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Remdesivir, Low-Carbon Energy, and the Origins of Innovation

How do we foster innovation to solve COVID-19 and climate change?

Ten days ago the Food and Drug Administration issued an emergency approval for remdesivir. It’s too soon to know how effective the antiviral drug will be in the treatment of Covid-19, but its development provides a great example of the economics of innovation. 

As an economist who studies energy and the environment, I’ve followed closely a series of major innovations over the last decade including the falling costs of renewables, the growth of hydraulic fracturing, and energy-efficient lighting. Like many economists, I believe much more innovation will be needed in this sector if we are to “bend the curve” on carbon dioxide emissions.

Innovation is innovation – whether we are talking about antiviral drugs or low-carbon energy — so much can be learned from understanding individual case studies. What is interesting about remdesivir is that two very different stories have emerged, and they illustrate some of the key underlying themes in the economics of innovation.

Capitalism to the Rescue

The first story told about remdesivir is that it is a product of the free market. This Wall Street Journal op ed, for example, points to “privately owned” companies, “risk-taking shareholders” and “America’s laws and market system” as the key ingredients in the drug’s origin story.

Central to this world view is the idea that the profit motive is a powerful stimulus. Innovation requires costly investments made over a long time period and Gilead, the company that is developing remdesivir, would not have made these investments without the potential for significant profits.

The free market has long been a key theme in low-carbon energy innovation as well. Venture capital firms and other investors make profits when their efforts are successful, but they also lose money when their efforts fail. This “survival-of-the-fittest” winnowing helps allocate resources to the most promising technologies.

nasdaq

An Incomplete Story – Twin Market Failures

The power of the free market will certainly continue to be part of the story as we look for solutions to Covid-19, climate change, and the world’s biggest challenges.

But this explanation is incomplete. There are two market failures that mean that regardless of how well the free market works, it never is going to deliver enough innovation:

  1.     Unpriced negative externalities. These include carbon dioxide emissions from fossil fuels and virus transmission to third parties, for example.
  2.     Knowledge spillovers. These are benefits that cannot be captured by the innovator because they “spill over” to other companies, sectors, countries. Ironically, this is also an externality, but in this case a positive externality.

Yes, Gilead could end up earning large profits. Yes, an innovator who develops a better light bulb can earn large profits. But because of these two market failures, companies are unable to capture the full societal benefit of new discoveries, and thus have insufficient incentive to develop these innovations in the first place.

LightBulb

The Crucial Role of Federal Funding

Which leads to the other story emerging about remdesivir — innovation comes from government support. This New York Times article, for example, puts federal funding at the center of the drug’s origin story:

“The story of remdesivir’s rescue and transformation testifies to the powerful role played by federal funding, which allowed scientists laboring in obscurity to pursue basic research without obvious financial benefits. This research depends almost entirely on government grants.” — Gina Kolata in the New York Times, May 1, 2020

This view of innovation emphasizes research universities like UC Berkeley, where I work. The research underpinning remdsesivir goes back 20+ years  to work done at Vanderbilt University and the University of North Carolina by virus experts who “just wanted to know” how viruses work.

Government support has played a role in major low-carbon energy innovations too, from solar panels to wind turbines to LED lighting to lithium ion batteries, and is the rationale for U.S. Department of Energy national laboratories including Lawrence Berkeley National Laboratory, NREL, Argonne, and Oak Ridge. Economist David Popp in a recent Hamilton Project Paper argues that the U.S. federal government should be spending even more on low-carbon energy research.

Especially when it comes to investments in basic science, the knowledge spillovers are potentially so large relative to immediate profits that it would be a mistake to leave these investments to the market. These are long-term, long time horizon investments for which the societal rate-of-return exceeds the private rate-of-return. 

Berkeley

All of the Above

So which is it? The free market? Government support? The answer is, of course, all of the above. Interestingly, the Wall Street Journal op-ed makes no mention of the role of government beyond patent protection, while the New York Times article makes no mention of private enterprise. But either story is, in itself, incomplete. 

