Energy Post Weekly, 2 December 2016
Karel Beckman, editor-in-chief
I believe the global energy sector may have come to a crucial turning point. I think what we are seeing today is the end of new nuclear power.
Let me start by saying that I am not a principled opponent of nuclear power. In my opinion, if we can do without nuclear power, without harming the climate or incurring unreasonable costs, we should. Nuclear power is after all not a good in its own right. But if we need it, we should go for it. It’s a question of cost and benefits in the end.
What I am seeing now, though, is that we may have come to the point where worldwide most people are coming to the conclusion that the costs of new nuclear power outweigh the benefits. And that we don’t need new nuclear power going forward, even considering our global climate goals.
To be clear, I am talking about new nuclear power stations. There is little point in closing down existing nuclear plants prematurely – as Germany has done.
The Swiss people, who tend to have a pragmatic perspective on life, apparently share this view. They voted in a referendum on 27 November against a proposal to bring forward the timetable for the closure of their nuclear plants.
The Swiss government has decided that Switzerland should gradually get out of nuclear power, but has not set a clear timetable. The country gets over a third of its electricity from nuclear power. It wants to have an all-renewable electricity supply by 2050.
This vote makes perfect sense to me, but it is of course not a victory for nuclear power.
Elsewhere in the world, where countries are having to decide whether to build new nuclear power stations, the decisions are more and more turning out to be negative for nuclear power.
The case of South East Asia
Let’s first look at Asia, and in particular at Vietnam. That country’s National Assembly voted on 22 November in support of a government proposal to cancel all plans to build nuclear power plants.
This is a momentous decision for various reasons.
First of all, Vietnam had been preparing to build nuclear power plants for many years – decades in fact. As Jim Green tells the story in a fascinating article, back in the 1980s and 1990s several studies had concluded that Vietnam should build nuclear power plants. In 2010, Vietnam signed an intergovernmental agreement with Russia to build two (later four) reactors, and one with Japan to build two more. In 2011, the government issued a master plan envisaging eight new reactors to come online in the 2020s. By that time nuclear cooperation agreements had been signed with 7 countries, including the US, France, China and South Korea.
In 2014, the nuclear era in Vietnam seemed to really take off with a ground breaking ceremony at the Ninh Thuan 1 site where Rosatom would start building two reactors. But then the government delayed the project and also reduced its targets for nuclear power.
On 10 November of this year Duong Quang Thanh, CEO of staterun Electricity of Vietnam, drove the final nail in the nuclear coffin, stating that the government would propose the cancellation of plans for reactors at the two Ninh Thuan sites to the National Assembly. He added that nuclear power was not included (or budgeted for) in the power plan which runs until 2030.
In short: the Vietnamese decision was not taken lightly. Vietnam had made all the necessary preparations to start building nuclear power plants. The fact that it didn’t is very significant.
The second point to note is the reason why Vietnam decided not to go ahead with nuclear power: the decision was not ideological, but primarily based on economics. As Duong Quang Thanh put it: “nuclear power is not economically viable because of other cheaper sources of power.”
According to Jim Green, Le Hong Tinh, vice-chair of the National Assembly Committee for Science, Technology and Environment, said the estimated cost of four reactors at the two sites in Ninh Thuan province had nearly doubled to VND400 trillion (US$18 bn; €17.9 bn). The estimated price of nuclear-generated electricity had increased from 4‒4.5 US cents/kwh to 8 cents/kwh.
Another media report states that Japanese and Russian consultants said that the cost has escalated from the original estimate of US$10 billion to US$27 billion (€9.5‒25.6 bn). “The plants will have to sell power at around 8.65 cents a kWh, which is almost twice the rate approved in the project license and is not competitive at all,” reported on newspaper.
The third significant aspect of Vietnam’s decision is that Vietnam is a developing, growing economy, which expects demand for electricity to rise, although – and this is another important point – not as fast as previously estimated.
