New Nuclear Power company

Investment Analysis Clubs Macro Economic Trends and Risks
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Actually, it’s not new. It’s a spin-off from Exelon.

https://www.wsj.com/articles/this-new-company-is-betting-big…

**This New Company Is Betting Big on Nuclear Power in America**
**Exelon is spinning off its Constellation unit, which might need more federal aid for carbon-free power to prosper**

**by Katherine Blunt, The Wall Street Journal, 2/2/2022**

**...**
**The stand-alone company, called Constellation, operates the nation’s largest fleet of nuclear-power plants and has plans for further growth by acquisition. But the nuclear plants, which have struggled to compete in recent years with cheaper natural-gas plants, as well as solar and wind farms, face uncertainty. Many now rely on state subsidies to survive....**

**The bipartisan infrastructure bill passed by Congress last year includes $6 billion to support existing nuclear plants. [Plus state supports.]**

**...**
**The company plans to focus on ways to use nuclear power to produce green hydrogen, which is made using carbon-free energy to strip hydrogen atoms from water molecules through a process called electrolysis....But producing hydrogen with electricity has historically been more expensive than deriving it from hydrocarbons, and analysts say the company will likely be challenged to do so at scale unless it receives federal tax credits...** [end quote]

There’s a lot I don’t like in this picture.

Constellation isn’t profitable. It relies on government subsidies.

The advantage of nuclear power over solar and wind power is 24/7 generation. But Constellation isn’t pushing that advantage. Instead, it plans to focus on a sector (green hydrogen) where it’s not competitive.

I support nuclear power generation because it’s needed to provide reliable, carbon-free power. But I wouldn’t invest in Constellation. I don’t understand why anyone would.

Wendy

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I support nuclear power generation because it’s needed to provide reliable, carbon-free power. But I wouldn’t invest in Constellation. I don’t understand why anyone would.

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Nuclear power (operating 90% of the time) is not as reliable as solar/wind + storage power (operating 100% of the time).

We have a choice in the US:

  1. Build new nuclear
  2. Build new solar/wind + energy storage (California approach)
  3. Build new solar/wind + natural gas backup (Texas approach)
  4. Combination of 1, 2 and 3

Old nuclear plants are being subsidized because they are not profitable
New nuclear plants are still in the development
Solar and wind are proven cheap technologies
Energy storage via battery is being used in California
Energy storage via pumped hydro is being used in several states
Non-battery energy storage is still in development

Jaak

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The company plans to focus on ways to use nuclear power to produce green hydrogen, which is made using carbon-free energy to strip hydrogen atoms from water molecules through a process called electrolysis…But producing hydrogen with electricity has historically been more expensive than deriving it from hydrocarbons, and analysts say the company will likely be challenged to do so at scale unless it receives federal tax credits… [end quote]

There’s a lot I don’t like in this picture.

There a lot I don’t like too. The article is paywalled so I might be missing something, but using expensive nuclear power to make expensive green hydrogen doesn’t make a ton of sense. That’s essentially just a form of storage, right? But there are cheaper forms of storage right now.

There is some discussion of using hydrogen as a transportation fuel. But that is long, long way out if ever. The problem is the low energy density of hydrogen. A tough problem to overcome.

And there is some interest in burning green hydrogen either directly or blended with natural gas to generate electricity. Why would you take electricity from your nuclear plant, change it into hydrogen, burn it, and then change it into electricity again? That is never going to make financial sense. Instead you could take excess power from renewables and use that to make green hydrogen. That could make some sense because you are taking power that has zero value and storing it in the form of hydrogen you can sell later.

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There is a matter of relative cost depending the part of the economic cycle.

Building major projects right now makes a lot of sense compared to later.

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And there is some interest in burning green hydrogen either directly or blended with natural gas to generate electricity. Why would you take electricity from your nuclear plant, change it into hydrogen, burn it, and then change it into electricity again? That is never going to make financial sense.