It has never been more important to understand the process of innovation, and economics implies that we need both free markets and government support. I have no idea where the solutions will come from for Covid-19 or climate change. But the origin of these future innovations is very likely to include both these ingredients.

Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.

Suggested citation: Davis, Lucas. “Remdesivir, Low-Carbon Energy, and the Origins of Innovation” Energy Institute Blog, UC Berkeley, May 11, 2020, https://energyathaas.wordpress.com/2020/05/11/remdesivir-low-carbon-energy-and-the-origins-of-innovation/ 

 

Lucas Davis View All

Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is Faculty Director of the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Faculty Research Fellow at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. Prior to joining Haas in 2009, he was an assistant professor of Economics at the University of Michigan. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.

28 thoughts on “Remdesivir, Low-Carbon Energy, and the Origins of Innovation Leave a comment

  1. “How do we foster innovation to solve COVID-19 and climate change?”

    We are already fostering innovation to nullify AGW (not climate change, which is a much broader subject). By 2050 we won’t be using fossil fuels anymore for the same reasons we stopped buying typewriters and steam engines.

  2. Thank you for a balanced approach to this issue and keeping away from a false duality. A couple of other things come to mind in reading it.
    1) The need for a sovereign wealth fund in the U.S. so that the government investment in new technologies does not lead to high profits by tech innovation firms and outrageous salaries for their CEO. Low priced goods is not enough compensation. Plus all of the tax break investors get reduces the compensation for risk argument. When these companies take those profits into purchasing shares and not investing in further innovation or rewarding employees we end up with a bad deal for society.

    2) As mentioned above customer demand is also something that needs to be thought about. Right now demand is being cut by consumer’s valid fears of a risk of serious illness or death. This fear will need to be addressed and reduced by real solutions (meds and vaccines) but also by framing how reentering the world should be understood. Perceptions matter and are shaped by PR, advertising and stories. The stories of people surviving the disease and coming out of hospitals need more coverage. Also, the about 80% of young people who are infected with only moderate effects, needs to be taken into account. With actions to protect people that are visible and effective added to positive stories, perhaps some of the fear driving the market can be reduced.

  3. Thanks for this blog post. In addition to the links included here, a detailed discussion of innovation in low-carbon energy technologies, can be found in: National Academies of Sciences, Engineering, and Medicine. 2016. The Power of Change: Innovation for Development and Deployment of Increasingly Clean Electric Power Technologies. Washington, D.C.: The National Academies Press.

  4. Lucas, there has been a spate of comparisons between responses to COVID-19 and climate change in recent weeks. Many focus on the supply side of the economic equation: government incentives, the Defense Production Act, related technologies, etc.

    The main difference is on the other side: demand. At its root, the source of demand for a COVID-19 vaccine, N-95 masks, hand sanitizer etc. is fear of an existential threat: “If I’m exposed to this virus, I might die.” Climate change? It’s unlikely families of any of the estimated 25,000 humans whose death is inextricably linked to climate change each year appreciate that fact. Even fewer would be willing to pay hard cash to help solve it for their grandchildren’s grandchildren. Unfortunately, for innovations to address climate change, there’s not that much demand.

    “Government support has played a role in major low-carbon energy innovations too, from solar panels to wind turbines to LED lighting to lithium ion batteries, and is the rationale for U.S. Department of Energy national laboratories including Lawrence Berkeley National Laboratory, NREL, Argonne, and Oak Ridge.”

    The low-carbon energy innovation with the most impact, by far, is nuclear energy – and though Argonne and Oak Ridge made your list of the Top Four National Laboratories for Energy Innovation, nuclear somehow escaped your list of The Top Four Clean Sources of Energy*. Has nuclear become the other “n-word”, banned from socially-acceptable discourse in California? Seems that way. If so, fear of an existential threat is certainly to blame – the difference being, of course, that fear of COVID-19 has a rational basis.

