Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Halloway. So, Tracy, we
Speaker 1: recently did an episode with Matt Klein and we talked
Speaker 1: about essentially what a disaster German energy policy has been
Speaker 1: over the last several decades, winding up in this position
Speaker 1: where it's energy usage is not only heavily reliant on
Speaker 1: Russian gas, it's also really not clean and so even
Speaker 1: if your vision is a low carbon they haven't achieved
Speaker 1: that either. Yeah, the worst of all worlds, I would say,
Speaker 1: years of under investment in energy capacity, moving away from
Speaker 1: nuclear um after Fukushima, increased reliance on Russian gas, which
Speaker 1: clearly is problematic now, and not actually reducing any of
Speaker 1: their carbon emissions all at the same time. Yeah, kind
Speaker 1: of an extraordinarily bad combination. But you mentioned nuclear, and
Speaker 1: of course Germany has been moving away from it for
Speaker 1: some time. But it does feel that even prior to
Speaker 1: the recent energy price spike, or even prior to this
Speaker 1: sort of heightened awareness on the German energy situation specifically,
Speaker 1: there does seem to be a sort of i don't know,
Speaker 1: rethinking or some sort of turn in people sort of
Speaker 1: reconsidering how much nuclear has been shut down over the
Speaker 1: last several years, how little new nuclear has been built,
Speaker 1: and whether that's been wise. Yeah, it's definitely been an
Speaker 1: ongoing debate. But I have to admit this is something
Speaker 1: I mean, I was aware that nuclear had fallen out
Speaker 1: of favor, but I cannot remember when that moment actually
Speaker 1: happened and what exactly the process was. So obviously Fukushima
Speaker 1: happened in Japan, and there's a lot of concerns around that,
Speaker 1: but I'm very, very interested in how nuclear sort of
Speaker 1: lost the public debate. Yeah, that makes sense. Yeah, me too.
Speaker 1: And I think obviously, look, you have a handful of
Speaker 1: well known either disasters or near near disasters. But it
Speaker 1: is interesting that at a time when there's so much
Speaker 1: interest in reducing carbon emissions, you know, so much has
Speaker 1: been focused on wind, solar, maybe hydropower, very little about
Speaker 1: how nuclear could be part of the solution, right, And
Speaker 1: at the same time, we have in recent years really
Speaker 1: seen some of the weaknesses or the downsides in certain renewables.
Speaker 1: So you know, days when there isn't enough wind, we
Speaker 1: just don't have energy in some parts of the world,
Speaker 1: Days when there isn't enough sun. We've seen that in
Speaker 1: places like the UK and also in Texas. Yeah, that's
Speaker 1: exactly right. And so obviously wind and solar could at
Speaker 1: times produce incredibly cheap electricity, but it's intermittent and we
Speaker 1: don't have the battery technology to store it when it's
Speaker 1: really sunny. As you mentioned, I think it was in
Speaker 1: November December. They're all these days in Europe and it
Speaker 1: was like the wind just was and blowing, and so
Speaker 1: the energy prices sore because what can you do. And so,
Speaker 1: whether it's in the US where we've had a number
Speaker 1: of energy grid blackouts, we saw that in Texas last year,
Speaker 1: whether it's Europe, or the price of electricity is soaring,
Speaker 1: a rethink of nuclear. So I'm very excited about our guests.
Speaker 1: We're going to get the case for nuclear investment today.
Speaker 1: I'm super excited about our guests. We're gonna be speaking
Speaker 1: with Meredith Anglin. She is the author of the book
Speaker 1: Shorting the Grid, The Hidden Fragility of Our Electric Grid.
Speaker 1: Absolutely fascinating book basically talking about grid policy. Uh and
Speaker 1: somehow it's incredibly readable. It's actually a page turner, even
Speaker 1: though the topic is very dense in our cane. Meredith
Speaker 1: has a gift for taking what is highly technical and
Speaker 1: making it extremely compelling. And she is also a pro
Speaker 1: nuclear activist in some way and thinks it is the
Speaker 1: solution to many of our energy questions. Prior to writing
Speaker 1: the book, she has been for several years a researcher
Speaker 1: worker in the utility industry on our power problem. So, Meredith,
Speaker 1: thank you so much for coming out on odd lots,
Speaker 1: thank you so much for inviting me, and I'm so
Speaker 1: happy to be talking to you. Into Tracy Meredith, I
Speaker 1: loved your book. And like I said, and other people
Speaker 1: on Twitter said the same thing. That's like, how is
Speaker 1: a book that is on such a technical topic regulatory policies?
Speaker 1: Are the grades so readable? And I mean it is
Speaker 1: a page turner somehow. But why don't you just give
Speaker 1: us a little bit of your background prior to writing
Speaker 1: the book. What is your experience within the utility and
Speaker 1: energy industry. Well, I was always very interested in chemistry.
Speaker 1: I became a chemist and it was also interested in geology,
Speaker 1: and uh, I was working towards my PhD at University Chicago.
Speaker 1: I do not complete that. I have a master's and
Speaker 1: I was you know, and so forth. But it was
Speaker 1: in a in mineral chemistry, and when I began thinking
Speaker 1: about what you do with mineral chemistry. When I got
Speaker 1: out of school, I was also interested in geo thermal energy,
Speaker 1: and so I began researching how could I work in
Speaker 1: geothermal I learned enough to be actually getting some little
Speaker 1: contracts in geo thermal and UH. Then I got a
Speaker 1: job at a company that wanted to get into geo
Speaker 1: thermal but was working on nitrogen oxide pollution, which is
Speaker 1: a really big problem. And so I was working on
Speaker 1: nitrogen oxide pollution, including UH some patents. UH. Nitrogen oxides
Speaker 1: are one of the prime ingredients in smog, and so
Speaker 1: I was working on that. And then I moved over
Speaker 1: to the Electric Power Research Institute, where I was in
Speaker 1: geothermal energy. So I felt I had finally achieved what
Speaker 1: I had wanted to achieve by being in UH geo
Speaker 1: thermal energy. But then when I was in the search
Speaker 1: group that was in renewables, I began to see sort of,
Speaker 1: I don't know, the dark side of renewables, not so much.
