The Problem for Coal and Nuclear: ‘Capital, With Its Lust for Growth, Continues to Migrate Elsewhere’

first_imgThe Problem for Coal and Nuclear: ‘Capital, With Its Lust for Growth, Continues to Migrate Elsewhere’ FacebookTwitterLinkedInEmailPrint分享Bloomberg Businessweek:U.S. electricity demand has stopped growing over the past decade, partly due to recession but more a reflection of structural changes in the economy and rising efficiency.Its tough to make the economics of a new nuclear or coal-fired plant work. By the time they are permitted and built, it can be many years after the initial proposal before such plants generate any electricity (and revenue). That was less of a problem in decades past when, even if initial budgets proved optimistic, ever-increasing demand meant that the capacity would be needed at some point and therefore produce cash flow.Even if you can justify plowing billions into a giant new plant pushing more supply into a flat market, gas-fired plants can be built more quickly, as can renewable-power sources such as wind-turbines and solar arrays.The latter do require high upfront capital. But, crucially, they can be built more easily in increments rather than big, one-off projects. Moreover, at least for now, capital for newer forms of energy technology doesn’t seem to be in terribly short supply, if Tesla Inc.’s latest bond issue is anything to go by. And once built, their fuel costs are zero, which means that, when they run, they switch on first and tend to suck revenue away from traditional plants.Hence, the argument for nuclear plants, and even coal-fired plants, has shifted of late toward less straightforwardly economic grounds, such as job security or even — a real sign of desperation — national security.In the meantime, the facts on the ground continue to change in ways unfavorable to the incumbent power sources. Focusing in on recent history, and the near future, it is clear which technologies are now battling it out for a bigger share of America’s electricity demand:America’s coal-fired and nuclear plants aren’t about to switch off en masse, just as plenty of gas-guzzlers will continue to be driven off dealer lots for a while yet. But capital, with its lust for growth, continues to migrate elsewhere. Ignoring that fact isn’t a realistic strategy.More: The Energy Market’s Facts Of Lifelast_img

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