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Posts Tagged ‘NRG Energy’


Saturday, December 4th, 2010

December 4, 2010

Nuclear Townhall
During a sweep through Bloomberg’s New York City headquarters Friday, U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko told the news service that nuclear plants being advanced by Southern Co., Scana Corp and NRG Energy, Inc. are at the top of the 13 applications currently pending before the agency.
Jaszko said the three companies are "actually doing" preparation work at their sites in Georgia, South Carolina and Texas.
Conspicuously missing from the list is EDF’s Calvert Cliffs 3 plant, which had been a clear frontrunner for Energy Department loan guarantees until the withdrawal of UniStar principal Constellation Energy.
Jaszko said decisions on applications to build will start flowing in 18 months.
Bloomberg quotes the Chairman as saying a couple years ago, more applicants "may have been talking about construction immediately after licensing, now there appears to be more of a wait and see."  Jaczko attributed the hiatus to a recession-induced energy demand drop and a decline in the cost of natural gas.
The press-shy NRC Chairman — who has been increasingly embattled in the face of mounting Congressional criticism for his handling of the high-profile Yucca Mountain license review — has generally been fastidious in not offering specifics on new plant licensing.


Friday, November 5th, 2010

With all the enthusiasm about electric cars, nobody’s paying much attention to where the power is going to come from. NRG Energy’s CEO David Crane has a simple answer – nuclear power.

“There is a symbiotic connection between this vehicle and nuclear power plants,” Crane told a meeting of the Princeton Chamber of Commerce yesterday. “The advent of electric cars is going to cause a huge, disruptive technology change, one that will throw off all sorts of business opportunities locally and elsewhere. There would be a nuclear renaissance. We would like to see that.”

Crane has long argued that electric cars would be the best thing for the electrical industry since air conditioning. He notes that recharging batteries would take place at night, when conventional demand hits its low point. "You want to turn nuclear power plants on and keep them running at full load all of the time," he said, according to this report in The Times of Trenton Business News. Therefore electric cars and nuclear generation would mesh perfectly.

Crane has good reason to be optimistic. According to the report in yesterday’s Nuclear Townhall, NRG appears to be closing in on a federal loan guarantee for its South Texas project.

"We believe we’re in the final stages of government review [and will be able to make an announcement] within a few weeks,” Crane told The Wall Street Journal. South Texas involves two 1,350-MW Toshiba Advanced Boiling Water Reactors. NRG’s chances have improved immensely since Constellation Energy – its principal rival for awards – dropped out of the Calvert Cliffs project two weeks ago.

Read more at the Time of Trenton


Thursday, October 7th, 2010

Continuing a pattern that is emerging among the nuclear haves and have-nots, South Korea may offer the United Arab Emirates billion to finance the four reactors Korea is building in the Persian Gulf country.
“The Export-Import Bank of Korea expects to lend most of the money that Korea Electric Power Corp. and contractors will need to borrow to build four 1,400-megawatt atomic power stations in the U.A.E., said the bank’s chief representative in Dubai,” according to this report in Bloomberg News.
The transaction has its ironies. The Emirates are supposed to be an oil-rich country, flush with foreign exchange, while Korea is a resource-poor country struggling to gain a foothold in the international market. But the Koreans are technology-happy and have developed a strong reputation in the Middle East for finishng projects on time and on budget. Kexim, the state-owned bank that provides credit for Korean companies overseas, has already committed this year to lend $9.4 billion for energy projects and other infrastructure work in the Middle East.
Last week the Japan Bank of International Cooperation announced it is negotiations with NRG Energy to provide up to $4 billion in financing for the South Texas project, which will be building two Advanced Boiling Water Reactors, jointly owned by Toshiba, Hitachi and General Electric.

Who knows?  Maybe the Koreans will soon be offering the U.S. financing to get other nuclear projects off the ground.


Read more about it at Business Week


Wednesday, July 21st, 2010

Following nuclear renaissance first wave, “Wall Street’s appetite for nuclear investment will increase.”