So what goes for Vietnam, goes for all those other developing economies who some years ago may wanted to turn to nuclear power. They are all faced with lower demand growth than expected, and have become aware that nuclear costs relatively more than had been expected, in view of the falling costs of renewable alternatives.
This means that after the Vietnamese decision, other countries in South East Asia are likely to take the same course, writes Green.
He notes that Russia has nuclear cooperation agreements with seven countries in south-east Asia ‒ Vietnam, Indonesia, Malaysia, Thailand, Cambodia, Myanmar and Laos. “But not one of those seven countries ‒ or any other country in south-east Asia ‒ has nuclear power plants (the only exception is the Bataan reactor in the Philippines, built but never operated) and not one is likely to in the foreseeable future. Nor are other nuclear vendors likely to succeed where Russia is failing.”
The case of China and India
True, China and India are currently building new nuclear power stations, but their programmes face severe challenges.
China has started construction on just one nuclear plant this year, writes Steve Thomas of the University of Greenwich in a recent article. According to Thomas, “the 58GW target of nuclear capacity in service by 2020 is not achievable and, like nuclear capacity targets in the past in China and elsewhere, it will be quietly revised down.”
India, according to the World Nuclear Association, “has a flourishing and largely indigenous nuclear power programme and expects to have 14.6 GW nuclear capacity on line by 2024 and 63 GW by 2032. It aims to supply 25% of electricity from nuclear power by 2050.”
However, this ambition is highly unlikely to succeed. As reported in the World Nuclear Industry Status Report 2016, India, which currently operates 20 nuclear power reactors, with a total capacity of 5.2 GW, got just 3.5% of its power from nuclear last year. This was down from 3.7% in 2011. The country has 6 units “under construction”, but three of those have been “under construction” for over a decade. Together, these new reactors have a capacity of 4 GW. If they are built, total capacity will be less than 10 GW - far removed from the 63 GW 2032 target described by the World Nuclear Association.
What is more, two major new projects, which together would see 12 new reactors built, are both in dire straits. Areva signed a preliminary accord in 2009 to build six 1,650 MW reactors at Jaitapur, a coastal town in India’s western province of Maharashtra. The project has been on hold as Areva has also sought clarity on India’s nuclear liability laws.
As journalist Dan Yurman wrote in his nuclear blog Neutron Bytes on 22 November: “EDF may take another three to four years to complete talks to build six nuclear reactors in India. The project has not broken ground and the environmental permit was rescinded due to delays in starting work at the site. Farmers in the area have mounted protests about concerns their crops would be affected by radiation from the plants due to an accident.”
The Indian government is supposed to fund part of this huge project, but as Yurman writes, it is not clear how it will do that, “since a separate deal with Westinghouse for six 1150 MW AP1000 reactors hinges on successful export loans from the U.S. The prospects for the loans will depend on a new Congress approving a change to the agency that makes them.”
The case of South Africa
Moving away from Asia to Africa, there is the very telling case of South Africa, which looks quite a bit like Vietnam.
On 22 November, the same day that the Vietnamese parliament voted in support of nuclear postponement, the South African government released a new electricity plan, which has turned out to be a great disappointment to the nuclear lobby in that country, writes Hartmut Winkler, Professor of Physics at the University of Johannesburg, in an article for The Conversation.
South Africa is faced with the same hard facts as Vietnam, notes Winkler: “Firstly, the growth in energy demand has proved to be lower than projected. Secondly, the cost of renewable technologies has dropped faster than expected.”
The new plan allows for “the construction of just over 20 GW of nuclear power”, writes Winkler. “But this would only gradually come on line between 2037 and 2050. Given that construction of the plants would take ten years the decision to go ahead with the nuclear build could still be delayed for another decade.”
In other words, no new nuclear power will be built for a long time, perhaps ever, in South Africa, at least not as far as the current government is concerned. Currently, South Africa has two nuclear reactors, supplying about 5% of its electricity. Up until recently, the country had a target of 13.4% of nuclear power by 2030.