    *Lithium-ion batteries only save energy when a portable supply of electricity is necessary. In non-portable applications, they waste it.

    • “The low-carbon energy innovation with the most impact, by far, is nuclear energy…”
      If this can be done without bankrupting California, as the present state of the technology would, and without the corporate support that is highlighted as the true villain in the film you extoll, “Plant of the Humans”, then we can move forward with nuclear. Right now, neither of those conditions are feasible.

      • “If this can be done without bankrupting California, as the present state of the technology would, and without the corporate support that is highlighted as the true villain…”

        Keeping Diablo Canyon open would certainly not bankrupt California, notwithstanding made-to-order conclusions to the contrary. But building new gas plants to take its place, and curtailment costs for wind and solar (the 138 GWh CAISO curtailed in January was 981% higher than the year before), and building banks of expensive batteries that need to be replaced every 10-12 years, and paying CCAs to serve as unnecessary middlemen…that’s another story. That’s where corporations are dying to get a piece of the action.

        The unfortunate fact is that nuclear is not uneconomical, but too economical. With very little fuel to sell and very little maintenance, the only thing nuclear plants have to sell is clean electricity. California’s gas interests saw the writing on the wall decades ago, and gradually decoupled sales of electricity from profit to guarantee a market for sales of gas. Now gas plants, with a solar farm here or there for greenwashing purposes, are the only logical choice.

        “Right now, neither of those conditions are feasible.”

        Depends on your priorities. If your play is shale gas in the Permian Basin, nuclear is infeasible. If your play is fighting climate change while keeping electricity rates low, nuclear energy is the only feasible condition.

        • I’ll repeat for you again–Diablo Canyon would cost $100 to $120/MWH to continue to operate after 2025. That is based on PG&E’s own cost estimates (and utilities rarely underestimate costs.)

          And please provide the list of NEW gas plants proposed in California to replace Diablo Canyon. Due to the length of the siting process at the CEC, these plants have to already be in the queue to gain approval and have signed PPAs by 2025. (Don’t bother looking–there aren’t any and won’t be any.)

          • Nonsense. PG&E’s/MCube’s cost estimate is patently ridiculous – PG&E will be paid off by 2025 – and more expensive than any other nuclear plant in the country. Has any auditor taken a look at your report? I didn’t think so, and there’s a reason for that.

            Of course Newsom won’t permit new gas plants to be built – that would be too obvious. So AES and Calpine (20 gas plants in CA) are uprating old ones, while forcing customers to pay for batteries to store their gas-fired electricity. Storage will increase their a round-trip emissions footprint by 15%. Add 3% leakage, and we’re up to about the CO2e footprint of clean coal.

            “California faces a crossroads on the path to 100% clean energy

            “Lithium-ion batteries typically store enough electricity only for a few hours — and during the winter, the sun and wind can disappear for days at a time. Building enough solar panels, wind turbines and batteries to keep the lights on even during those cloudy, windless periods would be “extremely costly and impractical,” according to research presented to state officials last month by Energy and Environmental Economics Inc., better known as E3.

            “The consulting firm released a study in June finding California might still need between 17,000 and 35,000 megawatts of gas capacity in 2050. At the high end, that’s not far from the 41,000 megawatts of gas installed today.”

            https://www.latimes.com/environment/story/2019-12-12/california-clean-energy-gas-plants

            So much for 100% clean electricity by 2045, eh?

          • It’s PG&E’s study, not M.Cubed’s, that determined the cost of Diablo Canyon going forward. The report was scrutinized in the retirement application by many parties for which I supplied the proceeding number to you numerous times. (A planning study is never “audited” because there are no recorded expenditures for what’s going to happen in the future.)

            The referenced E3 report is one scenario for what MIGHT happen 30 years from now. There are no gas plants in the queue right now, which is your assertion. All of the coastal gas plants have already been upgraded and there’s no others that will be replaced.

