Navigant Research Blog

Proposed Bill Would Revive U.S. Rare Earths Industry

— February 28, 2014

Attempting to solve two energy security crises at a single stroke, Missouri senator Roy Blunt in early February introduced the National Refining Cooperative Act of 2014 (NRECA), which would create a federally chartered corporation to build and operate a processing facility for rare earth elements.  Used in a variety of cleantech, defense, and telecommunications technologies, rare earths have become increasingly valuable over the last decade even as producers in China have established an effective world monopoly on their production.

Until the early 2000s, the United States was the world’s leading supplier of lanthanides, scandium, yttrium, and other rare earths, and the Mountain Pass mine on the border of Nevada and California was the world’s largest producer of the minerals.  Dogged by environmental issues and flat world prices, the Mountain Pass mine shut down in 2002, and rare earths production in the United States evaporated.  As I reported in Fortune in 2011, a Denver-based company called Molycorp has restarted Mountain Pass and is attempting to carve out a place as a significant producer of rare earths.  However, China still controls 95% of the market and has demonstrated its willingness to curtail exports in order to control the world’s supply.

Critical Elements

“We are here to state the importance of the need to bring back the rare earth industry to the U.S. to protect and grow jobs as well as to control our own sources of rare earths that are so important to green technologies, aerospace, and defense, and energy-efficient motors and generators,” testified Robert Strahs, the VP and general manager of Arnold Magnetic Technologies, before a U.S. House Committee on Foreign Affairs hearing in 2011.

Backing NRECA is a loose coalition of developers, miners, and alternative energy activists, including the Thorium Energy Alliance, which for the last 5 years has been promoting the development of nuclear reactors that use thorium, a radioactive element, rather than uranium.  As I documented in my 2012 book SuperFuel, thorium is cleaner, safer, and more abundant than uranium and is effectively impossible to fashion into explosives.  It’s also nearly always found in association with rare earths.  NRECA would create a private corporation that would store the thorium left over from rare earths production and formulate and market it for commercial uses, including energy generation.

Thorium is almost ubiquitous in the Earth’s surface, and the United States possesses enough readily available thorium to produce ample electricity for hundreds of years.  Scientists at Oak Ridge National Laboratory in Tennessee pioneered thorium reactor research in the 1960s, but the program was abandoned under the Nixon Administration.  Other countries are moving forward.  The Indian Atomic Energy Commission recently debuted the prototype of the advanced heavy water reactor (AHWR), which is designed to run on solid thorium fuel.  The AHWR is being developed at the Bhabha Atomic Research Centre, outside Mumbai, which has become one of the world’s centers of thorium reactor research.

The Refining Cooperative bill is designed to end China’s monopoly on strategically important rare earth elements and to provide a consistent supply of thorium to fuel low-risk, zero-carbon nuclear power for generations.  Nevertheless, NRECA’s backers have faced a multiyear uphill struggle just to get the bill introduced.  The current bill, introduced in the Senate, could be matched in coming weeks with a similar piece of legislation introduced in the House as part of the 2014 National Defense Authorization Act, the annual budget bill for the Department of Defense.

“We have strong bipartisan support in the House and on the Senate Armed Services Committee,” Jim Kennedy, a Missouri developer and one of the bill’s leading proponents, told me.

They’ll need it.

 

Thinking Small, Nuclear Power Enters Distributed Era

— April 26, 2013

The nuclear power industry’s drive to deploy small, modular reactors (SMRs) took a significant step forward this month.  Nuclear technology vendor Babcock & Wilcox (B&W) formalized its funding agreement with the U.S. Department of Energy (DOE) for the mPower reactor project.  With $79 million of federal funds for this year (and a total of $150 million over the 5-year program), B&W plans to build a prototype SMR at the Clinch River site in Tennessee, owned by the Tennessee Valley Authority (TVA).