The case of Europe
If countries like Vietnam and South Africa are unable or unwilling to build new nuclear power, who else would take up the cause? Europe?
Well, Europe’s number one nuclear country, France, seems to have completely lost the nuclear plot in recent years. Its national nuclear champions, reactor builder Areva and electricity company EDF are facing huge problems over their nuclear activities.
Just last week, EDF took over the reactor construction business of Areva for €2.5 billion, in fact bailing out the troubled unit. As Dan Yurman, a pro-nuclear author, reports, “Areva is behind schedule on projects in France, Finland and China, and the costly delays have raised concerns at EDF as it lines up Areva to build two new nuclear plants at Hinkley Point in Britain. The contract signed with EDF clears the way for Areva to raise five billion euros in new capital, largely from the French government.”
Yurman quotes French Finance Minister Michel Sapin as saying “Today marked a new step in the restructuring of France’s nuclear industry which the government is pursuing with determination,” but of course the fact that the French government has to express this kind of determination – and put up billions – is exactly the problem.
Note that the takeover of Areva by EDF is part of an €8 billion government plan to rescue Areva. But the deal is not finalized yet. It “is expected to be final in the second half of 2017 and hinges on the results of tests carried out by the French regulator on the primary circuit of the Flamanville-3 reactor and satisfactory audits at Areva’s Le Creusot, Saint-Marcel and Jeumont forging facilities.”
This refers to the current safety issues in the French nuclear sector, which have led to the closure of a third of its nuclear park, which supplies three-quarters of the country’s electricity. See my article on “The grave implications of France’s nuclear emergency” on Energy Watch of 18 November.
So where does this leave the UK, which has contracted with EDF to have two new EPR reactors built by Areva/EDF at Hinkley Point C?
Well, perhaps Gérard Magnin, the former director of EDF who stepped down from the board in July in protest at the Hinkley Point C approval, has the answer to that. In a remarkable piece in the Guardian, Magnin writes that the nuclear energy strategies of France and the UK are short-sighted, expensive and risky, and citizen-owned solar and wind schemes are the way forward.
“The most surprising [thing] for me is the attitude of the UK government which accepts the higher cost of electricity ... in a time where the costs of renewables is decreasing dramatically,” Magnin writes. “In 10 years [when Hinkley Point C is due to be completed], the cost of renewables will have fallen again a lot.”
Of the Hinkley C design, Areva’s European Pressurised Reactor (EPR), Magnin says: “A lot of people in EDF have known for a long time the EPR has no future – too sophisticated, too expensive – but they assume their commitments and try to save the face of France.” There is not a word French in there!
Magnin, who also said France’s nuclear industry is in “the worst situation ever”, has founded an association of cities switching to green energy after leaving EDF and is now director of a renewable energy co-op in France.
The notion that nuclear power is not competitive (anymore) in Europe is also the thesis of a recent article in DIW Economic Bulletin, published on 2 November. It is written by 7 researchers working for DIW, the prestigious German Institute for Economic Research.
They bluntly assert that “The nuclear power industry is faced with profound challenges— not only in Germany, but throughout Europe as well. New nuclear power plants are very expensive to build and even at high carbon prices, nuclear power is not competitive.”
The paper argues that even at a carbon price of €100/ton, over 20 times the current level, coal-fired power is still 20% cheaper and gas-fired power some 40%.
The findings are particularly relevant to a number of Eastern European countries which are currently considering expanding their nuclear power capacity, such as Czech Republic, Slovakia and Hungary, or building nuclear power plants for the first time, such as Poland.
The DIW researchers also point out that the EU’s “reference scenario” for energy – the latest edition was published before the summer – projects or assumes that in 2050 nuclear power will supply approximately the same share of power than it does now in Europe (actually, slightly more). To achieve this, 50 GW of new nuclear power stations would need to be built and some 74 GW needs to be retrofitted or replaced. The authors think this is unlikely to happen. In fact they argue that even countries like France and the UK could do without new nuclear power and still achieve their climate targets in a cost-competitive way.