            You assert that nuclear technology will become cost effective even though it is not currently. Why is such progress limited to a single technology? Given how rapidly storage technology has been changing, especially relative to nuclear, why should that progress suddenly stop?

          • PG&E’s bogus Joint Proposal was “scrutinized” by the company’s own handpicked group of antinuclear zealots, a national pseudo-environmental group with substantial fossil fuel investments, one of Diablo Canyon’s six labor unions, a coalition of utility employees, and their various attorneys. All had something to gain by signing on the dotted line.

            Here’s Planet of the Humans producer Ozzie Zehner responding to criticism of the film: “I think the existing environmental movement is going to be the last to come around to the story in this film, because they’re going to argue solar cells and wind turbines are going to become more efficient, cheaper, these sorts of things. What they miss is that it doesn’t really matter….it hasn’t worked after spending a trillion dollars and we’re no better off. In fact, we’re much worse off than when we started this thirty years ago.”

            He hits the nail on the head, and everything he says applies to batteries. Yes, they will become better, they will become cheaper. But understanding why it doesn’t matter requires a basic understanding of the physics of electromagnetic energy, and on that subject you really have no idea what you’re talking about. It’s like saying, “If I continue to practice swimming every day, one day I’ll be able to swim the Pacific Ocean” – not even close. Here is the bottom line, again, confirmed by E3. Let it sink in: relying on renewables to address climate change is a recipe for climate disaster.

            “Building enough solar panels, wind turbines and batteries to keep the lights on even during those cloudy, windless periods would be ‘extremely costly and impractical,’ according to research presented to state officials last month by Energy and Environmental Economics Inc., better known as E3.The consulting firm released a study in June finding California might still need between 17,000 and 35,000 megawatts of gas capacity in 2050. At the high end, that’s not far from the 41,000 megawatts of gas installed today.”

          • “PG&E’s bogus Joint Proposal was “scrutinized” by the company’s own handpicked group of antinuclear zealots, a national pseudo-environmental group with substantial fossil fuel investments, one of Diablo Canyon’s six labor unions, a coalition of utility employees, and their various attorneys. All had something to gain by signing on the dotted line.”

            No, its proposal was scrutinized by a host of other intervenors including ratepayers groups, renewable and merchant generators, CCAs, direct access customers, the CPUC’s own ratepayer advocate office, and other environmental groups not handpicked by PG&E. In addition, the SWRCB had reviewed PG&E’s once through cooling proposal. (I’m sure I left off someone.) I’m not sure who else you believe is “authoritative” enough to completely trump all of those other stakeholders, who all essentially came to the same conclusions. What you’re asking to be done has already been done, and the conclusion is contrary to your world view.

          • “What you’re asking to be done has already been done, and the conclusion is contrary to your world view” – wrong (as usual) on both counts.

            For starters, we’re not “asking” anything. Californians for Green Nuclear Power (CGNP) is demanding California legislators prevent the premature shutdown and replacement of California’s largest source of carbon-free electricity, an $11.5 billion asset, financed not by “stakeholders” and others recognizing a opportunity for quick profits, but by California ratepayers over the course of 40 years.

            I realize acknowledging nuclear’s clean energy contribution is contrary to your world view; that you’ve already chosen to put your faith in advertisements and fallen idols like Bill McKibben and Al Gore to protect the environment. But guess what? Nothing has already “been done”. Electricity from Diablo Canyon is, at this moment, allowing you to read these words without your screen flickering on and off should clouds move in or the wind stop blowing. Meanwhile, Planet of the Humans has laid to waste the lie of renewable energy, and legislators are listening. AB 2898, a bill to recognize nuclear as a source of renewable energy, is currently in the Committee on Utilities and Electricity of the California Assembly. It will level a playing field tilted by fossil fuel interests to guarantee natural gas an unlimited future in California electricity, and will make nuclear truly competitive with natural gas at any time of day or night.

            CGNP is guided by our belief nuclear power paves the only viable path forward on climate change. But don’t listen to us, listen to others who share that belief – they make for some pretty good company.

