National programmes – where do they stand now?

1 August 2012

Just over a year after Fukushima, there is a general perception that nuclear power’s credibility has sustained a major blow that severely damaged (possibly irreparably) its prospects for achieving a significant role in satisfying future energy needs. In fact, this is not the case at all.

For one thing, there are more powerful forces acting on world energy development that will likely prove much more significant in the longer run than a single accident in one country. The world energy supply and demand outlook remains fundamentally unchanged today, although it is arguable that the economic recession in many countries has lessened the push towards ‘clean power’ as cost factors have taken on more prominence. Yet the desire to curb greenhouse gas emissions remains.

Nevertheless, we are seeing increasing scepticism about the possibilities of carbon capture and storage (CCS) as a viable anti-carbon technology and also more doubts about renewable energy. CCS has always looked like a long shot and it is surprising that International Energy Agency (IEA) scenarios continue to place such high hopes on it. Surely it is better not to burn the carbon in the first place, unless this is unavoidable? CCS is both technically and economically unproven, so should really be ruled out as a viable option until more is known. Within renewable energy, the high cost of offshore wind farms is now becoming more apparent, and without huge subsidies they will never take any substantial place in the energy mix. Although some solar power technologies are now looking increasingly promising, several major solar companies have gone bankrupt in the past year for a variety of reasons. Finally, the cost of integrating intermittent renewable energy resources into grid systems is gradually becoming appreciated. These costs are borne by all generators, when they should rightly be allocated to renewables alone.

These factors encourage an expanded view of nuclear’s future. But there is one big negative for nuclear looming in the energy world that could conceivably outweigh all of these. The discovery and early exploitation of massive unconventional shale gas resources in North America has very quickly changed the position of nuclear power there. Gas prices have fallen substantially to such a low level that it is almost impossible for new nuclear plants to compete. In the shorter term, gas-powered generation is replacing dirty old coal plants, which brings with it an immediate saving in carbon emissions. Unless gas prices remain at the current low levels for a long time (which seems unlikely because at these levels demand must spiral upwards) the existing 104 nuclear plants should not be economically threatened, but new reactors will be hard to justify. It is conceivable that the two AP1000 projects in Georgia and South Carolina (each with two reactors) may be the only ones to go ahead in the U.S. for some time.

Elsewhere in the world, it is hard at present to say how significant unconventional gas will eventually turn out to be. There have been significant environmental concerns expressed in Europe and elsewhere, but if the gas price falls substantially in any country owing to significant new low-cost supplies, the prospects for nuclear begin to look a lot dimmer.

In my April 2012 comment I said that the impact of Fukushima on public acceptance of nuclear has been very variable across different countries, ranging from very little impact in the United Kingdom and the United States to quite significant in (not surprisingly) Japan and also in Germany. The wider impact on nuclear prospects as a whole, for both the worldwide operational fleet of 430 reactors and for possible new reactors, is also quite difficult to analyse. In some cases, it has followed shifts in public opinion; but in others, the naturally-increased fears surrounding nuclear following a major accident have not been reflected in any policy changes, or at least not as yet.

Clearly the situation in Japan remains of great concern to those putting high expectations on nuclear. Possibly the biggest negative aspect of the accident is that its direct impact on people nearby will remain for a long time. Nobody may die because of the radiation releases, but the psychological and economic impact of the evacuation of people will remain an important factor even when they can all eventually return home. Also, the credibility of the Japanese industry has taken a severe knock and there will now be a prolonged struggle to get all the reactors currently out of service put back into operation. Public opinion will be an important factor in this and the industry must slowly rebuild the trust that has been lost.

Yet Japan cannot reasonably do without nuclear power. The economic impact of the additional fossil fuel imports required to operate alternative generating capacity is already obvious and cannot be borne over the longer run. It makes more sense to allow the shut-down reactors to return, but it is unlikely that all of them will be allowed to do so. There will have to be some ‘sacrificial lambs’ to appease public anger toward the industry, which may well mean a somewhat arbitrary closure of the older reactors, rather like in Germany. So perhaps 10-15 (in addition to Fukushima Daiichi 1-4) may be lost forever. Over the longer run, however, it is conceivable that Japan’s prior strong attachment to nuclear power will return, as the alternative generation options are unattractive economically, environmentally and out of security-of-supply concerns. So Japan is likely to build new nuclear units in the future.