Speaker 1: The dark side is the fact that they really weren't
Speaker 1: up to the the level of a lift that people
Speaker 1: were claiming they would have, and that when you wanted
Speaker 1: to put in a renewable people objected, And that astonished
Speaker 1: me that the people were trying to stop renewable development.
Speaker 1: How could they do this? But at any rate, um
Speaker 1: I began working with on some similar corrosion issues with
Speaker 1: a group that was working in nuclear, and I began
Speaker 1: to get to know them. Now I didn't have anything.
Speaker 1: I wasn't against nuclear, but I wasn't. I wasn't like
Speaker 1: drawn to it particularly, But then I began working with them,
Speaker 1: I began to realize its advantages, and I switched over
Speaker 1: to the nuclear group. Later on, I ran a consulting
Speaker 1: company about basically about a corrosion control and water chemistry
Speaker 1: and nuclear plants. And then when I sort of them,
Speaker 1: I retired. I began supporting our local nuclear plan, ver
Speaker 1: monty Yankee, which led me into trying to understand how
Speaker 1: Vermont Yankee interacted with the people who ruled the grid,
Speaker 1: and that eventually led to the book shorting the Grid
Speaker 1: to note it's funny. I actually used to live in Brattleboro, Vermont,
Speaker 1: a couple of miles away from the Vermont Yankee nuclear Plan,
Speaker 1: which I remember tons of debate about it at the time,
Speaker 1: and lots of local activists wanting to shut it down,
Speaker 1: and now it did get shut down. But it's fun,
Speaker 1: you know, I remember this debate very well. Well, can
Speaker 1: we talk a little bit more about that? So you know,
Speaker 1: I mentioned this in the intro, the idea of nuclear
Speaker 1: sort of losing public opinion. How did that happen exactly?
Speaker 1: And how do the alleged downside stack up against the
Speaker 1: opportunities or the upsides of nuclear power as you as
Speaker 1: you learned about them. Well, that is a really difficult
Speaker 1: question that there are many books about, Like there's a
Speaker 1: book called the Rise of Nuclear fear Um. One of
Speaker 1: the things is that people had it mixed in their
Speaker 1: minds with nuclear weapons. What I'm trying to say is
Speaker 1: that there are plenty of states like uh, North Korea
Speaker 1: with nuclear weapons but no nuclear power plants. And there
Speaker 1: are plenty of states like United Arab Emirates with nuclear
Speaker 1: power plants and no nuclear weapons. I mean, they don't
Speaker 1: go together, as like, if you've got one, then you've
Speaker 1: got the other. And the whole idea that someone would
Speaker 1: steal stuff from a nuclear power plant to make a
Speaker 1: weapon is so absurd it just I mean, the things
Speaker 1: that are in nuclear power plants are very big, very radioactive,
Speaker 1: and the plants are well guarded, so I mean you
Speaker 1: would have to drive some kind of a special vehicle.
Speaker 1: I mean, it's just it's not it's not like an
Speaker 1: easy thing to imagine. So I don't like to even
Speaker 1: go into that very much because it's it's it's all
Speaker 1: so theoretical. It's just not reasonable. But my mother was
Speaker 1: very active in in in banned the bomb groups and
Speaker 1: and but you a sent against nuclear but one power.
Speaker 1: But when the bomb actually got banned, I think some
Speaker 1: of those groups just my morphs gone over like, oh well, well,
Speaker 1: let's go after the nuclear plants. Now. It wasn't reason.
Speaker 1: It was just sort of like, let's do the next step.
Speaker 1: We were worried about fallout, and now we have these plants,
Speaker 1: so we'll go after them. And and and the fact
Speaker 1: that they're not releasing anything into the environment, we're not
Speaker 1: gonna worry about that part. They could there's this whole
Speaker 1: word could. They could. They could if you have a
Speaker 1: laborate enough scenario, they could. What do you talk about
Speaker 1: that a little bit further? And actually, of course you
Speaker 1: know we're talking about Europe the other night, I think
Speaker 1: it was. I think it was last Thursday, were recording
Speaker 1: this March tent, so I think a week ago. One
Speaker 1: of the scarier headlines that has come out of the
Speaker 1: Russia invasion of Ukraine. All the headlines are are awful,
Speaker 1: but there was the concern about this particular nuclear plant.
Speaker 1: There was a report about a fire, and then everyone
Speaker 1: was debating how terrible could this be? Could this be
Speaker 1: a Fukushima or Chernobyl or something like that, And then
Speaker 1: the people who actually knew what they were talking about said, no,
Speaker 1: that's a completely unrealistic scenario. There's not like that at all.
Speaker 1: But can you give us like the basic reasons, like Okay,
Speaker 1: why isn't a nuclear power plant as sort of major
Speaker 1: security risk if it could catch fire or something like that?
