The world nuclear industry – is it in terminal decline?

6 October 2014

Despite low prices for uranium, poor new-build market in the USA and delays in Japanese reactor restarts, there remain many reasons to be positive about the long-term prospects of nuclear power, including massive improvements in China and the likelihood of large-scale life extension. By Steve Kidd

The latest annual edition of the World Nuclear Industry Status Report (WNISR) has just been published and is certainly worthwhile reading for anybody interested in the future of nuclear power. Although the authors and their sponsors are unashamedly anti-nuclear, there is good information in the publication, and some of the points made are fair ones and worthy of reflection.

One of my comments five years ago (November 2009, 'Nuclear Industry Status - better than claimed?') covered an earlier edition of the report. What is remarkable is how little has changed. Although there has been the major accident at Fukushima, nuclear plants are taking longer to build and have become more expensive, and power generation from renewables has risen sharply, the fundamental arguments of the WNISR (and the flaws surrounding them) remain much the same.

The latest edition has a forward by Tatsujiro Suzuki, who until the end of March 2014 was vice chairman of the Japan Atomic Energy Commission (JAEC), who declares, "I sincerely believe that WNISR 2014 can be a good reference for anyone who is interested in nuclear energy and understanding the reality of the global nuclear industry more accurately without bias". Given the continuing mess at Fukushima highlighted in the report (13 pages out of 150 are devoted to this) it is maybe surprising that the authors have chosen a Japanese expert to endorse their efforts. And Mr Suzuki's concept of bias is obviously as flawed as the remedial efforts of his colleagues back home have been.

The approach of the authors is unchanged: inflate any evidence that may serve to back up their view that the nuclear industry is on its last legs, while either ignoring or downplaying anything to the contrary. But if one strips out the worst biases in the way the material is used and adds some extra relevant text and data supporting a contrary view, there would be a very good report.

To start on a positive note, it has to be accepted that much of the information on world nuclear generating capacity presented by IAEA, WNA and others is at least potentially misleading.

"It has to be accepted that much of the information on world nuclear generating capacity presented by IAEA, WNA and others is at least potentially misleading."

Most seasoned observers will know that the Japanese reactors are still shut down, yet they are still included in totals of world nuclear generating capacity. WNA's approach is to include the Japanese reactors as "operable", but even this is questionable in the case of Fukushima Daiini (and a few others), which hardly anybody believe will ever come back into service. WNISR's suggestion is to introduce the concept of 'Long Term Outage (LTO)', defined as 'any reactor that has not generated any power in the entire previous calendar year and in the first semester of the current calendar year.' Such reactors (there are also a few beyond Japan) are then deleted from the nuclear capacity tables until they return to service. This concept is, however, very much a sledgehammer to crack a nut. Once the future of all 'operable' 48 Japanese reactors is decided (either restarting or entering decommissioning) the concept becomes essentially irrelevant. So it'll likely disappear within a few years.

The sections on prospective nuclear countries and the delays to the construction of reactors are also comprehensive and relatively fair. It is reasonable to suggest that it is highly unlikely that Russia will succeed in carrying out even half of the projects in which it claims to be closely involved, while it is true that even the Chinese programme is suffering some delays. On the other hand, lots of positive features of nuclear in China are either glossed over or ignored. Delays and cost escalation in large capital investment projects are not unusual in any sector and attempts to suggest that nuclear is very 'special' in this are misplaced. Large nuclear power stations are essentially just huge civil engineering projects.

As ever, WNISR makes a lot of the sharp decline in nuclear's share of world electricity generation, and takes this as evidence of terminal decline. Such calculated shares of big totals can nevertheless conceal as much as they reveal. The Japanese situation has obviously severely depressed world nuclear electricity output in recent years, and (depending on how many reactors return to service) this will get reversed. The report briefly notes that nuclear power production rose in 16 countries in 2013 and in six of them it reached a new maximum. Yet this doesn't receive much further analysis. The report also admits that the current nuclear new-build programme, with around 70 reactors under construction, is the biggest since 1987. Does this sound like an industry in a deep slump? Far from it, and although the industry and its supporters may have overhyped the concept of a 'nuclear renaissance' about ten years ago, in a least some important countries the nuclear industry is growing rapidly.

Amongst these is the UK and the report attempts a hatchet job on its prospective new-build programme. To the extent that there are big problems in the UK, they go well beyond the nuclear sector (see August 2014, 'UK energy policy - where did liberalisation go?'). The authors of WNISR assumes that the Hinkley Point 3 project will get tripped up by the EU Commission, but they should at least question why offshore wind farms are able to secure guaranteed prices of £150 per MWh, ahead of nuclear's £89.50.