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You are not understanding how the process will work. First of all nuclear power plants run day and night. At night the nuclear plants do not get much money for all the electricity they generate because demand is low between 11pm and 6am. Nuclear plants at night can make hydrogen gas with their low cost electricity and store the hydrogen. Then during the 9am-9pm peak demand hours the hydrogen can be used to run gas turbines and make lot more money.

The cost to supply electricity varies minute by minute as explained in the following link:

https://www.eia.gov/energyexplained/electricity/prices-and-f….

The wholesale price of electricity on the electric power grid reflects the real-time cost for supplying electricity. Demand for electricity contributes to the cost of supplying electricity. Electricity demand is usually highest in the afternoon and early evening (peak hours), so costs to provide electricity are usually higher at these times.

Most consumers pay prices based on the seasonal average cost of providing electricity, so they do not experience these daily price fluctuations. Some utilities offer their customers time-of-day pricing to encourage electricity conservation and to reduce peak demand for electricity.

Several nuclear power plants are now testing hydrogen production as a way of making nuclear power more economical. Read the following article from American Nuclear Society:

Arizona Public Service is the latest nuclear utility with confirmed plans to install hydrogen production capacity, an investment decision that is based on analysis conducted under the Department of Energy’s H2@Scale program and backed by a $20 million DOE award.

APS will be able to draw on six metric tons of stored hydrogen produced at its three-unit Palo Verde plant to generate about 200 MWh of electricity during times of high grid demand and low solar availability, possibly by sending that hydrogen to peaking gas turbines, and may also use its stored hydrogen to make chemicals and other fuels, according to the DOE. With over 10 million metric tons of hydrogen produced and consumed in the United States each year, this is a demonstration-scale project, but one that could be go a long way to proving the technical and economic feasibility of using nuclear power for alternative revenue generation.

https://www.ans.org/news/article-3323/palo-verde-gets-20-mil…

Hope this helps you understand why nuclear power should generate hydrogen during night time low demand conditions.

Jaak

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You are not understanding how the process will work. First of all nuclear power plants run day and night. At night the nuclear plants do not get much money for all the electricity they generate because demand is low between 11pm and 6am. Nuclear plants at night can make hydrogen gas with their low cost electricity and store the hydrogen. Then during the 9am-9pm peak demand hours the hydrogen can be used to run gas turbines and make lot more money.

Except that you could simply burn natural gas and make even more money.

Hope this helps you understand why nuclear power should generate hydrogen during night time low demand conditions.

A couple points I think you missed: There are cheaper forms of storage right now. Pumped hydro for one. Utility scale battery storage for another. Utilities are building grid battery storage unconnected to renewable projects right now. They are not doing it because they are hippies, they are doing it because it makes them money. They are not building hydrogen projects.

And a future market for hydrogen is largely hypothetical at this point.

And even though power is cheap at night, nuclear power overall is still expensive. That why even some existing nuclear faculties require subsidies to remain in operation.

At the same time, lots of renewable power is being curtailed. That power could be free to an energy intensive customer who is flexible.

One other factoid which I didn’t mention: Over the last decade wind energy prices have fallen 70% and solar photovoltaics have fallen 90%. Battery prices have fallen much farther than that. If those trends continue very much longer, it will be cheaper to simply build extra renewable capacity instead of conventional. That means at certain times there will be plenty of extra power with nothing to do. So energy intensive businesses–like hydrogen electrolysis–would be delighted to accept all that free power. If hydrogen becomes a thing, that is how it will happen, I predict.

Hope this helps you understand why using nuclear power to generate hydrogen doesn’t make much sense when compared to less expensive options. Even if hydrogen were to become a thing, which is not clear at this point.

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Hope this helps you understand why using nuclear power to generate hydrogen doesn’t make much sense when compared to less expensive options. Even if hydrogen were to become a thing, which is not clear at this point.

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I do know about energy storage and the various ways to generate hydrogen. The old large nuclear power plants want to survive the economic pressures being brought on by cheap renewable and natural gas. So hydrogen is a lifebuoy for nuclear. There is no question that hydrogen will be part of the future in energy storage, power generation, and alternative fuels manufacturing.