Speaker 1: Like why did the people who seem to understand nuclear
Speaker 1: the most they did not seem particularly worried about that
Speaker 1: risk in that situation. Well, it's a standard kind of
Speaker 1: uh plant. It's a light water reactor. It's not like
Speaker 1: the Chernobyl plants. The Chernobyl plants, every every nuclear plant
Speaker 1: has to have a way to slow down the neutrons,
Speaker 1: and that's called the moderator, and in American plants that's
Speaker 1: that's water, and in the Russian plant it was graphied.
Speaker 1: So when the Russian plant began overheating, the graphite began burning.
Speaker 1: Uh it was just an incredible mess. That's your noble one.
Speaker 1: But the ones that are operating now in Russia, they're
Speaker 1: practically like the American plants there, they're like pressurized water reactors.
Speaker 1: There's uh three levels of water safety between them and
Speaker 1: uh any released to the environment. What I'm trying to
Speaker 1: say is you have the pressurized water that surrounds the
Speaker 1: reactor core. Then that water goes into loops within a
Speaker 1: steam generator. That steam generator makes steam which turns the turbine.
Speaker 1: But it and then it doesn't it is it isn't
Speaker 1: the same water that went through the reactor core. It's,
Speaker 1: as a matter of fact, incredibly pure water. Very no
Speaker 1: expense is spare to make that water incredibly pure, and
Speaker 1: the reason is that you don't want it to pass
Speaker 1: sitting things on these high speed turbans. And then as
Speaker 1: it comes out of the turbans, it's cooled by a
Speaker 1: tertiary loop, which actually is a water that goes through
Speaker 1: a cooling tower or something which is out in the environment,
Speaker 1: but at that point it's like three three steps away
Speaker 1: from from the reactor. So uh, people kept imagining all
Speaker 1: these scenarios which which are unreasonable of the reactor uh
Speaker 1: having some huge problem that causes this vast release, which
Speaker 1: actually did happen at Chernobyl, but that was because it
Speaker 1: was a completely different plant. Another thing I have to
Speaker 1: say is Chernobyl did not have a containment structure around it,
Speaker 1: so anything that was released was immediately released. These plants
Speaker 1: have containment structures around the reactor steam generator, uh area
Speaker 1: that can be hit by like missiles. I mean really
Speaker 1: they run. Uh they they're so strong that can be
Speaker 1: hit by trains, uh, missiles. I don't know how big
Speaker 1: a missile I suppose if it was, but but you
Speaker 1: know that they're they're testing in the Midwestern ones are
Speaker 1: tested with U utility poles flung against them as if
Speaker 1: there was a tornado. I mean, so the whole idea
Speaker 1: that these things are just on the verge or something
Speaker 1: horrible happening is really not reasonable. And it is. But
Speaker 1: as I say, I think that the people were like, oh,
Speaker 1: we banned the bomb, let's ban the other nuclear stuff.
Speaker 1: It's all horrible aside from safety, Were there any other
Speaker 1: constraints or are there any other constraints on building out
Speaker 1: nuclear capacity, because I mean, if there's one thing I
Speaker 1: learned from some city, it's that nuclear power plants are
Speaker 1: extremely expensive compared to all other forms of power. But
Speaker 1: obviously that's that might be out of date. But you know,
Speaker 1: are there financial constraints or policy constraints that impact investment
Speaker 1: in nuclear power? Well, there are finding at this point
Speaker 1: nuclear plants are more expensive and slower to build than
Speaker 1: other types of plants, and they're usually compared with um
Speaker 1: combined psycho plants of natural gas plants because very few
Speaker 1: people are building coal plants anymore, except, of course, in
Speaker 1: many places in the world, but not in America. Uh,
Speaker 1: people are building coal plants in China and in India,
Speaker 1: but they're not building them in America. So we compare
Speaker 1: our nuclear plants to natural gas plants, and they're much
Speaker 1: more expensive. However, nuclear fuel tends to be a lot
Speaker 1: less expensive and a lot more reliable than the fuel
Speaker 1: for the natural gas plants. And people do a comparison
Speaker 1: with a wind turbine. Whatever wind turbines aren't even supposed
Speaker 1: to last more than twenty five years, and nuclear plants
Speaker 1: can last sixty years, uh, eighty years, whatever, how often
Speaker 1: do you have to build? It becomes a question with
Speaker 1: with with many of the types of plants. So can
Speaker 1: you actually do the math a little bit more for us,
Speaker 1: like what are the you know a region is thinking
Speaker 1: about investing a like how much how long did would
Speaker 1: it take to build a nuclear plant versus a uh
Speaker 1: something that's powered more by natural gas? And another important
Speaker 1: thing you talk about in your book is that a
Speaker 1: nuclear plant holds the fuel on site, whereas natural gas
Speaker 1: is real time. It doesn't store the gas on site,
Speaker 1: It needs it just in time, and so if there's
Speaker 1: any sort of pipeline disruption, the natural gas plant is useless.
Speaker 1: But talk about the upfront costs of the two, and
Speaker 1: then like how it plays is out over time in
Speaker 1: your views such that the nuclear is the better investment. Well,
Speaker 1: you know this isn't my major area of expertise about
Speaker 1: investing in nuclear I'm sorry to say that. I will
Speaker 1: say that nuclear plants have had a tendency to be
Speaker 1: um estimated at five billion and come in at ten billion.
Speaker 1: But and meanwhile, natural gas plants are estimated at five
Speaker 1: hundred thousand and come in and a million and a
Speaker 1: half or something. No, not a million and a half.
