012.10.015

1040-6190/$–see front matter 5