            James Hansen, the “Father of Climate Change Awareness” and Director of the Earth Institute, Columbia University
            Tom Wigley, Climate and Energy Scientist, National Center for Atmospheric Research, Boulder, Colorado
            Kerry Emanuel, Professor of Atmospheric Science, Massachusetts Institute of Technology
            David Lea, Professor, Earth Science, University of California
            Barry Brook, Professor of Environmental Sustainability, University of Tasmania
            Paul Robbins, Director, Nelson Institute for Environmental Studies, University of Wisconsin-Madison
            Richard Rhodes, author, Pulitzer Prize-winner, The Making of the Atomic Bomb
            Gerry Thomas, Professor of Molecular Pathology, Department of Surgery and Cancer, Imperial College London
            Philip Thomas, Professor of Risk Management, University of Bristol
            Wade Allison, Professor Emeritus of Physics, Oxford University
            Joe Lassiter, Professor, Harvard Business School
            Peter H. Raven, President Emeritus, Missouri Botanical Garden. Winner of the National Medal of Science, 2001
            Andrew Klein, Past President, American Nuclear Society
            Mark Lynas, Alliance for Science, Cornell University, author, The God Species, Six Degrees
            Bill Lee, Professor of Nuclear Engineering, Imperial College London and Bangor University, U.K.
            Steven Pinker, Harvard University, author of Better Angels of Our Nature
            Michelle Marvier, Professor, Environmental Studies and Sciences, Santa Clara University
            Tony Roulstone, Department of Engineering, Cambridge University
            Martin Lewis, Department of Geography, Stanford University
            Simon Henry Connell, Department of Mechanical Engineering Science, University of Johannesburg
            Joshua S. Goldstein, Professor Emeritus, International Relations, American University
            Malcolm Grimston, author of The Paralysis in Energy Decision Making, Honorary Research Fellow, Imperial College London
            Robert Coward, Past President of ANS
            David Dudgeon, Chair Professor of Ecology & Biodiversity, School of Biological Sciences, The University of Hong Kong
            Gwyneth Cravens, author of Power to Save the World
            Robert Stone, filmmaker, “Pandora’s Promise”
            Myrto Tripathi, Voices for Nuclear, France
            Staffan Qvist, co-author, A Bright Future (PublicAffairs 2019)
            Norris McDonald, President, Environmental Hope & Justice
            Valerie Gardner, founder, Climate Coalition
            Carl Page, co-founder, Anthropocene Institute
            Kirsty Gogan, Executive Director, Energy for Humanity
            Michael Shellenberger, Time Magazine “Hero of the Environment,” President, Alan Medsker, Environmental Progress
            Steve Kirsch, CEO, Token
            Rauli Partanen, Ecomodernist Society (Finland)
            Olguita Oudendijk, ECOMODERNISME NL, (Ecomodernist Society, Netherlands)
            Steven Savarense, Saving Our Planet (France)
            Kristin Zaitz and Iida Ruishalme, Mothers for Nuclear (U.S. and Switzerland)
            Rainer Klute, Nuklearia, Germany
            Rebecca Lohfert Boas, Ren Energi Oplysning (Denmark)
            Amardeo Sarma, co-founder of the German Ecomodernist Society Ökomoderne e.V.
            Robin Thiedmann, Chairman of the German Partei der Humanisten

            Why listen to venture capitalists like Charles Koch when we can listen to climate experts?

          • And the list of parties opposing continued operation of Diablo Canyon is as long as the list of individuals that you include, most of whom have little or no expertise in either nuclear power or in energy planning and operation.