Speaker 1: Excuse me, five d a billion and a half. Really
Speaker 1: I would so. Um. But the thing is that with
Speaker 1: the natural gas plant, you have to have a fuel
Speaker 1: supplied all the time. It just keeps coming in over
Speaker 1: the pipeline and sometimes, uh, that's okay, and sometimes it's
Speaker 1: not okay. Like right in the winter in the Northeast,
Speaker 1: we actually are dependent on l G deliveries just like
Speaker 1: we were Singapore or something to get enough natural gas
Speaker 1: into all pipelines for winter use, and nuclear stores about
Speaker 1: eighteen months of fuel on site. So uh, some disruption
Speaker 1: in the price of fuel or anything like that, you've
Speaker 1: got a lot of time to try and figure out
Speaker 1: what to do about it. Well, with natural gas, they
Speaker 1: say it's now X price. You're paying it. That's it.
Speaker 1: You're either paying it and refusing to accept it, whichever
Speaker 1: is that. The main difference that you see between nuclear
Speaker 1: power and renewables, it's the I guess, the reliability of
Speaker 1: power generation and the idea that you can build up
Speaker 1: you know, eighteen months of capacity as you put it,
Speaker 1: and not really have to worry about it, versus if
Speaker 1: you have something like wind or solar, it's much more unpredictable.
Speaker 1: Oh yeah, that's very important. Now. One of the things is, uh,
Speaker 1: grid reliability is dismissed by people who are in favor
Speaker 1: of you know, like, oh, we'll get to a hundred
Speaker 1: percent renewables, we'll figure out how to make them reliable.
Speaker 1: It won't take that much. Uh. But when you get
Speaker 1: right down to it, what most people wanted and grid
Speaker 1: is reliability. They want the lights to go on when
Speaker 1: they turn on the lights. They want the water treatment
Speaker 1: plan to keep operating. They want, uh, you know, all
Speaker 1: the things that the grid gives us uh to keep happening.
Speaker 1: And if they're interrupted a lot, this is very very bad.
Speaker 1: And and so what happens is that nuclear plants, um
Speaker 1: let me give you an example. The thing is, it's
Speaker 1: very hard to talk about natural gas in terms of
Speaker 1: size because it's a gas. Nobody thinks of it in
Speaker 1: terms of size. So what I'm gonna do is I'm
Speaker 1: going to pair Vermont Yankee nuclear plant with Merrimac Station,
Speaker 1: which is not far away. It's down in New Hampshire.
Speaker 1: Meyri Max stations, a coal plant is four hundred megawatts,
Speaker 1: and Vermont Yankee was a nuclear plant at six hundred megawats.
Speaker 1: So Vermont Yankee would have a semi pull up every
Speaker 1: eighteen months with a new load of fuel. Okay, one semi,
Speaker 1: maybe they took two sometimes I don't know, with a
Speaker 1: new load of fuel. I've often thought that since there
Speaker 1: were several hundred people working at the plant, they probably
Speaker 1: had more deliveries of paper products of various kinds, from
Speaker 1: from from than than fuel. Meanwhile, over at Merrimac station,
Speaker 1: you have four hundred megawatts. I did the calculation several
Speaker 1: times over to try and figure it out. Uh. They
Speaker 1: told me at the station that it was forty one
Speaker 1: ton ray Hopper cars of cold per day. I went
Speaker 1: through a whole calculation on the probable heat rate and
Speaker 1: came up with thirty nine Hopper cars per day. So
Speaker 1: you see, the thing is they they are taking delivery
Speaker 1: of a lot of coal every day to run that station.
Speaker 1: And of course, when you're delivering a lot of things
Speaker 1: that it's uh, it's can be interrupted. Now, the thing
Speaker 1: that I wanted to say is that if you look
Speaker 1: at a four hundred megawatt UH natural gas plant, it
Speaker 1: is burning not forty cars of coal, because the H
Speaker 1: two and the natural gas also burns. Say it's burning
Speaker 1: twenty cars of coal a day. It isn't coal, it's carbon,
Speaker 1: you see. But at least you can have a visual.
Speaker 1: Then you can have a visual that the natural gas
Speaker 1: plant is getting twenty cold cars full of carbon delivered
Speaker 1: to it every day. You see. We can't have that division.
Speaker 1: Somebody will say, oh, it's got MMC so many million
Speaker 1: cubic feet. I don't. I can't imagine a million cubic
Speaker 1: feet of a gas and what happens, and that's beyond me.
Speaker 1: It's it's much easier to just think if it were coal,
Speaker 1: then how much would this be? How much would you
Speaker 1: see showing up at the plant? And let's look at
Speaker 1: the carbon for a moment. You get these forty coal
Speaker 1: plants going to Merrimack station and then they combine with
Speaker 1: oxygen in the air to make carbon dioxide, which is
Speaker 1: because it's combined, it's heavier than than the coal was.
Speaker 1: So if you had to carry the carbon dioxide away
Speaker 1: in coal cars, you would be using um more than
Speaker 1: twice as many coal cars to carry it away. So
Speaker 1: that's something to think about. I keep trying to figure
Speaker 1: out how to express because otherwise it's so theoretical. People like, oh, yeah, uh,
Speaker 1: it comes, We've got a million cubic feet. Nobody goes like,
Speaker 1: how much does that way? How much space would it
Speaker 1: take up? It's a gas, right, So I try to
Speaker 1: put it in terms of if it were coal, if
Speaker 1: it were visible, if it had to be delivered and
Speaker 1: taken away in railroad cars, this is what would be like.
Speaker 1: That's a really interesting way to think about it. Let's
Speaker 1: go back to conventional renewables, and the two renewables uh
Speaker 1: that people have in their mind when they hear renewables
Speaker 1: are obviously wind and solar, and they inspire a lot
Speaker 1: of very good feelings. They do not emit carbon when
Speaker 1: the sun is shining or when the wind is blowing.