SMRs have gleamed in the eyes of nuclear power providers for a decade now, as the industry seeks a new model for economical, carbon-free power generation for the 21st century.  The Fukushima nuclear accident in March 2011 seemed to squelch the so-called “nuclear renaissance,” but many countries – including the United States, South Korea, Russia, China, and even Japan – are moving ahead with plans for small reactors that can be factory-crafted (thus “modular”) and assembled onsite.  Economies of scale have dominated the nuclear power industry for most of its life, with reactors expanding to 1,000 MW or even 1,500 MW.

Now, many believe that the future of nuclear lies in SMRs of under 300 MW that can be arrayed in multiple configurations, giving power generators more flexibility and, in theory, lower capital costs.

There are more than a dozen designs currently under development for SMRs.  Most of them are simply miniaturized versions of existing, light-water reactors; the mPower is a 180 MW “advanced integral pressurized water reactor” that could be deployed not only for supplying power to the grid but in more specialized applications, such as powering remote oilfield operations or desalinating water.

Arctic Nukes

“SMRs offer TVA an important new option for achieving clean, base-load electricity generation and we are ready to begin the work to understand the value of that option,” said TVA senior vice president of policy and oversight, Joe Hoagland, in a statement.

Increased safety is also a feature of SMRs, at least potentially.  NuScale Power, a startup principally backed by Fluor Corporation, said at an SMR conference earlier this month that it has developed an inherently safe system that, in case of a full power shutdown such as happened after the Japanese earthquake and tsunami, will self-cool the reactor without the need for external power or water.  Essentially, the NuScale design uses a simplified set of water valves that flip open automatically in case of a power disruption.

“Because of the simplicity of the NuScale design, only a handful of safety valves need to be opened in the event of an accident to ensure actuation of the [emergency cooling system],” said Jose Reyes, the co-founder and CTO of NuScale, speaking at the Nuclear Energy Insider SMR Conference in Columbia, South Carolina.  “These safety valves have been mechanically pre-set to align to their safe condition without the use of batteries following a loss of all station power.”

The earliest applications for SMRs are likely to be distributed generation in remote places, including military forward operating bases.  A Russian consortium is constructing a barge-mounted SMR, based on the nuclear engines that power icebreaker ships, that can be deployed in some of the least hospitable places on Earth.  The idea of nuclear reactors powering oil and gas production in the Arctic is hardly a reassuring thought for environmentalists and diplomats, but it’s likely to become a reality in less than a decade.

The mPower prototype is scheduled to be up and running by 2022.

 

Why We Don’t Need a Fusion-Powered Rocket

— April 7, 2013

A team of researchers at the University of Washington (UW) has won a second round of funding from NASA for their concept for a nuclear fusion-powered rocket to take men to Mars.  Given the very grave problems we face as a nation and as a species, not to mention the long and dismal history of fusion reactor design, the folly of this is astounding.

“We are hoping to give us a much more powerful source of energy in space,” John Slough, the UW research associate professor of aeronautics and astronautics who heads the project, said in a UW website feature, “that could eventually lead to making interplanetary travel commonplace.”

I call this kind of thing “future porn”: the starry-eyed reporting of R&D that aims to accomplish outlandish goals that, even if attainable, will almost certainly prove too expensive, complicated, or non-lucrative to ever become reality.  Future porn stories always contain lots of conditionals and very long timeframes.  The terms “could,” “would,” and “eventually” tend to appear frequently.  “Now, astronauts could be a step closer to our nearest planetary neighbor through a unique manipulation of nuclear fusion,” the UW site reports.

Slough’s team “was one of a handful of projects awarded a second round of funding last fall after already receiving phase-one money in a field of 15 projects chosen from more than 700 proposals.”

I can think of a half-dozen things that NASA should be working on that would be more applicable to our current predicament and beneficial to humanity than harebrained schemes for Mars exploration; warding off annihilating asteroids and dealing with climate change would be top of the list.