            You mischaracterize my position yet again. I’ve laid out what the nuclear industry must show before we can endorse expanded use of that resource. The problem is that the industry has yet to accomplish those objectives: https://mcubedecon.com/2019/04/26/the-two-problems-to-be-addressed-head-on-by-nuclear-power-advocates/

          • E3’s RESOLVE model is quite limited in its applicability to changing technologies. (I’ve used an earlier version.) And as I said, you’re selectively ignoring the technological innovations in renewables and storage that are making system configurations possible that seemed impossible 5 years ago. Further, you’re ignoring the amount of “free” storage that will be available in electric vehicles when they become a significant segment of the vehicle fleet. Capacity limits will be meaningless when that happens. The E3 study ignores that potential entirely (see Table 18). Note that the 23 million automobiles on California’s roads have over 2,000 gigawatts of power capacity (compared to 60 GW of peak demand) and those cars are parked about 95% of the time. The E3 report shows about 80 gigawatts of storage capacity, which is only 4% of the vehicular capacity. If we have 10% of the vehicles engaged in the grid by 2050, problem solved.

          • “I’m not sure who else you believe is “authoritative” enough to completely trump all of those other stakeholders…”.

            You may be surprised to learn Californians for Nuclear Power was a stakeholder in PG&E’s application A16-08-006, “JOINT PROPOSAL OF PACIFIC GAS AND ELECTRIC COMPANY….TO RETIRE DIABLO CANYON NUCLEAR POWER PLANT… AND REPLACE IT WITH A PORTFOLIO OF GHG FREE RESOURCES,” but I’m not surprised – by California’s Public Utilities Commission (CPUC) we were consistently ignored and denied; motions were delayed or lost; phone calls went unreturned.

            CGNP was the only intervenor exclusively representing the interests of California environmentalists and ratepayers, without a penny in profit to gain from the shutdown. We were represented by attorney Mike Gatto, former CA Assemblyman / Chairman of the Assembly Committee on Energy and Utilities, who in his last term had introduced two bills to reform the CPUC only to see them both shelved in committee.

            In A16-08-006, CGNP introduced hundreds of pages of testimony refuting the ridiculous costs quoted by PG&E to extend the plant’s operating license for another term – all were ignored. When CGNP decimated PG&E’s claim to be able to replace Diablo Canyon with a portfolio of GHG-free resources, PG&E didn’t even try to fight. Instead, the company dropped any pretense of being able to do so by (illegally) changing the scope of the proceeding in midstream – all with the blessing of California’s corrupt CPUC.

            If there had been any doubt, CPUC’s pervasive corruption was confirmed when the commission approved PG&E’s application, with its pledge to “REPLACE IT [Diablo Canyon] WITH A PORTFOLIO OF GHG FREE RESOURCES” in its very title, without any commitment whatsoever to do so.

            If you like you can go back and read our testimony, you obviously overlooked it during the proceeding. Not my job to do your homework.

          • “CGNP was the only intervenor exclusively representing the interests of California environmentalists and ratepayers”

            This is an absolutely false claim. Both TURN and ORA (now CalPA) represent those groups and are much more broadly based than CGNP. In factk, CGNP appears to be heavily represented by nuclear engineers and scientists who have a personal financial stake in continued building and operation of nuclear power. CGNP carries at least as much “bias baggage” as any other intervenor group.

          • “Not my job to do your homework.”

            Unlike you, I did my homework already and read CGNP’s testimony. It was full of wishful thinking that tried to claim that its witnesses knew more about regulatory requirements than the agencies promulgating and enforcing those regulations. The testimony was so poorly done that the CCAs decided to not bother rebutting that it because it would fall on its face on its own. Almost all of the other parties also chose to ignore CGNP’s sloppy work.

        • “The unfortunate fact is that nuclear is not uneconomical, but too economical.”

          Carl, what evidence do you offer that the industry standard for assessing LCOE, Lazard, is incorrect about nuclear? https://www.lazard.com/perspective/lcoe2019/

          I am in no way against nuclear, and wish that they had developed LFTR plants decades ago which use only about 1% of the “fuel” used by LWRs. But, the monstrous facility and the necessary security to keep it safe hardly seems like a long term bet vs unattended solar panels lasting 20 years or more. Batteries still come up short, true, but have been improving exponentially for over 60 years and should get the job done in another 8.

