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Wednesday
May162007

The Uranium Banana Skin?

Recently, we wrote an article on the possible threats to the uranium bull market and nuclear power in general. In this article we will explore what we believe is the biggest single threat to the long term position of nuclear power with uranium as a fuel.

What could be on the horizon?

We ask you to look upon this technology with a open mind, no matter what prejudices or previous conclusion you may have arrived at. We were extremely sceptical when this was first brought to our attention, but as professionals we researched the topic thoroughly regardless of our opinions beforehand, and all that we ask is for you to put your sceptical views aside if you have any, until you have read this article in its entirety.

Taking the UK as an example, we are taking a careful interest in this power source, as the UK is one of the areas which could stand to benefit from this technology. Recently, a review from the UK government showed that there are now types of wave power that are capable of producing electricity at a cost lower than USD 0.10/kWh. This is the point at which electricity consumption becomes economically viable.

Out of all the wave power devices, the “Salter” Duck is the most efficient, generating electricity at under USD 0.05/kWh. The Duck was invented and developed in the 1970's, by Professor Stephen Salter at the University of Edinburgh and the device generates electricity by bobbing up and down with the waves on the sea surface. Despite its ability to produce energy extremely efficiently the idea was killed off mid way through the 1980's when a report from the EU “miscalculated” the cost of electricity produced by a factor of ten! They hugely overestimated capital cost, underestimating the reliability of underwater cables and ridiculously claiming that each Duck would cost the about the same as the prototype had cost. Recently, the “error” has been uncovered and the Salter Duck is getting more coverage and consideration.

Many view this “error” or “miscalculation” as a deliberate attempt to destroy the Salter Duck's future as a source of electricity. Some believe that pressure from the Nuclear Industry may have influenced the EU in its decision to report that the Salter Duck was not economically viable as it would have seriously threatened the existence of nuclear power, which at the time was an extremely prominent emerging energy source. What does this tell us? Well it suggests that people in the nuclear industry felt threatened by the possibilities of wave power and that in itself adds credibility to the wave power idea. It also adds to the argument that marine renewables are the biggest single threat to nuclear power and the uranium bull market as the nuclear industry may have been forced to act this way.

Let us explain in a bit more detail how the Salter Duck actually works. The Salter Duck works by absorbing 90% of the energy from incoming waves and leaving a calmer sea behind the cam. The nodding motion of cam operated pistons then compress hydraulic oil and once this pressure has built up, the pressurised oil is released through a hydraulic motor that in turn converts 90% of the captured power to electricity.

Salter Duck Diagram

After campaigning long and hard to save their project, Professor Salter and his team had to break up in early 1987. Salter wrote to the House of Lords committee on renewable energy; “We must stop using grossly different assessment methods in a rat race between technologies at widely differing stages of their development. We must find a way of reporting accurate results to decision makers and have decision makers with enough technical knowledge to spot data massage if it occurs. I believe that this will be possible only if the control of renewable energy projects is completely removed from nuclear influences.” Once the programme manager of Salter's team started predicting that they could get costs down to 3.3p/kWh, an economically viable level, he was excluded from the next important meeting of the key committee. He also claimed that 'They [the government] basically killed the project because it was going to threaten the expansion of the nuclear industry,'

Salter admits that the project was perhaps a bit ahead of its time. 'It's a bit like somebody saying in 1905 that they had a really good idea for a huge aircraft like the Airbus A380 when people didn't believe that biplanes would fly.” Regardless of the sentiment towards his project, Salter still remains convinced of the potential from wave power, claiming that “you could run continents with this sort of power”. Salter says, “The long-term dream for the Duck stream is that you run a long line of them from the Hebrides down to the west coast of Ireland, with a break to allow shipping through, then you build out from Cape Wrath [the most westerly point on the northern coast of Scotland], past the Faroes and all the way to Iceland. You can use hydroelectrics and the Icelandic geothermal to back that up when there aren't any waves. So you get a very high-capacity factor of wave power coming into Scotland and Norway and feeding on down into the rest of Europe. That's a really enormous resource.'

However another renewable marine resource is tidal power and this also has a lot of potential. The Pentland Firth, which is the channel between Scotland and Orkney is estimated to hold 50% of Europe's tidal power. Using tidal steam turbines, many, including Salter himself think that we could get 10-20GW of power out of the system. I realize that this figure does not mean a lot to a lot of people so let us put this enormous amount of power into perspective.

This project could produce more energy than all the nuclear power stations in the UK combined.

Pentland Map

Does that sound like a threat to nuclear power? Could marine renewables be the Uranium Banana Skin?

Personally we think that these two power sources do not have to smash into each other head first, there should not be confrontation between them, but co-operation. By working with each other, rather than against each other they can both offer an extremely good solution to not only the UK's energy needs, but global energy needs in general. A lot of the research in the article has been focused on the UK and Europe, but that is simply because that is where the studies have taken place and where the research has been carried out. We are confident that with more research in different parts of world, similar possibilities can be discovered.