Hydrogen will enable ships to be powered by clean hydrogen gas turbines, airplanes can be powered by clean alternative fuels, and we can have clean energy storage.

Hydrogen cofiring has been developed and new hydrogen gas turbine power plants are being built plants in many countries including USA, UK, Netherland, Australia, Singapore, and many other places.

The following document shows that both renewables and nuclear are viable sources of hydrogen production.

https://iea.blob.core.windows.net/assets/a76b2cc9-f7e3-459e-…

Hydrogen burning gas turbine manufacturers: Siemens, GE, Mitsubishi, and many other.

Jaak

P.S. - Hydrogen as an energy storage will compete with battery storage, pumped hydro storage, and other energy storage methods.

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The following document shows that both renewables and nuclear are viable sources of hydrogen production.

https://iea.blob.core.windows.net/assets/a76b2cc9-f7e3-459e-……

Can you point to the slide that demonstrates nuclear is a viable source of hydrogen?

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Can you point to the slide that demonstrates nuclear is a viable source of hydrogen?

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I can do much better than that. Here is brief from the World Nuclear Association which discusses the viability of nuclear as a source of hydrogen:

https://www.world-nuclear.org/information-library/energy-and…

Nuclear energy can be used to make hydrogen electrolytically, and in the future high-temperature reactors are likely to be used to make it thermochemically.

The energy demand for hydrogen production could exceed that for electricity production today.

Most hydrogen today is made by steam reforming of natural gas or coal gasification, both with carbon dioxide (CO2) emissions. Future demand will be mainly for zero-carbon hydrogen. Plans for increased hydrogen production are essentially based on electrolysis using electricity from intermittent renewable sources. Off-peak capacity of conventional nuclear reactors or other power plants can also be used. In future, a major possibility for zero-carbon hydrogen production is decomposition of water by direct use of heat from nuclear energy, using a thermochemical process enabled by high-temperature reactors.

Electricity and hydrogen are convertible one to the other as energy carriers. However, the overall efficiency of electricity-hydrogen-fuel cell-electricity is no more than 40%. One approach to mitigate intermittency of wind and solar electricity is to make hydrogen by electrolysis and feed this into the gas grid, the power-to-gas strategy. It has been suggested that most electricity from wind might be used thus, greatly simplifying electrical grid management.

Read the whole article to understand the energy transition from fossil fuels to hydrogen and alternative fuels.

Jaak

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A couple points I think you missed: There are cheaper forms of storage right now. Pumped hydro for one. Utility scale battery storage for another. Utilities are building grid battery storage unconnected to renewable projects right now. They are not doing it because they are hippies, they are doing it because it makes them money. They are not building hydrogen projects.

And a future market for hydrogen is largely hypothetical at this point.

And even though power is cheap at night, nuclear power overall is still expensive. That why even some existing nuclear faculties require subsidies to remain in operation.

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So contrary to your above statements - hydrogen projects are being built and hydrogen is being used for electricity generation and production of alternative fuels.

Jaak

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Read the whole article to understand the energy transition from fossil fuels to hydrogen and alternative fuels.

Yes, the article said green hydrogen needs cost under $1/kg to be competitive with other sources. The methods outlined in the article all cost substantially more than that.

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Yes, the article said green hydrogen needs cost under $1/kg to be competitive with other sources. The methods outlined in the article all cost substantially more than that.

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Just like wind and solar energy started with high costs, but mass production and innovation have made them the cheapest form of electricity generation.

Hydrogen is about 10 years behind wind/solar, so you will see green hydrogen costs coming down in the same fashion.

