Friday, December 27, 2013

Counting Down The 10 Most Important Energy Facts Of 2013--Facts 7,6, and 5

The Countdown of the Ten Most Important Energy Facts of 2013 continues with Number 7:

7. Nuclear Production Falls Again Below 2010 Record Year, Confirming A Slow Decline In Nuclear Power

Though nuclear power has not had a burst of new plant construction, that is almost perpetually predicted to be around the corner, the nuclear industry had steadily increased output from the nation's nuclear fleet. Investments in existing nuclear plants that wrung more power from them were quietly made over decades.  And so, for 40 years, nuclear power production rose steadily and set new record production levels, even long after the industry added very few new plants to the fleet.

Now, the era is ended, when nuclear plants regularly set record production marks. Nuclear production peaked in 2010, at nearly 807 billion kilowatt-hours, or more than 4 times wind's 2013 output.

This year will mark the third year in a row of nuclear production being less than its 2010 peak, confirming that America's nuclear power production has plateaued and may well have begun a slow decline. In addition, 5 nuclear units were scheduled for retirement and decommissioning this year. Three of those plants came to the end of the road because of mechanical problems that were too expensive to repair, but 2 others were running well.  Yet, their operational costs exceeded the low wholesale electricity prices they earned in competitive power markets.

Why are wholesale electricity prices low? Declining electricity demand, rising wind and solar production, and massive shale gas supplies that have driven down gas prices since 2008 from their high of $13 per thousand cubic feet.

Indeed, one analysis concluded that about 25% of the nation's nukes were vulnerable to closure simply because the costs of operating them exceeded the revenues they earned in wholesale electricity markets.  That is stunning, if accurate.

The slow decline of nuclear power production that has commenced since 2010 is reversible, but the odds are that it will not be. The two nuclear plants in Georgia, now under construction, will alone not be enough to do so.

If 2010 proves to be the all-time record high for US nuclear production, the task of curbing America's carbon and air pollution just got harder. Nuclear power remains America's single, biggest source of non-fossil fuel energy.

6. Marcellus Region Supplies 18% Of America's Natural Gas

The difference between gas glut and shortage in America is the Marcellus region's 13 billion cubic feet per day production--18% of America's gas supply. Whether one loves or hates it, Marcellus production is pivotal in national gas and electric power markets.

Natural gas prices rose from an average of $2.77 in 2012 to about $3.63 in 2013, a substantial increase from the rock bottom prices of last year.  Yet, had Marcellus gas production been removed from the market or had been reduced to 2010 levels of 2 billion cubic feet per day, America's natural gas price would have skyrocketed toward $8 for a thousand cubic feet or even higher at times.

Marcellus gas wells are among the most prolific shale wells in North America. That is one reason why the region's gas wells are also among America's lowest-cost to produce, highest profit margin units. Amazingly, despite those economics, Pennsylvania (unlike West Virginia) allowed another year of record gas production to pass without a drilling or severance tax.

Taxation, regulation, and zoning of gas production in the Marcellus region remain inadequate.  Most best practices, such as not using drilling wastewater pits, and technologies still are not required in the region.

Strong public opposition in New York meant that it continued its moratorium during 2013.  A moratorium issued in 2010 of further leasing of Pennsylvania's state forests also continued.  Then in an important decision at the of 2013 that may shape 2014 regulation of gas drilling in Pennsylvania, the Pennsylvania Supreme Court declared unconstitutional Act 13 that had preempted local zoning of gas drilling.

5. Electric Car Sales Breakthrough To Annual Rate of 100,000 Plus

The electric car revolution gained escape velocity in 2013. Large numbers of new models entered the marketplace. Prices fell. Tesla's stock soared.

Consumers responded to more models and lower prices, buying 9,000-10,400 per month at the end of 2013 or at an annual rate of more than 100,000.  Sales in 2013 were double 2012 numbers.  Rising sales means more electric vehicles on the road, with the total now exceeding 170,000.

The sales momentum in 2013 creates the possibility that electric car sales could achieve a rate of 1% of monthly sales by the end of 2014. That will be an historic milestone when, not if, it is achieved.

Virtually nothing is more important to the America's economy, environment, and national security than transitioning our transportation fleet from oil. And so the strong rise in electric vehicle sales in 2013 is a truly important energy fact of 2013.

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