          • Jonathan, I hesitate to debate LCOEs for the simple reason they’re 100% dependent on assumptions. Any number assigned to a “Levelized Cost of Electricity”, a “Social Cost of Carbon”, or a “Public Heatlh Cost of Handgun Ownership in the U.S.”, for example, can be easily manipulated to produce a desired result. So when you say Lazard is the “industry standard”, my first question is “Who is Lazard serving by publishing its study – electricity ratepayers, solar entrepreneurs, or…itself?”

            When cost estimates are peer-reviewed and published by reputable academic journals they’re sometimes useful for comparative purposes. Then, the author’s name and reputation are on the line, and academic journals as a rule do not publish papers by authors with disclosed conflicts of interest. Conspicuously lacking from any LCOE published by Lazard, Deutsche Bank, and other investments banks, however, is a name – a human who is willing to take responsibility for the accuracy and rigor of the conclusions reached therein.

            The author credited with the paper at your link, “Lazard’s latest annual Levelized Cost of Energy Analysis (LCOE 13.0)”, is, I guess, “Lazard”. That credence is given to papers written by corporations with a clear, vested financial interest in their findings is a modern phenomenon. Thirty years ago, any paper representing itself as an objective analysis written by Lazard, or General Motors, or Kraft Foods would have been a joke.

            If you live anywhere near a nuclear plant I’d encourage you to take a tour. When I toured San Onofre in 2010 our guide told us half of the plant’s ~1,000 jobs were related to security, which probably explained its high cost of operation ($.10/MWh). But when I see nuclear plant credited with a lifetime of 40 years (Gen 2 reactors are capable of lasting at least twice as long), or compared to sources with less than half the availability, and twice the cost of transmission and ancillary services, identifying the motive for publishing the paper is easy – and identifying its author, even easier.

          • Jonathan
            In other words, Carl Wurtz can’t really find anything wrong with the Lazard studies, so instead he needs to attack whether the messenger. He still can’t put up a set of numbers that demonstrate that nuclear plants are economic to build and operate. Only the sources that he personally approves of are allowed to be considered as valid (except when those sources, such as other offices and labs in the DOE) contradict his world view. Then THOSE sources ALSO must have a selfish hidden agenda. And it doesn’t matter if a group of parties, all with entirely different motivations, come to an agreement that contradicts his world view, they must all be conspiring with a singular motivation that biases all of their opinions.

          • “ Jonathan, I hesitate to debate LCOEs for the simple reason they’re 100% dependent on assumptions.”

            I’m not buying that. We have 70 years of hard data operating nuclear plants, which was my question. The cost to produce their energy is well and completely understood, save within a few percent for retirement costs.

            “ Any number assigned to a “Levelized Cost of Electricity”, a “Social Cost of Carbon”, or a “Public Heatlh Cost of Handgun Ownership in the U.S.”, for example, can be easily manipulated to produce a desired result.”

            False equivalence. LCOE is simply an average of total cost per unit delivered. The others are purely fictitious political terms. Lazard may not be perfect, but it serves the energy industry. Having paid to attend a major event for the storage industry, I can attest to the fact that LCOE along with historical market price data is completely driving the decisions for which solution to choose for “the next implementation.” If the numbers were substantively (not just marginally) in error, they would all be screaming bloody murder. I get that empirical study is not the same as academic study, but in the world of finance and engineering empirical is actually MORE valuable.

            Nuclear plants – I’ve visited a couple.including a LWR and a nuclear sub. I also have a friend in the nuclear industry whom I’ve asked about Lazard’s numbers who has verified them and explained why nuclear costs are not and never will be falling rapidly. The capital costs are staggering, the operational costs steep both because they require highly trained specialists to run and maintain them and because of the special security costs not applicable to other power sources. Better designs are not appreciably improving those costs more than incrementally, which can never keep up with exponential improvements.