Fusion Fail

The fusion-rocket news out of Seattle coincides with a discouraging report in Science News on the National Ignition Facility’s long, quixotic, and so-far failed attempts to produce controlled fusion by compressing a sphere of cryogenic hydrogen using 384 beams from the world’s most powerful laser, thereby releasing tremendous amounts of energy.  NIF scientists 4 years ago confidently predicted “that by September 30, 2012, they would demonstrate a fusion reaction producing net energy, a milestone known as ignition.”  Needless to say, that hasn’t happened.

The NIF account makes for a fascinating case study in the peril of relying on computer simulations.  Essentially, the researchers were convinced by their computer models that the hydrogen would compress symmetrically, i.e., into a near-perfect sphere.  Instead, the material deformed and warped, defying the attempts to unleash more energy than the powerful lasers put in.  “Nature just wants to break you,” said John Edwards, NIF’s associate director of fusion – a remark that echoes the head-shaking sighs of just about everyone who’s ever tried to achieve a sustainable, controlled fusion reaction.

Instead of lasers, the fusion rocket out of UW would use large metal rings, made of lithium, caused by a powerful magnetic field to implode and compress a type of plasma, leading to continuous bursts of fusion that would power the rocket.  To master the intricacies of this ingenious scheme, the scientists have relied upon, you guessed it, “detailed computer modeling.”

 

The Problem With Pay as You Go

— April 7, 2013

A “pay as you go” strategy for critical infrastructure, such as power supply – wherein infrastructure is financed incrementally, during the construction process – could make sense when applied to small remote microgrids supplying small solar systems in the developing world.   End-users in these countries often earn subsistence wages and need only enough juice for lights, computers, and cell phones.

When applied to nuclear power, though, the pay as you go concept dramatically increases the risks to end-users.   Just ask residents of Florida, where ratepayers are discovering that utilities can actually make more money – and consumers pay more for electricity – the longer it takes to build nuclear power stations.  The culprit is something called “construction work in progress,” or CWIP.

The Nuclear Energy Institute (NEI) has made a convincing argument that CWIP should actually save consumers money.  By collecting funds from ratepayers in advance of actual power production, sudden rate shocks can be avoided.  Financing costs for such large infrastructure projects can be reduced under CWIP, since investors have more certainty that debts will be paid off.  Since the investment ratings of utilities are protected, borrowing costs also shrink.

In the case of a proposed nuclear reactor by Progress Energy in Levy County, Florida, NEI estimated that CWIP program financing would save consumers $13 billion over the life of these nuclear reactors.  When Florida passed a bill in 2009 authorizing CWIP, it sailed through the state legislature with only a single dissenting vote.

After 6 years of CWIP financing, residential customer bills in Florida are projected to increase by $50 a month this year, even before the nuclear reactors generate a single kilowatt-hour of electricity.  Progress Energy originally estimated that building the two unit reactors would cost $5 billion and would be generating carbon-free power by 2016.  Instead, the construction costs have ballooned to $22.4 billion, and the plant – if ever completed – will not be generating power until 2021.

Ironically, this revised price tag and construction schedule mean that Progress Energy will generate more – not less – revenue the longer it takes to build the nuclear reactor.  If the project were cancelled today, the utility would still walk away with $150 million in profit.  So far, ratepayers have committed to over $1 billion dollars for a nuclear plant that won’t produce any power  for almost a decade.

If nuclear power could be financed in a way that makes economic sense, then proceeding down that path might make sense.  “Distributed nukes” – which would be deployed at a much smaller scale, reducing large investment risks – could be a better fit for CWIP and provide the form of financial innovation that might lead to a nuclear renaissance.  (Both water and transmission facilities have deployed CWIP with little controversy).  Unfortunately, the experience in Florida is turning former nuclear advocates and supporters of CWIP into skeptics, though the practice still has its defenders.

All eyes are on Florida to see if and when the plug is pulled on CWIP for large-scale nuclear power plants, with Republican state representative Mike Fasano, who voted for the CWIP state legislation in 2009 and supports nuclear power, leading the charge to shift financial risks away from ratepayers and to utility shareholders with new state legislation.

 

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