David Crane is a bit of an anomaly.  A Harvard-educated lawyer with an undergraduate degree from Princeton’s Woodrow Wilson School of Public and International Affairs, he serves as CEO of NRG Energy, one of the nation’s leading merchant energy companies.  Although NRG generates 99.8 percent of its electricity from fossil fuels (52.9 percent natural gas, 31.0 percent coal, 15.9 percent oil), it won its spurs with the nuclear industry in 2007 when it became the first company in 29 years to submit a proposal for a new reactor to the Nuclear Regulatory Commission.  The South Texas Project has been through much turmoil since then – the City of San Antonio pulled out as costs mounted – but NRG is still pushing ahead.   South Texas on a very short list to be recipient of a federal loan guarantee – if Congress appropriates sufficient funding. We caught up with Crane on one of his many cross-country trips in pursuit of the Nuclear Renaissance. 

NTH:  As CEO of a merchant energy company with a stake in almost every form of electrical generation, how do you size up the situation of where we’re headed in terms of building new generating capacity?

CRANE: While demand is down due to the recession, I believe this is a temporary phenomenon and demand will grow as the economy continues to recover. I think we will see much of this demand increase come in the form of renewable power via renewable portfolio standards from states. This will be augmented by the introduction of mass-market electric vehicles later this year, which will be the biggest thing that’s happened in our industry since air conditioning.  I believe many consumers, already sensitive to our nation’s dependence on foreign oil, will want to power these vehicles with clean energy.  In line with these trends, we are positioning NRG as a leader in this no-carbon revolution.

We are seeing more and more onshore wind across the wind belt. Solar is finally beginning to take off as reduced cost of photovoltaic cells and increased government incentives take hold. We are aggressively developing projects in Arizona, California and New Mexico, and we already own the largest photovoltaic site in California.

While the federal loan guarantees for new nuclear has taken longer than originally anticipated, we hope to see additional appropriations and loan guarantees in the coming months which will help continue the momentum for new zero-emission nuclear power. I think any discussion of developing a clean energy economy must include a strong role for nuclear—indeed, it must be based on a new advanced nuclear power since nuclear is the only carbon-free, low-cost, around-the-clock baseload power generation with American ingenuity and American labor.

We are seeing a number of demonstration projects announced for carbon capture systems that may allow us to use our nation’s vast coal resources without the carbon emissions that traditionally come with coal. NRG won a Department of Energy grant for a CCS demonstration project at our Parish facility. Yet, it is commonly understood within the industry that truly “clean coal” facilities are not ready for mass deployment at scale where nuclear is fully ready to be deployed.

Lastly, greater domestic reserves of natural gas are a two edge sword for generation: Reserves keep the price down for this cleaner-burning fuel, but it makes other forms of generation less economical to build, which could move us to an over reliance on natural gas with its potential for volatile price changes.

NTH: Right now the Nuclear Regulatory Commission at least five years to issue a construction license for a new reactor. Is there any way this process can be speeded up?  What would you suggest to the NRC?

CRANE: At the end of the day, the NRC is a regulatory body with a critically important safety mission. As such, their first and foremost responsibility is to make sure that all of the units that come on line can be constructed and operated in a safe and secure manner. In order for the NRC to diligently perform this function, the licensing process can only be shortened so much.

That being said, we would expect that the timeline for new plant licenses would be reduced. First, there are a number of incomplete designs. The NRC cannot be expected to certify the safety of a design that is not yet complete. That is part of the reason we chose GE’s ABWR – it was a complete design that had been built before and previously certified by the NRC. Second, it is the first time for any of us to go through the new licensing process. I am sure that there were some learning experiences for both the NRC and for the applicants and we will have the ability to implement those lessons learned on later projects. Finally, some of the unknowns in the process, such as the length of the hearings, will be known by the next applicants.

NTH:  One of the most common arguments against nuclear is that Wall Street won’t invest. If and when anything gets licensed, the money won’t be there for new reactors. As a CEO trying to win investors for the South Texas Project, what’s your take on that?

CRANE: I think it’s a little misleading. Wall Street debt investors, whom the loan guarantee program is designed to support, are very risk averse. They don’t like new technologies, they don’t like unproven licensing processes, they don’t like long construction periods, and they don’t like the history of unsuccessful nuclear construction in this country (even though that history is two-to-three decades old at this point). When the first wave of the nuclear renaissance is completed, debt investors will see successful resolutions to all of these risks.  At that point, we think Wall Street’s appetite for nuclear investment will increase.

