The International Energy Agency (IEA) in its latest report, Electricity 2024, dedicates a significant amount of space to nuclear power – a departure from its previous studies which treated it as peripheral. In its press release on the new report, IEA says the increase in electricity generation from renewables and nuclear "appears to be pushing the power sector's emissions into structural decline". Over the next three years, low-emissions generation is set to rise at twice the annual growth rate between 2018 and 2023. Global emissions from electricity generation are expected to decrease by 2.4% in 2024, followed by smaller declines in 2025 and 2026.

According to IEA Executive Director Fatih Birol the power sector currently produces more CO2 emissions than any other in the world economy, “so it's encouraging that the rapid growth of renewables and a steady expansion of nuclear power are together on course to match all the increase in global electricity demand over the next three years”. He added: “This is largely thanks to the huge momentum behind renewables, with ever cheaper solar leading the way, and support from the important comeback of nuclear power, whose generation is set to reach a historic high by 2025.”

The 170-page report generally includes nuclear alongside other renewables as a key factor in electricity demand, supply and CO2 emissions up to 2026. Nuclear is mentioned 227 times in the report including a dedicated 10-page ”spotlight” on nuclear power generation.

Clean electricity supply is forecast to meet all of the world’s demand growth to 2026. “Record-breaking electricity generation from low-emissions sources – which includes nuclear and renewables such as solar, wind and hydro – is set to cover all global demand growth over the next three years…. The rapid growth of renewables, supported by rising nuclear generation, is set to displace global coal-fired generation, which is forecast to fall by an average of 1.7% annually through 2026,” the report notes.

“By 2025, global nuclear generation is forecast to exceed its previous record set in 2021. Even as some countries phase out nuclear power or retire plants early, nuclear generation is forecast to grow by close to 3% per year on average through 2026 as maintenance works are completed within France, Japan restarts nuclear production at several power plants, and new reactors begin commercial operations in various markets, including China, India, Korea, and Europe, it notes.

The overview, however, is somewhat distorted by the omission of Russia, which has one of the most ambitious nuclear expansion programmes in the world with several new units due to come on line in the next few years. By 2035, Russia plans to build 17 new large power units aiming to increase the share of nuclear generation in the overall energy balance from 20% to 25% by the 2040s. While the IEA report includes reference to Russian reactors being built abroad, it ignores its domestic development.

The report’s nuclear “spotlight”, says that between 2024 and 2026, an additional 29 GW of new nuclear capacity is expected to come online globally, more than half of them in China and India. “With new plants starting commercial operation in various regions, as well as French nuclear recovery and expected restarts in Japan, we forecast global nuclear generation will be almost 10% higher in 2026 compared to 2023. In 2025, global electricity generation from nuclear energy will have exceeded its previous record level in 2021.”

IEA notes that, “with a minority of European countries currently planning to phase out nuclear energy, many emerging and a number of advanced economies are planning to phase in or expand nuclear energy generation”. Based on the number of NPPs currently under construction and new ones being planned, “the growth in nuclear power is so far mainly in Asia”.

Citing World Nuclear Association estimates. IEA says that, as of November 2023, 68 GW was under construction, with a further 109 GW currently planned and 353 GW proposed. “Based on reactors under construction with expected completion up until 2026, Asia is set to surpass North America as the region with the largest installed capacity.” China continues to lead in global nuclear capacity additions, with 27 GW currently under construction.

IEA says technological leadership in nuclear power “is shifting towards China and Russia” noting that “technology providers for 70% of the reactors currently under construction were China and Russia”. The report also mentions India’s plans to triple its nuclear capacity by 2032, “which corresponds to capacity additions of almost 13 GW, with 6 GW currently under construction”.

