The World Nuclear Association has published reports on nuclear fuel demand and supply at approximately two-year intervals since 1975. The 2017 report is the eighteenth in the series. The fuel report is produced by World Nuclear Association member working groups which include companies active in all aspects of nuclear fuel production and use, assisted by the Association’s Secretariat. It is based on public domain information supplemented by information from questionnaires sent to both member and non-member companies. Expert judgement and discussion are applied to this information to populate the scenarios for nuclear and fuel cycle development.

Challenges for nuclear power

The great advantages of nuclear power over competing forms of generation are well known: near zero greenhouse gas emissions, very high reliability, typically good lifetime cost competitiveness and the industrial and human resource benefits associated with its development and use. Nevertheless, the nuclear industry continues to face challenges to the construction of new nuclear plants and even the operation of existing plants.

Important challenges arise in securing public acceptance, which has been heightened by the Fukushima accident and has resulted in some politically motivated hurdles of which the decision by the new South Korean president to phase-out nuclear is the latest. The difficulties faced with attempts to re-open the temporarily shut Japanese reactors are further examples of lack of public acceptance, even for existing plants.

Another challenge arises from newly competing generation technologies. Unconventional gas in the USA is reducing wholesale power prices to levels where some nuclear plants are struggling economically. 

Intermittent renewables in a number of countries are also contributing to lower wholesale prices and the capacity factors of baseload generators. This development is a result of the skewing of financial support for low-carbon generation sources almost exclusively towards renewable subsidies rather than a technology-neutral approach.

Added to these challenges are the difficulties that have been experienced with the construction of the new reactor designs in the USA and European countries. The long hiatus on nuclear construction in these countries has resulted in problems delivering the first of the new reactors and led to postponements and cancellations of reactor builds using these designs.

As a result of the increased influence of the above challenges, the World Nuclear Association has shifted downwards its three scenarios for nuclear capacity. The Upper, Reference and Lower Scenarios project global capacity of 625GWe, 482GWe and 326GWe respectively in 2035 which are each 11-13% lower than their respective projection in the 2015 report. Despite these shifts, our projections for capacity in the Reference and Upper Scenarios remain positive with annualised growth rates for the period of 1.6% and 3.1% respectively, which if realised would deliver higher growth than at any time in the last 25 years.

Capacity growth shifts to the East

The negative shifts should not obscure the fact that nuclear remains a growth industry with 60 reactors under construction in June 2017 and many more being planned, particularly in China, India and Russia where the economics of nuclear look attractive relative to competing technologies.

In China, the government remains committed to a rapid build-up of the nuclear fleet and a capacity of between 120 150GWe is expected by 2030. Currently, the new-build pipeline is awaiting successful completion of the new designs under construction, in particular, the AP1000s being built at Sanmen and Haiyang. Construction of these reactors commenced in 2009, and they are now undergoing pre-commissioning tests. We expect them to start commercial operation in 2017 and 2018, respectively. Successful operation will, we believe, demonstrate proof of concept and lead to the initiation of the delayed domestic CAP1000 and CAP1400 construction programme, resulting in rapid learning gains in the construction of these advanced reactor designs.

In India, the domestic reactor programme received a vote of confidence this year from the government with the setting of a target for construction of ten pressurised heavy water reactors. The successful completion of the VVERs at Kudankulum also augurs well for the construction of further VVERs at that site.

In Russia, the retirement of the RBMK and VVER-440 reactors in the next fifteen years will require a significant programme of replacement reactor construction. This programme should cement the learning from building the VVER- 1200 design fully within the Rosatom supply chain and allow the series economies of repeated construction to be realised.

Also, the ambitions of China and Russia to build reactors in other countries are leading to a more competitive international market for nuclear with attractive packages being offered to utilities in existing and new nuclear countries. The Nuclear Fuel Report 2017 projects in the Reference Scenario nine new nuclear countries by 2035, of which preparatory work and site construction is currently underway in four – United Arab Emirates, Belarus, Bangladesh and Turkey. The performance of the existing nuclear fleet continues to be good with capacity factors for the global fleet (excluding the temporarily shut Japanese reactors) at historic highs.