Speaker 1: Electricity is extremely cheap, and I get perhaps the marginal
Speaker 1: cost of that electricity is essentially free. What is uh?
Speaker 1: And you talk about the but what is like the
Speaker 1: basic flaw? Like, what is the argument against just let's
Speaker 1: keep ramping up wind, Let's keep you know, there's gonna
Speaker 1: be this big new wind firm off of New York,
Speaker 1: there's gonna be some win. Why not just continue to
Speaker 1: place uh turbines and panels on every roof and every
Speaker 1: UH on every mountain ridge we can find. Okay, let
Speaker 1: me let me talk about why that isn't a reasonable
Speaker 1: way of looking at the First thing is it's just
Speaker 1: a very simple example. Um. People go to a fancy restaurant, say,
Speaker 1: and the restaurant says, we run a hundred percent on
Speaker 1: renewable electricity here. And the people say, oh, this is great.
Speaker 1: We're not only having a great meal at ten at night,
Speaker 1: but we are also on renewable electricity. Well, actually, they
Speaker 1: what the restaurant has done is just hadn't put up
Speaker 1: a bunch of It may have some some solar panels,
Speaker 1: but it's not running off the solar panels at ten
Speaker 1: at night. What it is doing is this fine renewable
Speaker 1: energy certificates or it is net metering. That is, it
Speaker 1: produces more solar two and it sells it to the
Speaker 1: grid and then it bused fossil from the grid at
Speaker 1: ten at night. And so people get they get misled
Speaker 1: there at this restaurant and it's a hundred renewables and
Speaker 1: they're thinking, well, everybody can do this. If they can
Speaker 1: do it, we should be able to do it. Okay,
Speaker 1: So that's the simple misleading thing. The more formal statement
Speaker 1: would have to be that renewables add to the overall
Speaker 1: system costs of the grid. For one thing, Uh, you
Speaker 1: have to back have something to back them up, now
Speaker 1: you know. I, I really I don't think batteries are
Speaker 1: ever going to do it. But that's a whole another talk. Uh,
Speaker 1: and and and so forth. But whether you decide it's
Speaker 1: batteries or its or it's gas fire plants, or it's
Speaker 1: a pump storage device, okay, something has to be available
Speaker 1: when the um when the renewables are not available, and
Speaker 1: so that means that you have to have redundancy on
Speaker 1: the grid. And that redundancy doesn't go into the cost
Speaker 1: of when the wind turbine is actually making wind, it
Speaker 1: goes into the sort of the overhead cost of the
Speaker 1: whole grid. So what happens is that people don't understand that.
Speaker 1: They say, well, the wind turbines are really cheap, rights,
Speaker 1: and as long as you've got an equal amount of
Speaker 1: installed capacity that you can actually call on, okay, whether
Speaker 1: it's fossil, whether it's whether it's nuclear, whether it's whether
Speaker 1: it's a pump storage whether it's a battery, you don't
Speaker 1: have a reliable grid and and so people don't realize that.
Speaker 1: For example, if if the grid was all what I
Speaker 1: would call traditional plants nuclear, coal, gas, hydro, then a
Speaker 1: grid will usually try to have reserve capacity of I
Speaker 1: don't know twenty So for example, if the highest amount
Speaker 1: of uh killer Watta killer Watson being used at a
Speaker 1: time is something, then the grid will have installed capacity
Speaker 1: of that amount plus. So our grid, for example in
Speaker 1: New England, it runs about on a nice day, not
Speaker 1: a fierce day, not a very cold day, very hot day,
Speaker 1: it's running around fourteen giggle watson peak okay or fifteen
Speaker 1: well then, but on a very cold day it will
Speaker 1: run twenty gig wats. So we have to have twenty
Speaker 1: three giga watson installed capacity, so that if it's a
Speaker 1: very cold day or a very hot day and it's
Speaker 1: running twenty gigawatson, some of the planets go offline, then
Speaker 1: we still have that three gigga wats to make up
Speaker 1: for it, you know, So we're all set. But if
Speaker 1: if those twenty gigawats were wind and solar, we'd have
Speaker 1: to have another twenty gigawatts of something that we can
Speaker 1: call on when the wind and solar aren't available, and
Speaker 1: so that's an immense cost, the redundancy cost. I have,
Speaker 1: I guess a hypothetical question, um, but it's related to
Speaker 1: policy and the decision about who chooses the actual mix
Speaker 1: of energy in our world. So you know, let's say
Speaker 1: tomorrow everyone woke up and looked at their Bloomberg terminal
Speaker 1: and saw that, you know, the oil price was at
Speaker 1: two hundred dollars per barrel or three dollars per barrel,
Speaker 1: and gas prices were still spiking, and everyone decided, okay,
Speaker 1: we wanna change up our energy mix. We want to
Speaker 1: do more nuclear for instance. How does that How would
Speaker 1: that public sentiment actually feed through into additional investment into
Speaker 1: nuclear power? Because it feels like, you know, I just
Speaker 1: moved back to New York and I've signed up with Contetisent,
Speaker 1: Like it certainly feels like I don't have much of
Speaker 1: a choice in what type of energy is delivered to me,
Speaker 1: um and who provides it. So I'm just curious, like
Speaker 1: what actually changes if the world starts accepting nuclear power.