Additionally, it’s worth pointing out that these are very sizeable financings. Our project will require $10 billion to $11 billion of debt. If multiple new nuclear projects were to attempt financing over the next few years, it would overwhelm Wall Street’s capacity for power projects in general, let alone new nuclear.

We have done everything we can to mitigate these risks at NRG, using a design that has been built and is certified, but there are still first-of-a-kind risks. And until we have proven that these risks can be mitigated and overcome, we would not expect a significant appetite among bond investors for new nuclear.

NTH: You had a bad experience with the San Antonio City government on that project. What did you learn from that?

CRANE: Probably the most important thing is we did not realize that while the nuclear team at CPS Energy, our Texas partner, was fully onboard with the expansion, they had not gained the same level of support for sufficient spending from either their leadership, their board or the San Antonio City Council. Our lesson learned is to better understand the environment in which our partners are operating.

NTH: NRG gets 99.8 percent of its power from fossil fuels.  Yet you still talk quite a bit about wind and solar. How much of this represents a serious wager on these technologies and how much is BP-type window dressing, trying to curry favor with the environmental community?

CRANE: We are not “green-washing” but are investing in these technologies because we see them as the generation of the future and we want to have “first mover advantage.”

I think each of these technologies should be developed in the region where they make the most sense, accounting for regional differences.

For instance, the Southwest, with its copious sunlight, is a prime area for solar development. Solar, which is coincident with peak demand, can be developed in the heart of the Sonora and Mojave deserts and transmitted right into the southern California load pocket.

The South, which lacks strong solar and wind resources, can develop nuclear. The population there generally is comfortable with nuclear power and its utilities have experience as nuclear developers.

Along the Eastern Seaboard, we can develop offshore wind. The best offshore wind resource in the country, coincident with peak demand, is called Mid-Atlantic Bight and is located as close as 10 miles off the coastline. We can build wind parks in the shallow waters there and serve the dense population centers along the Northeast Corridor from Boston to Washington.

Finally, the entire country should buy electric vehicles, powered by nuclear and renewables backed by fast-start gas plants.

I am proud of our stance on helping to move these technologies as are NRG employees.  This is a nice example of when doing the right thing for the environment and the country is also the right thing from a business perspective.

NTH: Now that you’re now operating completely in the merchant mode, with no state monopolies or guaranteed returns, do you think this system gives you a fair shake?  Is there a level playing field for merchant generators or do state officials still tend to favor their old monopoly clients?

CRANE: We have to work harder but that is a good thing. We cannot rely on a rate base and if we have cost overruns just throw them at the ratepayer with little or no consequence to ourselves.  We take a very disciplined approach to our capital spending because we are spending the shareholders’ money. That might be harder but it is a model that the American economy and society is based on. Certainly one of the greatest surprises about my job has been that I consistently have to defend to outsiders the merits of the competitive free market for independent power companies relative to the monopolistic, rate-based model that has traditionally existed in the states.

NTH: You’re a Princeton graduate with a liberal arts education. You don’t see many of your type sitting in CEO offices. Do you think the colleges and universities have done a fair job of training engineers and scientists for the business world?  And do you think America is prepared to compete in an increasingly scientifically literate world?

I have benefitted in many ways in my CEO position from having been the recipient of a classic liberal arts and legal education but the fact that I was not required to, and did not take, any engineering or classic science courses after high school was, in retrospect, a mistake. I could do my job better if I had a better fundamental understanding of physics, electrical and nuclear engineering and environmental science. At the same time, I think it is very important for our nation’s engineering schools to make their curriculum more relevant to the needs of the economy and to educate their students more comprehensively in the social, economic and political environment in which technological decisions are made.

NTH:  Thanks very much for your time and good luck with that Texas project.


Thursday, July 8th, 2010

No matter what happens with an energy bill in Congress this year – if anything happens — the future doesn’t look bright for carbon. 

Congress might impose a straight up Cap-and-Trade provision limiting carbon emissions and allowing carbon-neutral energy producers to earn  credits that can be sold to carbon emitters.

Congress could just impose a simple tax on carbon emissions, or approve a deal with just the utilities to cut emissions.

And if Congress doesn’t act, the Environmental Protection Agency may issue its own carbon limits.