The German nuclear situation has been discussed ad nauseum, but it is only now becoming apparent where the new energy policy is taking the country. Public opinion is very strongly set against any reversal of the nuclear closure programme, but phasing out nuclear in Germany by 2030 was always the most likely outcome there, even pre-Fukushima. Shutting down eight of the reactors so quickly, however, may be helping to put the economic illiteracy of the government’s policy into stronger focus. The sudden increase in power costs and of imports, together with the deterioration of the financial position of the major power companies like RWE and E.On has begun to concentrate the minds of the industrialists. They are already facing severe competitive pressures against Asian rivals and are gradually realising that their previous calm acquiescence to a high renewables share was akin to shooting themselves in the foot. Someone will have to pay for the increasing costs of integrating the renewables into the local power grids, and it won’t be the Chinese.

In the remainder of Europe, the prospects for nuclear generally remain much as they were pre-Fukushima, with the existing reactors receiving extensions to their operating lives (even, it now seems, for the AGRs in the United Kingdom), with the immediate prospects for new reactors confined to a few countries such as Finland, Lithuania, the Czech Republic and Bulgaria. France may eventually have to sacrifice the two Fessenheim units to assuage the anti-nukes allied to new president François Hollande’s administration, but it seems unlikely that the country will turn strongly away from nuclear. The future of operating reactors in Switzerland, Belgium and Sweden may now be a little less certain than before, but the economics of continued operation, rather than politics, will probably eventually sway things. Russia stands out as a bright spot in Europe; the Fukushima accident has clearly caused some soul-searching there, as Japan is well-regarded as a technically-advanced nation, but the Russian domestic programme remains essentially unchanged, as is its desire to export reactors to many other countries around the world.

In North America, the shale gas situation mentioned above has begun to dominate power generation. But it seems inconceivable that the obvious mismatch between gas and oil prices can persist in the longer run, as cheap gas can surely substitute for oil in many applications, even in running cars. In Canada, it seems likely that there will be further units built at Darlington, but the major focus will continue to be on keeping the existing older CANDU units in operation.

In Central and South America, the picture is mixed. Mexico has announced that it is having a new look at further nuclear units, even after Fukushima, and Argentina still seems set on building further units once Atucha 2 is operational (probably now in 2013). Brazil, however, has suddenly announced that it will not now consider further units (beyond Angra 3 under construction) until after 2020. This has been rather under-reported but is one of the most significant announcements since Fukushima. For one of the BRIC countries to be turning away from previous plans to build additional reactors on new sites before 2020 is a blow for the nuclear sector, but cannot be attributed to Fukushima. Rather it is the result of a comprehensive energy review that suggests that investment in further hydro and other renewable energy options is the optimum strategy for Brazil for the next decade.

The situation in South Africa for additional units remains largely unchanged and dependent on reactor vendors offering prices that meet local requirements. Achieving a high degree of local content in construction is also an important factor in a country with high rates of unemployment.

But it is in Asia where the future of nuclear increasingly would seem to lie. Fukushima caused a pause in the Chinese programme (it is not yet completely clear that the pause will not turn into a hiatus), and some of the more extravagant forecasts of how many reactors will be online by 2020 are now ruled out. But the commitment to nuclear would appear to remain undimmed because it, along with energy-saving and the biggest renewables programme in the world, is needed as part of its solution to clean up the dirty air in cites. In Korea, too, the nuclear programme is going ahead strongly, despite the recent safety and governance issues at the utility KHNP.

Although India has experienced further public acceptance problems post-Fukushima, this has always had more to do with land rights than safety concerns (although the anti-nuke lobby has done its best to inflate the latter). The big issue there remains the resolution of concerns about the nuclear liability regime, which makes it difficult for overseas vendors to participate in future reactor programmes.

One interesting situation is with the prospective nuclear countries in Asia, such as Vietnam, Indonesia, Malaysia and the Philippines. The strength of their commitment to nuclear as an important part of their future energy programmes appears undiminished, despite the local tsunami threat. It is vital, however, that nuclear does not become seen as the last resort in energy plans, as if they are forced to accept nuclear after they’ve tried everything else. Success really requires a more positive endorsement. The same goes for the Middle East. With the exception of Kuwait, which has abandoned its rather sketchy pre-Fukushima plans, the other countries showing interest in nuclear (backed by a real project in the UAE) are still committed. In particular, Saudi Arabia is big and rich enough to have a major programme.

So altogether, the picture for nuclear has not changed so much, and where it has, factors other than the accident have begun to hold sway. Although it may appear a little crass to categorise Fukushima as a completely exceptional accident in a far-away, irrelevant place, that it is how it is, in fact, increasingly been seen. The poor performance of the Japanese regulators and operators has also been noted, and other countries insist that they can do better to manage what is in reality a very mature technology. Fukushima has, however, reminded everyone that nuclear needs to be handled with great care, and may not yet be appropriate for every country in the world. But their time will come.

Author Info:

Steve Kidd is deputy director-general of the World Nuclear Association, where he has worked since 1995 (when it was the Uranium Institute).

Any views expressed are not necessarily those of the World Nuclear Association and/or its members.

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