Speaker 1: Who actually makes the decision saying okay, we're going to
Speaker 1: build a power plant here or we're going to add
Speaker 1: capacity to existing power plants. Okay, Now, if you are
Speaker 1: in an area that is not run by auctions, if
Speaker 1: you're in a traditional vertically integrated area, the state, with
Speaker 1: permission from for for whatever issues might be coming up,
Speaker 1: the state decides on its resource mix, and it writes
Speaker 1: a something called an integrated Resource Plan, which it presents
Speaker 1: towards Public Utilities Commission, and then UH, if the public
Speaker 1: utility says, yes, this is the right thing to do,
Speaker 1: then things are put in place to do the sighting,
Speaker 1: to do the permits UH to to raise the money
Speaker 1: and so forth and so on. Now, the thing is
Speaker 1: that in the auction areas, which I call r t
Speaker 1: O areas, which is Regional Transmission Organization UH. And New
Speaker 1: York is very interesting because it's a state and r
Speaker 1: t O. So, but let's look at New England instead,
Speaker 1: because New England is um a mixture of many states
Speaker 1: run by an r t O UH and and and
Speaker 1: so forth. So every state supposedly, if you ask the
Speaker 1: head of our r T oh, what about the resource mix?
Speaker 1: He would say, the states decide on the resource mix.
Speaker 1: We don't have any particular ability to decide on the
Speaker 1: resource mix. But what it boils down to is in
Speaker 1: the r t O, it's only the plants that have
Speaker 1: um low prices uh for the next killer water, our
Speaker 1: low marginal costs and and and and can't not very
Speaker 1: high capital costs that actually can get built in an
Speaker 1: r t O system. So even if the state puts
Speaker 1: together an integrated resource plan that says we will we
Speaker 1: are going to build a nuclear plant here, the nuclear
Speaker 1: plant builders will say, are you kidding me? Were the
Speaker 1: way the auctions are set up, will never make a
Speaker 1: living at this and and and so one of the
Speaker 1: problems is that and and and this is why I
Speaker 1: named my book Sharing the Grid. It was in homage
Speaker 1: to the Big Short because in the Big Short uh,
Speaker 1: the mortgages which were not particularly good mortgages, liars mortgages, right,
Speaker 1: it didn't matter. They still made money. So the value
Speaker 1: of the mortgage really didn't didn't affect things. And sure enough,
Speaker 1: pretty soon because you had all these complicated uh dead
Speaker 1: obligations and collateralized this and collateral But what I'm trying
Speaker 1: to say is when you got through all that complexity,
Speaker 1: then you know the value of the mortgage, it didn't matter.
Speaker 1: And so in the rt O areas, the value of
Speaker 1: the power to the grid doesn't matter as much as
Speaker 1: long as it meets certain criteria for the options. So
Speaker 1: it's very, very similar to the situation. As a matter
Speaker 1: of fact, a power plant, a renewable plant, is the
Speaker 1: is most likely to actually make money on the grid
Speaker 1: because it gets uh texts, it gets subsidies and tax credits,
Speaker 1: and it doesn't have to rely on the auctions. As
Speaker 1: a matter of fact, some of those plants bid in
Speaker 1: saying we'll pay you to take our power. This was
Speaker 1: where that was a really striking aspect of your book,
Speaker 1: that there are times in which the wind is you know,
Speaker 1: the wind is blowing so much of the Sunday is
Speaker 1: shining that actually, uh, you know, the the renewable generators
Speaker 1: can actually bid to get their electricity used that negative
Speaker 1: prices because of the subsidies or the sale of credits.
Speaker 1: And in fact, your book in general talks about just
Speaker 1: how insanely complicated electricity auctions are and it's sort of
Speaker 1: mind boggling. But you're like, walk through it all, but
Speaker 1: can you just give the sort of simple reason why
Speaker 1: in a sort of auction based electricity system, the opposite
Speaker 1: of vertically vertically integrated UM nuclear, despite its advantages and reliability,
Speaker 1: is not economical for someone to invest in build it well.
Speaker 1: One of the things is that the nuclear plant is
Speaker 1: going to have to compete with plants on the auctions
Speaker 1: that will be UM bidding in it, like negative one,
Speaker 1: Sentich and so forth. So the overall price on the
Speaker 1: auction will be lowered by those plants, sometimes even all
Speaker 1: the way to negative And now one of the reasons
Speaker 1: that the the nuclear plant is also in trouble in
Speaker 1: this auction system is that in the auction system tends
Speaker 1: to favor renewables, and that means that if the sun
Speaker 1: is shining, they may want the nuclear plant to like
Speaker 1: go offline and make room for the solar. And nuclear
Speaker 1: plants are are wonderful. They are not equally flexible. Now
Speaker 1: you might say, oh see, there's a disadvantage to them,
Speaker 1: but I'm telling you. Let's say you're taking a car
Speaker 1: trip and you see a semi. The semi is carrying
Speaker 1: a lot of goods and it is carrying it. You know,
Speaker 1: it is efficient. There's one or two drivers and it's
Speaker 1: carrying all these goods. Is it flexible? Can it pass? You?
Speaker 1: Can it go up a hill quickly? Can it stop
Speaker 1: on a dime? No, It's basically designed to be very
Speaker 1: efficient at carrying a load forward and so forth. That's
Speaker 1: what the nuclear plants are designed for. And so UM,
Speaker 1: if they're being forced off the grid because the wind
Speaker 1: is blowing or because the the it's very very hard
Speaker 1: upon them, and they they will tend to have shorter
Speaker 1: life expectancies because of the changes that they're forced to do.
Speaker 1: I have another basic question, given that I haven't read
Speaker 1: the book, but why why you were and I planned
Speaker 1: to after this conversation, But why was everything set up
Speaker 1: in this way? Like why was the system created in
Speaker 1: which renewable seemed to benefit from the way auctions are
Speaker 1: actually conducted, UM versus something that would incentivize nuclear. Well,
Speaker 1: let's look back to why the whole argo system happened.