Europeans are leading they way to green hydrogen:

Hydrogen demand stood at 90 Mt in 2020, practically all for refining and industrial applications and produced almost exclusively from fossil fuels, resulting in close to 900 Mt of CO2 emissions. But there are encouraging signs of progress. Global capacity of electrolysers, which are needed to produce hydrogen from electricity, doubled over the last five years to reach just over 300 MW by mid-2021. Around 350 projects currently under development could bring global capacity up to 54 GW by 2030. Another 40 projects accounting for more than 35 GW of capacity are in early stages of development. If all those projects are realised, global hydrogen supply from electrolysers could reach more than 8 Mt by 2030. While significant, this is still well below the 80 Mt required by that year in the pathway to net zero CO2 emissions by 2050 set out in the IEA Roadmap for the Global Energy Sector.

Europe is leading electrolyser capacity deployment, with 40% of global installed capacity, and is set to remain the largest market in the near term on the back of the ambitious hydrogen strategies of the European Union and the United Kingdom. Australia’s plans suggest it could catch up with Europe in a few years; Latin America and the Middle East are expected to deploy large amounts of capacity as well, in particular for export. The People’s Republic of China (“China”) made a slow start, but its number of project announcements is growing fast, and the United States is stepping up ambitions with its recently announced Hydrogen Earthshot.

Sixteen projects for producing hydrogen from fossil fuels with carbon capture, utilisation and storage (CCUS) are operational today, producing 0.7 Mt of hydrogen annually. Another 50 projects are under development and, if realised, could increase the annual hydrogen production to more than 9 Mt by 2030. Canada and the United States lead in the production of hydrogen from fossil fuels with CCUS, with more than 80% of global capacity production, although the United Kingdom and the Netherlands are pushing to become leaders in the field and account for a major part of the projects under development.

https://www.iea.org/reports/global-hydrogen-review-2021/exec…

Jaak

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I support nuclear power generation because it’s needed to provide reliable, carbon-free power. But I wouldn’t invest in Constellation. I don’t understand why anyone would.

Wendy

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I hope, after reading my posts on this thread, you realize there are more factors involved with nuclear power and green hydrogen generation than your above conclusion.

Constellation (Exelon) executives and engineers are not stupid. They are planning for the future and figuring out how to rid nuclear power from its inherent inefficiency of producing electricity 24/7 and selling electricity below cost during nighttime.

Engineers and scientists around the world realize that green hydrogen is essential for reducing CO2 emissions to meet climate change requirements.

Jaak

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Just like wind and solar energy started with high costs, but mass production and innovation have made them the cheapest form of electricity generation.

Hydrogen is about 10 years behind wind/solar, so you will see green hydrogen costs coming down in the same fashion.

That’s kind of my point. Manufacturing hydrogen is energy intensive. So the energy source with the lowest input cost is going to be the winner in this area. Keep in mind, most of your links were making projections 10 years in the future.

Question: Given the part of your post I bolded, in ten years time, do you think nuclear will have the lowest energy input cost, or do you think renewables will have the lowest energy input cost?

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…do you think nuclear will have the lowest energy input cost, or do you think renewables will have the lowest energy input cost?

I fear that neither of these will gain favor and instead blue hydrogen–produced via fossil fuels–will become predominant. I believe Australia may be going down this route, for instance an article here is about how they’re making it from coal:
https://www.theguardian.com/australia-news/2022/jan/21/just-…
I hope we use green hydrogen in the future, but a problem that might crop up is blue hydrogen ‘repackaged’ as green. For instance in this official announcement from the Australian government it’s referred their hydrogen as ‘clean’ hydrogen–but what sort of hydrogen are they referring to?
https://www.industry.gov.au/policies-and-initiatives/growing…
I’m not sure how this is being generated. What, for instance, would one call hydrogen made from coal which has had the CO2 carbon captured during the process?

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do you think nuclear will have the lowest energy input cost, or do you think renewables will have the lowest energy input cost?

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I think it will be a push based on location and time of day/year.

Large nuclear plants will still be around in 10 years needing to make money on their power generation at night instead of selling it a negative prices.

Renewables will continue to have similar problems with excess generation during sunny days and windy days/nights in spring and fall.

However, Northern states have less sun in winter and Southeastern states have meager wind all year long.

Jaak