We see nuclear energy as a “temporary” solution to the worlds energy needs. When we say “temporary” we are talking perhaps up to 50 maybe even to 100 years. Over this period we see nuclear energy surpassing fossil fuels and then renewable energy sources taking over from there. Nuclear energy is not going to be a long term solution for energy, if all the worlds electricity was produced by nuclear power, then we would run out of uranium in five years! Whilst that would be very beneficial to the uranium price and our uranium stocks it is not helpful to humanity's energy needs.

Nuclear should be the transition energy, that takes us from fossil fuels to the renewable energy sources. After all, living on nuclear energy is like living on a set amount of capital, but living using renewable energy sources is like living from an everlasting income. This of course would all change if someone cracked either breeder reactors or nuclear fusion which will be discussed in a future article.

So in conclusion, what it the uranium banana skin?
The answer is that eventually renewable energy, in particular marine renewables such as wave and tidal power will be the banana skin that causes the nuclear industry to come to its knees. The good news as far as uranium investors are concerned is that this will not begin to happen for at least another decade and nuclear energy is at the very least, the immediate future whilst renewable energy is still being developed and most importantly, put into action.

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Reader Comments (12)

A very balanced and fascinating article, I hope the real decision makers in this area are now getting access to such innovative and intelligent thought. I share your view that nuclear energy, specifically uranium based fission energy, is only a partial stop gap measure. France is currently engaging in a pilot nuclear fusion project, which will produce only water and electricity. With projects such as this, and a little creative thinking, I believe we can slow and most likely reverse the effects of global warming. Your article certainly assists in promoting the cause.

May 17, 2007 | Unregistered CommenterJoe Docherty

This is a very important source of renewable energy that should be part of a mix,speaking on a global basis.There are still a lot of countries not surrounded by water or insufficient coastal shores to provide enough electricity through tidal power.This is definately an interesting subject that deserves its' own blogsite.

May 17, 2007 | Unregistered CommenterJerry

We thought that this article might bring the roof down on us for not being blindly bullish to the nuclear cause, so your comments are very much appreciated, thanks.

May 17, 2007 | Unregistered CommenterUranium Stocks

A very interesting view is indeed to see uranium as a partly transition-energy for fossil energy. Uranium has a great future until we see peak-uranium. But exploration on worldscale is just beginning so peak-uranium is not a issue for the next decade. And above all energypower related to uranium is so very cheap when mankind can handle the risks involved with uranium. Nowadays it is a manageble bet to buy near-producers of uranium especially in save country's like Canada, USA, Europe and Australia.

May 17, 2007 | Unregistered CommenterGerK

Interesting article but I disagree with the uranium estimate. Uranium is a common element and exploration for new supply has had a 20 year exploration void prior to the last couple of years. As a common element we have no idea how many centuries it will supply mankind. New discoveries are being made regularly by the accelerating amount of new exploration companies.
France is now developing a technology that recycles nuclear waste.
Another consideration is the cost of doing business on an active ocean vs dry land is formidable and maintenance of such a massive project as proposed would be challenging and ongoing.
Nuclear power's track record of reliability, low maintenance and low cost over a 40 year reactor cycle is favorable vs "the duck" which has yet to be proven commercially viable.
That being said if we can get technologies proven up like "the duck" it may be superior to anything we have, however based on this report, "the duck" has many years to go towards proving a reliable, commercial track record.
It is misleading to state at this point that "wave and tidal power will be the banana skin that causes the nuclear industry to come to its knees".

May 17, 2007 | Unregistered CommenterSteve

Thanks for all your comments!

Steve, the uranium estimate is of course based on the known uranium deposits and there could indeed be all more uranium out there that we haven't found yet. However until we do find it and mine it, it cannot be used in nuclear reactors. We have based these estimates on the known uranium, as if we speculate on additional uranium reserves then the estimate becomes simply a guess.

There is of course more and more exploration being done in search of uranium but what we need is more actual finds of uranium not just the companies. The flood of new uranium exploration companies on to the market does not mean that we will find more uranium, in fact many have no uranium at all.

Even when we do find more deposits, it is at least 10 years before the mine is put into production and starts feeding the hungry power stations.

Uranium is a commonly occurring element in the ground, but this is a misleading statement as on average uranium in the earths crust is about 2 to 4 parts per million, to actually mine uranium you need at least 80 parts per million and high grades go up to 200,000 ppm, so I am afraid turning your backyard into the next McArthur River is not an option yet!

France is indeed technology that could recycle nuclear waste, but that technology has yet to be proven to work and there is a big difference between the development of a technology and its implementation. For example, scientists have been developing nuclear fusion for years...but we haven't got it yet and until we do it is nothing more than a developing idea.