Their overall conclusions are worth quoting in full, whether one agrees with them or not:
During the post-war era, great effort was expended to establish nuclear power as an economical electricity generation technology—without success. The consensus in the literature is that based on economic standards, nuclear power is not attractive in a competitive environment. In addition, the negative environmental externalities of nuclear accidents and the storage of nuclear waste are strong arguments against the use of nuclear power.
Some European countries have detailed plans for closing their nuclear power plants. Nevertheless, the EU reference scenario continues to rely on nuclear power as a key pillar of the future supply of electricity. This perpetuates an image of the European energy mix that economic analysis does not support.
The decisions of the individual member states determine the composition of the European energy mix, but they do not base their decisions on economics alone. Political, strategic and even military considerations also play a role. This is the only possible explanation for why the UK and France continue to rely on nuclear power.
The model calculations show that even without nuclear power, both countries could count on a reliable, affordable electricity supply that satisfies their climate goals. The UK will be able to rely on excellent wind resources supplemented by storage and gas as a backup. In the context of its transition énergétique, France has developed a pathway built upon a combination of energy efficiency and renewable sources. Following this pathway consistently would render nuclear energy unnecessary without endangering the country’s self-imposed climate goals. The calculations also show that an electricity mix that includes nuclear electricity represents a risky expensive option for Europe as a whole as well as individual member states.
The case of the USA
Turning finally to the USA, the greatest nuclear powerhouse in the world, the situation looks much the same as in Europe. Old nuclear power stations are being closed, and hardly any new ones get built. They are just too expensive.
To quote Dan Yurman again, he reports on a recent US Senate Hearing, which concluded that “a long-term commitment to research is needed if nuclear energy is to remain a part of the energy mix”, in the US.
“If you do not take a major initiative now, it is inevitable that in 2030 the country will not have a nuclear [energy] option,” Massachusetts Institute of Technology Institute Professor John Deutch told the hearing.
“If the country is going to have a nuclear [energy] option in 2030, it must undertake an initiative of the scope and size that this committee described,” Deutch said. “Any such initiative is going to require time, considerable federal resources, redesign of electricity markets, and sustained and skilled management.”
The case of “advanced nuclear”
Deutch is not just anybody. He recently oversaw the preparation of a report prepared by a US Department of Energy task force which tries to find ways to revive the troubled American nuclear power industry. The solution must come from new technologies: the report sees four phases in which various advanced reactor designs – including both small modular and large reactor designs – are selected, developed and demonstrated over the coming decades. It estimates that such a program would require about 25 years and $11.5bn (€18.8bn).
As the Deutch report shows, the development of “advanced” nuclear reactors, including small modular reactors, is perhaps the last hope that the nuclear industry has for the future. A technological revolution may be needed if nuclear power is to be able to grow.
It is not at all obvious whether such a revolution will happen, though. Nuclear critic Jim Green has no faith whatsoever in the future of “fast reactors”, as he explains in this recent article on Energy Post. Nuclear supporter Dan Yurman, on the other hand, takes a more optimistic view.
The case of Chernobyl
However, if this special feature is to be an epitaph on nuclear power, it seems appropriate to end it with a highly symbolic piece of news. As PV Magazine reported on 21 November, two Chinese companies are planning to build a huge, 1 GW solar plant on the Chernobyl nuclear site!
“The announcement of a 1 GW solar project at Chernobyl acts as a symbolic shift in the global energy mix, as the site of one of the greatest energy-related disasters in living memory is now set to become a bastion of PV development in Europe”, writes PV Magazine. “The mega PV plant will be developed by a collection of Chinese companies, who will not only look to take advantage of the cheap land and existing electric transmission facilities at Chernobyl, but also expand their global outreach in the solar market.”
Goodbye nuclear, hello solar.
Note: Republished with permission.