Utilities have known this for a long time, and they’re not waiting for Congress to figure it out.

Their websites may be graced with images of wind turbines and solar panels as carbon alternatives, but an expansion to nuclear seems a more likely hedge against carbon uncertainty and a surefire way to fill the high-energy demand/low carbon gap.

Case in point: Jacksonville, Florida’s JEA recently closed on the $2 billion purchase of part of a reactor to find safe harbor from a carbon-tax world.
According to the utility, The JEA Board of Directors approved the pursuit of nuclear energy partnerships at their March meeting with the goal of providing 10 percent of JEA’s power from nuclear sources. That is the equivalent of approximately 300 megawatts of capacity. Adding power from nuclear sources to JEA’s portfolio is part of a strategy to make the utility less dependent upon fossil fuels.

The Municipal Electric Authority of Georgia (MEAG) is developing a nuclear plant with Georgia Power that would be one of the first new plants licensed in the U.S. in decades. It is an expansion of the existing Vogtle nuclear complex outside of Augusta, Georgia.

Oglethorpe Power Cooperation, a Georgia-based cooperative, is also a player in the Voglte expansion. It operates natural gas, hydroelectric, coal and nuclear plants, but cited its Vogtle investment as a source of, “emission-free power.”

Adding heft to the project is President Obama’s decision to grant the Vogtle project $8.3 billion in loan guarantees. The administration, while sour on Yucca Mountain as a nuclear waste site, has used a 2005 funding bill to back nuclear energy as a carbon-free alternative that is already available.

Other projects are already lining up for federal loan guarantees. Rep. Steny Hoyer, a Maryland democrat and the House of Representatives majority leader, has said that Constellation Energy’s bid to build a reactor at Calvert Cliffs, Md., is "first in line" for a federal loan guarantee.

Projects in Texas also hope to snare some of the guarantees. Luminant, a Texas utility, has applied for a license to add two new reactors at Comanche Peak nuclear plant in Somervell County.

A two-reactor expansion project run by NRG Energy in San Antonio is also hoping for federal guarantees.

The International Energy Agency, in a “Nuclear Roadmap” report issued last month, found that nuclear power could generate nearly a quarter of the world’s power by mid-century.

The report cited global pressure to reduce carbon emissions. It found that reactor and fuel-cycle development will have to continue and overall capacity will have to triple if nuclear power intends to compete with other low-carbon technologies.

"Nuclear energy is one of the key low-carbon energy technologies that can contribute, alongside energy efficiency, renewable energies and carbon capture and storage, to the de-carbonisation of electricity supply by 2050," said IEA Executive Director Nobuo Tanaka.

Exelon Corporation, which operates in several states, has already made nuclear power the cornerstone of its operations. The company operates 10 power plants that utilize 17 reactors, as well as wind and solar farms. Exelon has three coal-fired plants and 31 natural gas units, but it has aggressively, and comfortably, moved to nuclear.

Exelon Chief Executive John Rowe has said that his company won’t build new reactors as long as there isn’t a price on carbon. Just the same, Exelon is expanding its current reactor capacity as the energy environment changes and a carbon price tag looms larger.

President Obama met with Senate leaders of both parties recently to press his energy agenda, which in the past has included a cap and trade provision.
During the meeting Democrats agreed to scale back proposed carbon limits.
“We believe we have compromised significantly, and we’re prepared to compromise further,” said Massachusetts Democrat John Kerry, a co-author of one energy bill. But Kerry added, “The president was very clear about putting a price on carbon."

Republican Sen. Lamar Alexander of Tennessee saw it a different way.

“We’ve got to take a national energy tax off the table in the middle of a recession,” he said.

Obama could find a way to follow the lead of the United Kingdom’s new conservative prime minister, David Cameron.

Cameron recently announced a carbon tax as a way to boost nuclear power production. He views nuclear power not as just a hedge against carbon production, but an outright alternative.

Cameron made no secret of a possible carbon tax during his recent campaign for prime minister, though his government, intent on cutting deficits, just nixed a $120 million loan to support reactor construction.

He and Obama hope that pricing carbon will give private markets enough incentive to expand other forms of energy production, including nuclear power.

It is not yet clear if Congress agrees, but some utilities are not willing to wait.