            In any case, thank you for sharing your concern, which appears to be that the report values are subject to concealed motive and therefore automatically wrong. I agree there may be a bias, but am not anywhere near convinced the numbers are materially wrong as a result. In any event, even if they ARE a bit skewed, it doesn’t matter in the long run (more than five years) because incremental cost cuts on enormous capital investments will never keep up with nor appear more attractive than exponentially improving and more “nimble” solutions.

          • I was responding to Jonathan, but his revelation that he “is in no way against nuclear” apparently prompted you to go into attack mode and start shouting (netiquette, for caps-lock).

            You obviously didn’t read my reply, because I find plenty wrong with Lazard’s “study”: the company’s motivation for publishing it at all pits financial gain against accuracy, a conflict of interest that devalues any study’s conclusions – regardless the study, regardless the author. If I owned stock in the imaginary “nuclear industry” which haunts the dreams of anti-nuclear activists, for example, you would have every right to question the validity of my opinion of nuclear energy. Or, for example, if I was a member of a California commission with a sideline business consulting natural gas companies. Or maybe, if I was a consultant hired by that commissioner to write a report.

            Let me put his question another way: “What incentive would Lazard, with $tens of millions invested in its renewable energy funds, have to publish data that presents renewables in a negative light?”, or another: “Is Lazard not the standard of an industry dependent on promoting renewable energy?”, or another: “Does any other industry view Lazard’s LCOE as its ‘standard’ analysis?”.

            The National Renewable Energy Laboratory (NREL) was founded in 1977 by President Jimmy Carter*. In its original Mission Statement, NREL even admitted its bias, which has since been changed:

            “The National Renewable Energy Laboratory develops renewable energy and energy efficiency technologies and practices…”

            Thus employees of NREL are being paid $492M/yr to promote renewable energy – an inherent conflict of interest that assumes, without evidence, renewable sources represent viable sources of energy (if they don’t, no one at NREL has a job).

            “Only the sources that he personally approves of are allowed to be considered as valid…”

            You can consider valid whatever you like, although you’re probably finding your irrational fear of nuclear energy and talk of conspiracy theories is keeping readers from caring what you think. Like climate scientists or those in any other realm, I approve of objective, peer-reviewed sources without inherent conflicts of interest. You don’t seem to have much of a science background, but that’s the standard – get used to it.

            *Remember Jimmy Carter? Two years later he soiled his pants with the prediction “In twenty years, energy from the sun will provide 20% of U.S. energy.”

          • Again, you can’t find actual fault in the studies. You can only claim “bias, bias, bias” without any substantiation of how that has CHANGED the quantitative results. Lazard and NREL aren’t the only ones who come up with these findings–I’ve posted plenty of other sources in our ongoing debate. To be credible, you need to come up with actual faults in the analysis, not that you don’t like who did the analytic results. Please provide actual data and equations showing the flaws in the analyses presented by all of these various entities.

          • Nope. The burden is on you to present a single peer-reviewed, independent study worthy of analysis (the breakthrough study by Mars, Inc. titled “Snickers Really Satisfies – Does It, Or Doesn’t It?” doesn’t count). Lazard: strike one. NREL: strike two. Last chance.

            “Please provide actual data and equations showing the flaws in the analyses presented by all of these various entities.”

            Please provide evidence there are actual data and equations supporting Lazard’s analyses, and that its “study” wasn’t an invention of the company’s Marketing department.

            “…not that you don’t like who did the analytic results.”

            I have no idea who “did the analytic results” – that’s part of the problem. Please provide at least one peer-reviewed independent study supporting your LCOE of various sources of grid electricity, or don’t continue to waste my time.

          • I think Jonathan answered your claims about Lazard quite adequately. You need to present an alternative cost estimate (which you have failed to do completely) of a ready to run commercial nuclear generation technology. (The MIT study is about expectations of a future unproven technology.) You are unlikely to change your worldview, so I’ll leave it to other readers to judge which of our positions is most valid.

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