The report extols the rise of renewables in Europe and the impact they are having on power markets but the information presented and its analysis are as biased as they are incomplete and inept. In a (failed) attempt to curb carbon emissions, we have chosen the most expensive route by greatly subsidising intermittent renewable energy, which is now destroying power markets around Europe. Not just nuclear is suffering from low (or negative) wholesale prices when the wind is blowing and the sun shining - gas generation is suffering badly and the perverse consequence of these actions in Germany is to build more dirty coal plants. The end result will be higher prices for customers (WNISR doesn't say what happens to wholesale prices when the renewables are absent from the market), less energy security and probably little overall benefit to carbon emissions. The financial people quoted in the report are not surprisingly highly supportive of the new power market arrangements. Their snouts are very firmly in the trough for commissions, fees and consultancy from the market redesigns. But their perspectives cannot be regarded as sensible.

While it is true that operating nuclear power stations now face challenges from cheap gas or renewables generation, they remain capable of generating power at very low costs (fuel and operations and maintenance). If smart metering succeeds in flattening out
the load curve for electricity through the day (and maybe even the season), reports of the demise of baseload in power generation may be premature. The benefits of low-cost and reliable generation through the day and month will be recognised. The real costs of the dash for renewables are only now becoming apparent.

"The benefits of low-cost and reliable generation through the day and month will be recognised. The real costs of the dash for renewables are only now becoming apparent."

In common with previous editions, the latest WNISR tries to cast doubt on the likelihood of reactors running for beyond 40 years. As there are now a lot more reactors under construction than was the case a few years ago, the authors have to do this, or else world nuclear generation will likely rise quite sharply. Most forecasts show an increase of maybe 50% by 2030, but WNISR denies this. But assuming that reactors have been well-maintained, a 40-year restriction is artificial and not necessarily backed by a safety case. The report admits that the shutdown of the eight reactors in Germany immediately after Fukushima was purely a political decision and had nothing to do with safety. Hence their owners are now suing the German government for compensation. The shutdown of the remaining nine by 2023 can be regarded in the same light. Whether reactors can run for 40 years and beyond should be decided on a case-by- case basis and is a matter for the national safety authorities rather than a simple statistical analysis.

For example, WNISR continues to make the ridiculous argument that because the average age of the 153 reactors already shut down was only 24 years, it is optimistic to expect the remainder to last more than 40 years. This is akin to arguing that 40 year-olds today are unlikely to last to 60 because the average age of their peers (born at the same time as them) who have died already is 24. The 153 shutdowns include a lot of early- model reactors, some political closures and a lot of special circumstances, just as people dying before 40 are likely to have suffered an accident or caught a serious disease at a relatively young age.

The country reports in the appendix provide a lot of information, including every possible negative story that could cast doubt on the various national programmes. Given the magnitude and importance of the Chinese programme, it gets a very cursory treatment (and particularly by comparison with the long section on Fukushima). Whether Fukushima has much relevance to the nuclear programme in the UK, US and other countries (including some prospective nuclear countries) is never even questioned. The assumption is that it is a strong negative everywhere. Returning to China, the report omits the localisation of the supply chain, the heavy investment made in local nuclear training and education, and analysis of how the country has managed to build a large number of reactors on time and on budget. The text is full of unnecessary jibes about nuclear safety and, in particular, the CPR1000 reactor. The latter may have 1970s/1980s origins at Westinghouse and Framatome, but the version the Chinese are building is a significant advancement on the 34 units in France which share the same origins. And the French regulator is happy with these. Are they not equally concerned that the Chinese have built huge underground train systems in Beijing and Shanghai in only ten years? Surely there must be similar safety concerns?

The report says that, "during the past year, unprecedented evidence has emerged of challenges to China's planned nuclear power programme. These include delays in construction and cost increases for the Westinghouse AP1000 reactors and AREVA EPRs, continuing doubts over the siting of reactors in provinces inland, and questions over safety and regulatory oversight". It is true that some new issues have recently emerged, but these are almost certainly going to be insufficient to stop China having 55-60 GWe of nuclear units in operation by 2020. Top government officials have confirmed the commitment to nuclear as an important element in cleaning up the environment. WNISR makes a lot of the huge renewable programme, but the Chinese are always pragmatic and know that their environmental problems need multiple solutions. And they are only too aware of the limitations of renewables in providing reliable power to rapidly-growing urbanised populations.

"While it's true that nuclear power faces multiple challenges going forward, it deserves a fairer hearing than that given by WNISR."

While it's true that nuclear power faces multiple challenges going forward, it deserves a fairer hearing than that given by WNISR. The 70 reactors currently under construction will (with maybe one or two exceptions) get completed by 2020 and many of the current reactors will operate well beyond 40 years. In some countries where reactors do shut down (for example in Sweden) the possibility of replacing them with new units is now being explored. Nevertheless, when the financial calculations are made, unless there really is a huge safety advantage the argument for continuing with the current units will be very strong. Assuming nothing significant goes seriously wrong with the Chinese or Russian programmes, nuclear will be a growth industry in the period to 2030. And the nuclear share of world electricity may once again begin to rise slowly.

About the author

Steve Kidd is an independent nuclear consultant and economist with 17 years of work in senior positions at the World Nuclear Association and its predecessor organisation, the Uranium Institute

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