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UP FRONT The Importance of Nuclear Energy to US Energy Security January 2003 Key Facts Energy security depends upon a diverse mix of energy sources that balan ces cost, availability and environmental impact. Nuclear energy provides reliable, low-cost baseload electricity to sati sfy the increasing electricity demands of a digital economy, as well as peak demands caused by extreme weather conditions in winter and summer. Nuclear energy is a stabilizing factor in deregulated electricity marke ts because it is not affected by the price volatility experienced by oth er major energy sources, such as oil and natural gas. Nuclear energy produces no air pollutants, providing consumers an added environmental advantage over other fuel sources. Energy Security Critical to National Security Energy security is essential to national security. Our economy and daily lives depend upon electricity, but also our major defense systems and go vernment operations, airports and trains, and telecommunications. Our hi gh-tech economy depends upon electricity to operate servers and networks . Even traditional industries are computerized and automated as never be fore. The bulk of our nations electricity supply is produced by coal and nucle ar power plants 51 percent from coal and 20 percent from nuclear. Virt ually all of this electricity is base-load generationthe constant hour- by-hour flow of electricity in sufficient amounts to sat-isfy our basic daily electricity requirements, powering everything from home appliances to industrial machinery. Baseload generation is produced by large power plants that run 24 hours a day, seven days a week, including the nations 103 nuclear plants. In f act, the US electricity grid could not function without the stabilizin g presence of nuclear energy. Baseload electricity is especially critica l during periods of high energy demand, such as the winter and summer mo nths, when electricity usage increases for heating or air conditioning. Nuclear Energy Excels During Weather Extremes Nuclear power plants are particularly vital during extreme weather condit ions. They run during the sub-freezing temperatures of winter and the sw eltering temperatures of summer. By contrast, in winter coal piles can f reeze, or conveyor belts used to transport the coal to and from train ca rs and barges can fail to operate. Sometimes rivers freeze and coal barg es are unable to reach power plants. In addition, power plants fueled wi th coal, oil and natural gas can be shut down when they exceed limits on emissions, as was the case in California during 2000. Other energy sources are affected by weather conditions as well. Hydroele ctric plants are subject to seasonal water levels. Summer droughts will diminish their electricity production well into the winter. With wind tu rbines, the amount of electricity production is directly related to wind conditions. No electricity is produced when wind strength is below the level needed to turn the turbines at the required speed. Nuclear Most Reliable Electricity Source Nuclear power plants are the most reliable sources of electricity product ion. Power plant reliability is measured by capacity factorthe percenta ge of electricity actually produced, compared to the total potential ele ctricity that the plant is capable of producing. The aver-age capacity f actor for US nuclear plants was nearly 91 percent in 2001, compared to 68 percent for coal. Capacity factors are much lower for natural gas (ranging from 14 to 50 pe rcent, depending on the type of plant) and oil (34 percent), partly beca use many of these plants are used for peaking generation; that is, they are run intermit-tently to accommodate periodic, temporary increases in electricity demand. Natural gas plants are often too expensive to run co nstantly to produce baseload electricity. Capacity factors also are low for renewable energy sources. They contribu te to the nations electricity supply but do not generate electricity in sufficient quantities to be a primary baseload generation source. In 20 01, the capacity factor for hydroelectric power was 30 percent. This fig ure varies considerably from year to year depending on water levels, whi ch are sensitive to snowfall, rainfall and drought. For instance, hydro s capacity factor was 38 percent for 2000 and 29 percent for 2001. The capacity factor for wind turbines is approximately 30 percent, but th is figure also varies from year to year, depending on whether enough win d is blowing to turn turbines at the necessary speed. The trend toward increased nuclear plant reliability continues. The avera ge capacity factor for all nuclear plants for the first seven months of 2002 was over 92 percent, a slight in-crease from the same period in the previous year. Nuclear energy has kept pace with the increasing baseload requirements of a country using more and more electricity each year. In 2001, US nucl ear power plants produced a record-setting 769 billion kilowatt-hours (k Wh) of electricity, an increase of 2 percent (15 billion kWh) over the p revious year. One billion kWh serves the electricity needs of about 95,0 00 households for a year. In fact, the electricity output of US nuclear plants increased by one-t hird between 1990 and 2001the equivalent of adding 24 new 1,000-megawat t power plants to the nations electricity grid. Economical Nuclear Generation As nuclear plants increased their electricity production, their productio n costs declined. Nuclear production costs (which include fuel together with operating and maintenance ex-penses) are at an all-time low, and le ss than half of what they were a decade ago. Nuclear power plants are so efficient, in fact, that their production costs are among the lowest of any energy source. Nuclear Energys Secure Fuel Supply Nuclear power plants have low production costs because uranium fuel is a relatively stable, inexpensive fuel supply. Uranium is a fairly abundant element that occurs naturally in the Earths crust and is about as comm on as tin. The United States has ample uranium deposits, and a number of US allies mine and sell uranium. As a consequence, the price of uranium is fairly stable, while the prices of natural gas and oil can be particularly volatile. The wellhead price is an estimated market price calculate d by the US Energy Information Administration (EIA). This substantial increase in wellhead natural gas prices affected both th e utilities that pur-chased the fuel to generate electricity and the cus tomers they served. By contrast, nuclear fuel costs have declined steadily, from about 1 cent per kWh in 1990 to about 05 cent per kWh in 2001. The largest yearly p rice increase was 6 percent when fuel cost went from 065 cents per kWh in 1996 to 069 cents per kWh in 1997. However, the largest annual decli ne21 percentoccurred the following year as the price fell to 054 cent per kWh in 1998. Electricity-generating companies have relatively little ability to contro l oil and natural gas prices. In addition, power plants fueled with oil and natural gas are extremely sensitive to increases in fuel prices. Fue l represents approximately 80 percent of the cost of electricity produce d by a gas-fired plant. Prices for electricity generated from natural ga s can be un-predictable and relatively expensive. By contrast, fuel expe nses comprise only 27 percent of nuclear energys production costs, and a typical nuclear power plant replaces 25 percent of its reactor fuel ju st once every 18 to 24 months. A Stabilizing Factor in Deregulated Markets Nuclear energy is a stabilizing factor in the nations electricity market s, particularly in those 25 states that have deregulated electricity mar kets. Sixty of the nations 103 reactors are located in these 25 states. Nuclear energy is one of the best energy sources to ensure forward elec tricity-price stability because all the costs are known, stable and pred ictable, and therefore not subject to such surprises as a doubling of fu el prices. While the cost of most other fuel sources is trending higher, nuclear fue l costs have fol-lowed a downward trend. During times of volatility in t he oil and natural gas m...
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