18 August 2013

The National (United Arab Emirates): Fukushima and Chernobyl haunt atomic future

Fukushima and Chernobyl haunt atomic future

Colin Randall
The National, Aug 18, 2013

In the long shadows of Chernobyl and Fukushima lurks lingering uncertainty over the global nuclear energy sector as arguments rage about safety and cost-effectiveness.

Europe has been severely affected by a reluctance to invest as concerns grow about the reliability of some nuclear plants and the hefty costs of construction, operation and waste disposal.

The World Nuclear Industry Status Report (WNIR) for 2013, whose authors were drawn from France, the United Kingdom and Japan and led by the German-born nuclear energy consultant Mycle Schneider, has found 20 years after reaching a peak of 17 per cent, nuclear’s share of world energy provision has slumped to 10 per cent.

The triple Japanese catastrophe of tsunami, earthquake and nuclear meltdown at Fukushima in March 2011 is the obvious cause of two years of accelerating decline. The 4 per cent fall in power generated by nuclear plants by the end of that year was already a record low; last year, the decrease was greater still, at 7 per cent.


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Nuclear reactor building in the United States stagnates as costs clog the machine

Neil Parmar
The National, Aug 18, 2013

Is it the beginning of the end of nuclear energy production within the United States? To hear some experts tell it, the end has already begun.

It has been decades since a utility company built a new nuclear plant, for a variety of reasons. Some Americans have been concerned of late following the disaster in Fukushima, where radioactive water has been seeping into the ocean off the coast of Japan.

But some energy analysts say new nuclear plant construction at least in the US has not stopped due to a public backlash against this form of energy. “The only reason the share of energy produced by nuclear power over the last 20 years is that a few reactors have been decommissioned and no new ones have been built while other [energy] generation sources have grown,” says Gerry Runte, the managing director of Worthington Sawtelle, an energy-focused consultancy.

“Proliferation of reactor designs and the nuclear regulatory review process exacerbated the cost equation,” he adds. “Nuclear power plant construction is not very efficient in competitive markets, especially in the US, even with government support and subsidy.”

Before the 2008 downturn, the price of uranium was rising significantly. But the recession sapped demand from the wholesale electricity market and industrial customers.

While revenue generated by the nuclear industry within the US is forecasted to top US$35 billion this year, it has only inched up 0.8 per cent, on average, over each of the past five years and has “remained relatively stable because nuclear generation capacity has failed to keep pace with the rising demand,” according to a report released last month by the market research firm IBISWorld.

Meanwhile, the cost of uranium, a heavy metal used as fuel by nuclear power plants, has slumped compared to pre-recession levels.

Cameco, a Canadian firm that is one of the world’s biggest uranium producers, said this month it planned to cut the cost of uranium further as demand for the metal waned. Both the company’s profits and revenue were lower than expected when it reported its latest quarterly earnings earlier this month. At the same time, the cost of natural gas has been reaching historic lows in many regions of the US, according to Navigant Research. This, combined with the finding that a natural gas power plant can be built within three years - compared with as long as 14 years for a nuclear plant - has shifted the power in favour of natural gas producers, says David Yang, an industry analyst at IBISWorld.

All of this means construction costs for US nuclear projects are now substantially higher than alternatives. In one analysis of a high construction cost case, Worthington Sawtelle estimated the price of energy from a nuclear plant would be $103.33 per megawatt hour, compared with $45.77 provided by natural gas and $40.60 from coal.

“Under this scenario, the overall costs of electricity generated by nuclear would not be competitive with its fossil equivalents,” says Mr Runte.

The consultancy does note some nuclear plants in the US provide competitive costs and recoup capital investments. However, in these cases, the money recovered is only the purchase price of a nuclear plant from an original owner, “purchases that were typically cents on the dollar”, notes Mr Runte.

The struggles for the nuclear energy industry date back to the 1970s when only about half of the reactors on order within the US were actually constructed. Another challenge was that the overall cost for nuclear plants far exceeded their original estimates.

“These machines became more and more expensive,” says Mycle Schneider, an analyst on energy and nuclear policy for his own consultancy.