In Europe, “the political landscape for the deployment of nuclear power is evolving” despite phase out policies in Germany and Spain. Led by France, 14 European Union member states have joined an alliance to co-operate on nuclear energy. The goal of the alliance is to add 50 GW of nuclear capacity by 2050, which means a 50% increase of installed nuclear capacity in the EU. In addition France plans to construct six new European Pressurised Reactors (EPR). with plans for a further eight reactors after 2026. There are also plans for nuclear development, by newbuild or life extension, in the Netherlands, Sweden, Belgium, Finland, Slovenia, Bulgaria, Poland and Ukraine.

In the USA, the Nuclear Regulatory Commission is considering lifetime extensions for operating reactors from 60 to 80 years. Around 6 GW of capacity extensions have already been approved, with another 10 GW under review or expected. However, 21 GW of nuclear capacity (23%) is expected to suspend operations between 2030 and 2040. “The replacement of this capacity will be a major challenge for the US nuclear sector,” IEA notes.

“In Canada, 1.2 GW of capacity is planned to come online by 2036 at the Darlington site. In addition, the province of Ontario has announced plans to start predevelopment for the addition of 4.8 GW of capacity. A major construction project in South America is ongoing in Brazil, where the extension of the ANGRA site is delayed by almost four years, now scheduled for 2027 after initial plans for commercial readiness by 2023. Argentina plans to add a reactor to its Atucha site in co-operation with China.”

IEA says construction risk of nuclear projects remains the largest hurdle for financing. “Globally, nuclear construction projects that started between 2010 and 2020 had an average delay of around three years, which amounted to an additional 50% increase on top of the initially planned construction time. China had an average delay of just over two years, while the global average, excluding Chinese projects, is three and a half years, with some projects up to eight years behind schedule.” It adds that “delays in Europe and the United States exceed what is observed in other parts of the world, with China especially posting significantly fewer delays”. Through cutting construction times and delays, and with the extensive experience of the construction of multiple plants in recent years, China is able to build NPPs at significantly lower cost and with minimal delays compared with the US and EU.

Reducing construction risk can significantly bring down the cost of capital – a major cost factor for nuclear projects, the report says. “Complete and comprehensive design and planning should be completed before any construction begins. Further, high standards for documentation as well as integrated planning of interconnected dependencies are essential. Structural factors, such as supply-chain disruptions and skilled labour shortages need to be considered.”

In addition to reducing construction risk, improving financing conditions will be important for the deployment of nuclear capacities. “In the case of incomplete financial markets, government interventions such as contracts for difference (CFDs), guarantees or market design measures can be economically justified. However, the risk of over-subsidising nuclear energy through these government-backed instruments can also be a concern.” Projects can be directly funded through state financing as in China and India and governments “can also step in as guarantors to bring down capital cost” In addition, state actors interested in selling technology can also provide vendor financing, “as done by Russia for the construction of Rooppur nuclear reactor in Bangladesh or the El-Dabaa plant in Egypt”.

Typical measures include buil-own-operate as for the Akkuyu NPP being built by Russia in Türkiye or CFDs agreements as agreed on for the new Hinkley Point C reactor in the UK. “Dedicated institutions with focused expertise and pooled capital can also be beneficial. Within this context, the International Bank for Nuclear Infrastructure (IBNI) intends to provide a wide range of financial and advisory services for the development of nuclear projects in its member states. According to its representatives, they expect 20-30 countries to sign the joint declaration for the establishment of the institution between December 2023 and the Nuclear Energy Summit in Brussels in March 2024.” However, IEA points out that more than half of the world’s major private banks have excluded nuclear energy from their green financing frameworks.

The report also looks at small modular reactors (SMRs) noting that the smaller project size and possible serial production helps to facilitate the financing of projects. While there are a range of technologies with different use-cases being developed “currently, according to the International Atomic Energy Agency (IAEA), there are only two countries operating SMRs, China and Russia”.

Referring to the discontinuation of the NuScale SMR project set to deploy the first VOYGR SMR in Idaho (US) in 2023, IEA says the outcome and influence on the financial viability of NuScale remains unclear. “This event underlined the difficulties and vulnerabilities of pilot SMR projects, raising concerns about the future of them.”