The World Nuclear Association believes that nuclear energy can make a greater contribution to clean, affordable and reliable electricity generation in the period beyond 2035. These characteristics of nuclear power are likely to be more keenly appreciated as countries enter the unpredictable world of high reliance on intermittent renewable generation. ’Harmony’, the global nuclear industry’s vision for the future of electricity where nuclear provides 25% of global electricity generation by 2050, is compatible with the nuclear capacity growth trajectory given in the Nuclear Fuel Report’s Upper Scenario.

Fuel supply industry adjustment

Despite the positive nuclear news from the countries mentioned, the aggregate outlook for nuclear fuel demand has suffered a negative shift in growth expectations, which has had a significant impact on the development of fuel company capacities. In 2011 these companies were gearing up to meet the demands of a much larger nuclear sector. They are now adjusting to projections for uranium requirements in 2030 that in the 2017 report are 22-24% lower for the Upper and Reference Scenarios than in the 2011 report. Uranium requirements in the Lower Scenario are now expected to be somewhat higher than before but should the Lower Scenario be realised; there would be a decline in uranium requirements.

The extensive range of mining projects that were developed in the period 2000-2010 have now largely fallen away in the light of historically low U3O8 prices. However, mine development is a long-term process and some projects developed during these earlier times are only now starting production. Cigar Lake and Husab are two large mines that are currently still ramping up production and at their full combined production of about 12,000tU will eventually result in production displacement elsewhere in a slowly growing market. Many mining projects have been placed on care and maintenance or even abandoned. Indeed, some operating mines such as Kayelekera in Malawi and Azelik in Niger have temporarily closed. Nevertheless, there have been no unexpected closures of large mines in recent years (the closure of Rabbit Lake in Canada was expected), and adjustment has so far been achieved largely by reducing production at existing operations. In many cases, the production capacities of existing mines have fallen as the investment in new resource development has been reduced. This tendency has been particularly marked for the US ISL mines where new wellfield development has virtually halted, and national production has fallen to about 1000tU. But even in Kazakhstan future planned increases in production have been reduced.

Future fuel cycle developments

To project primary uranium supply, the report categorises mining projects according to their development status. The number of mines under development has fallen greatly and now the only significant mine expected to open in the next three years is the Salamanca mine in Spain. Other mines could be developed in the next 5-6 years, but this would depend on the uranium market showing signs of sustainable recovery. The report methodology is to delay the start date for potential mines in line with historical experience of mine development and the expected production from these projects as a whole is discounted to reflect the fact that not all projects successfully develop into mines. The 2017 report projects significantly lower mine supply than the 2015 report.

Secondary supply is added to primary production to give a total supply picture. Secondary supplies in our report are constituted mainly of US DOE inflows, ERU/MOX from reprocessing and underfeeding / tails re-enrichment. The World Nuclear Association makes a spot estimate of inventory levels, which are currently at very high levels, but does not model future changes to inventories, so inventory change is not included as part of the secondary supply. Projections of underfeeding and tails re-enrichment are based on an assumed global tails assay of 0.22%. The projected volumes fall away only in the mid- 2020s and remain higher in the Lower Scenario. Secondary supplies as a whole are projected
to fall away only slowly in the late 2020s and remain at or above 8000tU to 2030 in all scenarios. The addition of secondary to primary supply indicates an over-supplied market, the extent of which is expected gradually to fall away by 2025 when both the Upper and Reference Scenarios will be under-supplied. In the Lower Scenario, there will be no need for additional primary supply before 2030.

Other parts of the fuel cycle have likewise been affected by the retreat from the high expectations for nuclear power pre-Fukushima. The conversion sector has suffered from over- capacity: Springfields closed at the end of 2014 and has not re-opened, Converdyn has halved its capacity at Metropolis and Rosatom has centralised capacity at the Seversk site. The enrichment sector has seen the postponement of the US projects, but the sector has adjusted to lower demand by reducing its operational tails assays below the contractual tails assays agreed with customers thereby keeping the centrifuges fully employed. The fabrication sector is somewhat distinct from the rest of the front end of the fuel cycle insofar as its products are differentiated and highly engineered with respect to particular reactor designs. While the sector appears to be well-supplied at a global level, it is possible that at the regional level this will not always be the case. Nevertheless, fabricators are seeking to penetrate new markets, and the sector can be seen as becoming more competitive.