The projects mentioned are of course "challenging" as is any new science, but it is far less challenging than nuclear technology was in its early stages.

The Duck proven to be commercially viable and there are now types of wave power that can produce electricity at a cost of USD 0.10/kWh. The Duck and other marine technologies do have a fair way to go but that does not mean that they will not go there. In fact there is a commercial wave farm operating at the moment in Portugal using the Pelamis device and the biggest wave farm in the world is being planned in Scotland so marine technology is moving forward.

Of course we still believe that nuclear power will continue to thrive in the short term and we should see at least another decade of more and more nuclear plants being built. However in terms of the next 100 years, marine renewables look set to play a very significant role in providing the world with energy.

May 17, 2007 | Unregistered CommenterUranium Stocks

nice story

thanks

May 17, 2007 | Unregistered CommenterBruce Brocker

Thank you for your direct response to my post.
I am not discounting wave power just questioning your rational about uranium availability.

Your statements-
"Uranium is a commonly occurring element in the ground, but this is a misleading statement as on average uranium in the earths crust is about 2 to 4 parts per million, to actually mine uranium you need at least 80 parts per million and high grades go up to 200,000 ppm, so I am afraid turning your backyard into the next McArthur River is not an option yet!"

You missed the point.

"The flood of new uranium exploration companies on to the market does not mean that we will find more uranium, in fact many have no uranium at all."

Many have found significant amounts of uranium with no limitations to their discoveries as of yet. For example UMN, AXU and TVC, to name a few, combined have hundreds of millions of pounds and are open on strike. New discoveries are constantly being found and existing discoveries are being expanded on a steady basis. Globally previous mines abandoned due to low U prices decades ago, now owned by companies like URA, EFR, TEL and KRI have significant quantities of uranium and will be in production relatively shortly. The amount of these abandoned U mines in the world is considerable.
The amount of usable uranium in the world is huge and the lack of exploration over the last 20 years is the reason for the present shortage.

"Even when we do find more deposits, it is at least 10 years before the mine is put into production and starts feeding the hungry power stations."

This is misleading as some countries, such as in Africa, have a production window much shorter than this.
As the uranium squeeze continues this window will be narrowed down by pother countries through necessity.

The global nuclear renaissance is not being conducted by fools. They know there is plenty of uranium around for the future.

May 17, 2007 | Unregistered CommenterSteve

The trouble is that there is not a lot of uranium on the market, regardless of how much more is being discovered and the demand continues to rise, this is why the uranium price is going up.

More uranium is being discovered and I am sure that we will get more supply coming online eventually, it is just that at the moment, with the current amount of supply, if all the world's electricity was powered by nuclear energy, uranium would run out in five years. Of course, not all the electricity in the world will ever come exclusively from just uranium, and this is a hypothetically situation.

As more discoveries are being made, we assume that more supply we come online but this is not always the case. Take Cigar Lake for an example, it was supposed to supply 17% of the worlds uranium needs, but this is not going to happen (similar to the oil market losing Saudi), which just goes to show that great deposits don’t always come online as we would expect.

You are right that in some parts of Africa, getting a mine into production can be a bit faster but one must bear in mind that over 80% of uranium production comes from outside of Africa and in these countries it can take 10 years.

The main evidence supporting the fact that uranium is tight at the moment is the massive rise in the uranium price. Perhaps if more production comes online the price will fall, but that is still a fair way away.

Thanks a lot for your comments, we always appreciate and encourage debate on www.uranium-stocks.net

May 17, 2007 | Unregistered CommenterUranium Stocks

I'm not sure how you manage to track down these stories before anyone else, but this is what keeps me coming back to your website. Great work!

May 18, 2007 | Unregistered Commenterjacobj

When I read this article I thought that maybe these "ducks" are a real threat to nuclear energy, but additional articles says something different. The statement that "The total potential off the coast of United States is 252 million megawatt hours a year" seems kind of funny - it is an equivalent of only 28.8 GWe of capacity running the whole year. Is that all? And one needs a backup for it, just like the wind mills.
I can't agree either about the future of nuclear energy. I admit that there is a shortage of uranium today and that the amount of cheap uranium for current reactor technology is limited, but today's reactors were never meant to be the future of nuclear power. For Christ's sake, fast breeders were built 50 years ago. How can You even compare it with thermonuclear reactors that need the best possible technology only to start working, not mention to withstand couple of decades. Even pioneers of nuclear industry never imagined another direction of development of nuclear energy. For me, today's usage of uranium's energy is just a horrible waste, plus a lot of longlasting wastes, even though very small in quantity. When the cheap uranium is finally over, fast breeders will take the lead, and a fuel for it won't end quickly.

March 19, 2008 | Unregistered CommenterT.K.

Build it, I'll buy a couple of kilos. After you are producing.

June 3, 2008 | Unregistered CommenterIndiana John

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