Speaker 1: But the thing was that in the vertically integrated systems. Uh.
Speaker 1: The idea was that if a company invested in a
Speaker 1: power plant, it would get a rate of return on
Speaker 1: that investment from the people to whom it's sold the power.
Speaker 1: And so that company was a widow as an orphan stock,
Speaker 1: it wasn't going to have a huge problem. Uh. It
Speaker 1: was going to get as rate of return now. Um.
Speaker 1: When when people looked at this, it was clear to
Speaker 1: some people and this was just an incentive to gold
Speaker 1: plate the grid. The more the company could invest, the
Speaker 1: more it got paid, and didn't have a particular interest
Speaker 1: in in saving money. So people said, what we have
Speaker 1: to do is get some kind of market force in
Speaker 1: here to get that company to understand that saving money
Speaker 1: is important. And uh so the R T O system,
Speaker 1: the auctions were supposed to do that, but they didn't.
Speaker 1: And why didn't they is a very elaborate uh story
Speaker 1: having to do with the uh you know, the shell
Speaker 1: gas revolution, Uh, huge overruns on nuclear plants, the romance,
Speaker 1: if you pardon me saying so the romance if we
Speaker 1: can get everything we need from the sun and the wind. Uh,
Speaker 1: it's kind of bucolic, you know, ideal and uh and
Speaker 1: and some of the people were I think it was
Speaker 1: Armory Armor Levins who the quote was that if there
Speaker 1: was a clean source of power that was readily available,
Speaker 1: they would destroy things with it. You know. The idea
Speaker 1: is that lots of energy isn't good. The fact that
Speaker 1: there's limited energy from renewables that will keep humankind on
Speaker 1: the straight and narrow. So this is important to talk
Speaker 1: about some of the challenges of the vertically integrated price model,
Speaker 1: where if your return is cost plus x, then that
Speaker 1: gives you an incentive to just increase the costs, and
Speaker 1: so there are obvious impulses to find some sort of
Speaker 1: market mechanism to avoid that. You know, one of the
Speaker 1: things that I remember, and from about a decade ago,
Speaker 1: is the pickings plan and uh Tibu and pick ups
Speaker 1: of course, a well known oil and gas man who
Speaker 1: also was very into wind power. And something that you
Speaker 1: explain a lot is uh the idea of the renewable
Speaker 1: industries wants more natural gas, and they complement each other
Speaker 1: very well, and or in theory they do. Can you
Speaker 1: explain that a little bit further, how renewables and natural
Speaker 1: gas sort of dovetail with each other from an industrial
Speaker 1: business perspective? Oh? Yes, absolutely. One of the things is
Speaker 1: that renewables go on and off when they want to,
Speaker 1: and they need something that can that can ramp up
Speaker 1: and down quickly to to to even out the reliability
Speaker 1: of the grid. Now there are two things that can
Speaker 1: ramp up quickly to even out the reliability of the grid.
Speaker 1: Those two things are natural gas and hydro um coal
Speaker 1: plants and nuclear plants can actually load follow. I mean
Speaker 1: that is, they can go up in the middle of
Speaker 1: the day and come down at the end of the day.
Speaker 1: What they can't do is take care of the spikiness
Speaker 1: of the wind is up, the windows down of the
Speaker 1: the sun is shining. Whoop. So the front went by,
Speaker 1: a clouds came by, and in five minutes, five minutes
Speaker 1: has gone from less of solar to like, why is
Speaker 1: it so gloomy out there? Uh and and so natural
Speaker 1: gas is the partner for this. It's the partner that
Speaker 1: can that can fill in those gaps. Now, hydro could
Speaker 1: fill in those gaps too. But let's face it, people
Speaker 1: are taking out more damns than they're putting in, At
Speaker 1: least in my area. I can't imagine anywhere in the
Speaker 1: country someone would say we're going to build another damn
Speaker 1: the size of a Grand Cooley on this river. Uh
Speaker 1: and and and not meet an absolute storm of opposition.
Speaker 1: And in all honest state, back in the day, that
Speaker 1: was actually a the Ara clubse slogan Adams not dams. Huh. So,
Speaker 1: with everything that's going on in the world, what's your
Speaker 1: gut instinct on whether or not we are going to
Speaker 1: see a ramping up of investment in nuclear power and
Speaker 1: of rethink on the desirability of nuclear versus something like
Speaker 1: solar or wind. I think the chances are very good
Speaker 1: for that, but I'm not sure that they're good enough
Speaker 1: in this country. What I mean by that is in
Speaker 1: other countries, uh, they will look at the fact that
Speaker 1: um France doesn't have a single Uh, I don't it
Speaker 1: might have one, I don't know, a natural gas fire plant.
Speaker 1: It's a nuclear you know. And uh and and so
Speaker 1: France isn't particularly concerned with what is happening in the Ukraine,
Speaker 1: except as a European nature nation that doesn't want to
Speaker 1: see that amount of suffering. But in terms of like,
Speaker 1: well they turn off our power, they're not. They're not
Speaker 1: worried about that. So other people are going to begin
Speaker 1: to take energy security eighteen months on site. You can't
Speaker 1: be turned off by by somebody at the drop of
Speaker 1: a hat just because he's decided to start a war.
Speaker 1: I think that people are going to take it more seriously.
Speaker 1: And now people are already taking it seriously. In other
Speaker 1: parts of the world, nuclear plant builds have been going
Speaker 1: on in the Middle East and have been going on
Speaker 1: in in in China, but in America we we haven't
Speaker 1: done that. We just we have just a minute or
Speaker 1: two left before we have to wrap. But let's say,
Speaker 1: you know, public opinion were to change on nuclear Let's
Speaker 1: say just in the US, where what would the policy
Speaker 1: change have to be to make it happen. Would it
Speaker 1: be something at the federal government, would be at the
Speaker 1: state level, like obviously, as you explain, the current R
Speaker 1: T O auction model does not augur well for nuclear
Speaker 1: what would have to change? And then, real quickly, storage
Speaker 1: is the other big thing, and we haven't touched on it,
Speaker 1: but people talk about, well, no, no one wants the
Speaker 1: storage in their backyard, you know, you uh in Vermont
Speaker 1: probably people don't want the nuclear stored, you know, in
Speaker 1: in the you know, the Rolling Green Hills or under
Speaker 1: the Ganic apple farm. So just real quickly, can you
Speaker 1: touch on a where the policy impulse would have to
Speaker 1: change and how to deal with the fact that it's
Speaker 1: still extremely costly and by and large not desirable to
Speaker 1: live near nuclear storage. Okay, basically, um, in terms of
Speaker 1: policy changes, I think that we have to begin looking
Speaker 1: at systems costs, because if you look at it inexpensive
Speaker 1: wind turbine, and you don't look at the fact that
Speaker 1: a natural gas plant work to pay whatever is an
Speaker 1: offer for the natural gas has to be available to
Speaker 1: back it up, then you think that wind turban is
Speaker 1: pretty cheap. But if you look at the system cost
Speaker 1: you will realize that no, it isn't um And then
Speaker 1: in terms of a storage, oh, I don't know, I
Speaker 1: I get, I get very uh concerned with people who
Speaker 1: are so concerned with storage. I mean, the material is
Speaker 1: being stored is a ceramic, It's not a google like
Speaker 1: in in the Simpsons' curam And you know it's a
Speaker 1: dangerous substance. Okay, well fine, you know as somebody says, well,
Speaker 1: you know there's enough whatever I've had nuclear plan to
Speaker 1: kill everybody in the state, and I'm saying, yeah, you know,
Speaker 1: there's enough stuff under my kitchen sink to kill everybody
Speaker 1: in the family. The question is, and what I mean
Speaker 1: is you know, like uh, household household cleaners. But the
Speaker 1: thing is not is there enough? But isn't well contained?
Speaker 1: Isn't something likely to leak? And frankly, ceramics is the
Speaker 1: least likely to leak. Well, this is a huge, sprawling,
Speaker 1: fascinating topic. It's already given me like ideas for three
Speaker 1: or four new episodes that we have to follow on.
Speaker 1: I definitely suggest people check out your book, Shorting the Grid.
Speaker 1: Thank you so much for coming out odd lots. Thank you, Tracy.
Speaker 1: I found that extremely interesting. I do think like it
Speaker 1: this core thing. Meredith used the word bucolic when describing
Speaker 1: the allure of solar and wind, and I thought that
Speaker 1: was very apt. You could see the appeal. But when
Speaker 1: you think about the redundancy that has to be built
Speaker 1: the law, you know, the difficulty of batteries and so forth, Uh,
Speaker 1: you can see why it's not It's certainly not a
Speaker 1: silver bullet. Yeah, you mentioned you calic. I was thinking about,
Speaker 1: like all the responsibility that maybe pop culture has to pare,
Speaker 1: you know. Meredith mentioned the Simpsons, and I was also
Speaker 1: thinking about Back to the Future and like the doctor
Speaker 1: stealing a bunch of platonium and everyone getting it in
Speaker 1: their heads in the nineteen eighties, that you know, this
Speaker 1: is something that can be stolen and terrorists use it
Speaker 1: and stuff like that. Um, but it is interesting. I
Speaker 1: mean a I need to read that other book. That
Speaker 1: Meredith mentioned as well about how nuclear lost the public
Speaker 1: policy to date. But it's just and be fascinating to
Speaker 1: see whether or not the turnaround actually happens given current events,
Speaker 1: and then be if there is a turnaround in public sentiment,
Speaker 1: how feasible that actually is given the current structure to implement. Yeah,
Speaker 1: there's a lot we have to do. So we have
Speaker 1: to have an episode with someone who is very pro
Speaker 1: wind and solar and believes it really is the solution.
Speaker 1: We absolutely have to do a batteries episode because of
Speaker 1: both cars, and then also grid level storage is going
Speaker 1: to be like a huge question to like the further
Speaker 1: ramping up of renewables. There's a lot more to do.
Speaker 1: I think this is going to be like our huge
Speaker 1: theme I think for two and there's like so many
Speaker 1: different energy questions, uh coming through. But I thought it
Speaker 1: was very helpful and uh, people really should check out
Speaker 1: the book. Yeah, alright, well more to come on this subject,
Speaker 1: but in the meantime, shall we leave it there? Let's
Speaker 1: leave it there? All right? This has been another episode
Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can
Speaker 1: follow me on Twitter at Tracy Alloway, and I'm Joe wisntal.
Speaker 1: You can follow me on two her at The Stalwart.
Speaker 1: Definitely check out our guest Meredith England. She is at
Speaker 1: Meredith England. Big thanks to our producers Magnus Hendrickson and
Speaker 1: Colin Tipton. Followed the Bloomberg head of podcast Francesca Lead
Speaker 1: at Francesco Today and check out all of our podcasts
Speaker 1: in Bloomberg under the handle at podcasts. Thanks for listening.