Barclays report says nuclear is essential for decarbonisation

8 June 2021

Nuclear energy's high load factors and reliability could make achieving net-zero affordable, according to a special report, “Nuclear for a decarbonised future”, published on 2 June by Barclays. The 34-page report says, “Nuclear is safer than commonly assumed, and new technology and further research could make it even cleaner, safer and cheaper. This could pave the way for a greater contribution to the global energy transition.”

Barclays notes that the report was prepared in whole or in part by equity research analysts based outside the US who are not registered/qualified as research analysts with the Financial Industry Regulatory Authority. The report makes five key points:

  • Nuclear is net zero: Nuclear energy, such as solar, wind, geothermal and hydroelectric, generates no direct carbon or GHG emissions, and has one of the lowest life-cycle carbon emission rates of all generation technologies, when accounting for indirect emissions associated with the mining of fuel and plant construction. We believe nuclear could form the base load generation necessary to enable the safe, reliable, affordable decarbonised grid investors are seeking.
  • Nuclear can be affordable: Nuclear has a reliability factor of 80-90% compared with wind at 30-40% and solar at 10-25%. Along with its long plant life, nuclear works out comparatively affordable, especially when factoring in storage costs required for renewables. Nuclear’s high capital costs could come down if its life were extended or more plants were built, allowing for construction experience to shorten construction time and costs.
  • Nuclear is becoming safer with new technology: While the disasters at Chernobyl and Fukushima caused numerous deaths through sickness and displacement, both prompted wholesale upgrades to fleets and structural reforms to safety systems. Data from Energy Central show that nuclear has the lowest mortality rate of all types of power generation, in terms of deaths per terawatt-hour. New technology aimed at protecting reactor cores using the laws of physics (as opposed to power) should create even safer solutions.
  • Nuclear waste is small on a comparative basis: Annual nuclear waste generation is significantly less than the expected volumetric annual waste from retired solar panels, wind turbine blades and lithium ion batteries (including in electric vehicles). Recycling or reprocessing fuel in the case of nuclear could reduce waste by up to 97%, which is more efficient than solar panels, wind turbine blades or lithium ion batteries.
  • Nuclear power still divides investor opinion: Significant regional differences are evident regarding how nuclear power is viewed. The EU has not yet formed its official view, but when this comes it may provide additional clarity on the role of nuclear in the green transition.

The report looks at carbon capture for natural gas generation, nuclear generation, offshore wind, onshore wind, solar, battery storage and hydrogen. On carbon capture, it notes that “even if carbon capture could be added to all existing gas plants (which is unrealistic) there would continue to be a gap in electric supply given the amount of load needed to operate the carbon capture equipment”.

On nuclear generation there are three paths to maintaining or increasing generation market share: plant life extension to 80 years or more; new build similar to current projects in the US and China; of small modular reactors (SMRs). As to offshore wind, it has the benefit of higher and more consistent capacity factors than onshore wind, but faces higher costs and longer construction periods. Lease availability, transmission connectivity, and maritime concerns are major barriers. For onshore wind optimal sites are a limited commodity and onshore wind is an intermittent resource.

The report says solar costs continue to decrease and solar generation is growing faster than other generation types with an expectation for this trend to continue. Battery storage continues to see improved economics It does not generate energy but provides the ability to shift generation by a matter of hours or days as needed making it critical for system balancing and reliability. Of the different ways of producing hydrogen, the report notes that only 4% is generated through electrolysis. Some 96% is produced from fossil fuels leaving around 3-4% produced using renewables

Looking at the attributes of nuclear, the report says: “The crux of global debate on nuclear power is finding a balance between largely divided advantages and disadvantages.” A nuclear plant, over its lifetime is 10 times cleaner than gas and 20 times cleaner then coal. “While this is similar to renewables, the real ‘nucleus’ of nuclear power in the transition to net zero emission lies in its powerful reliability, with healthy plants exhibiting capacity factors in excess of 90% and able to generate power for up to 80 years.” This makes nuclear power “an optimal ‘plug-in’ base-load power to complement developing storage facilities as intermittent renewables energy increasingly penetrate the grid”. 

However, this “is complicated by interrelated issues of capital intensity and operational safety as well as environmental issues elsewhere in the value chain (mining and waste)”. Having said that, the report notes that, in terms of comparative economics, nuclear is “expensive, yet affordable”. As to safety, it concludes that the statistics are “reassuring” - despite high profile accidents no accident at a commercial NPP has cause more than four deaths, of which only one was directly caused by radiation. Nuclear is the “safest generation technology based on deaths/year/Twh” while SMRs and advanced reactor designs “should provide even better safety statistics than the historical comparables”.

The report puts the issues of waste and disposal “in context” noting that rare earth metals required for wind turbines and solar panels also require mining and, “while the waste is not radioactive, the disposal requirements for these materials and for lithium ion batteries create a larger volume of waste than for nuclear fuel”. All nuclear waste generated from commercial NPPs since 1950 “would fit on a football field stacked 30 feet tall”. With recycling/reprocessing up to 97% of nuclear waste could be reused, compared with up to 96% for lithium ion batteries, some 80% for solar panels, and some 85% for wind turbine blades.

“Additionally, we argue the sustainability benefits are still much stronger in comparison to other on-demand generation fuels”. The report notes that global uranium production in 2019 of 54,000 tonnes was “dwarfed” by thermal coal (6.8bn tonnes), oil (4.6bn) and natural gas (4.0bn) reflecting the “exponentially higher power yield of uranium relative to coal and natural gas”, resulting in “relatively small and dense waste”, only 3% of which is classified as “high level” (mainly used fuel). However, “while this appears manageable, the only country to have found a permanent solution for nuclear waste is Finland”.

Turning to “construction lead times”, the report acknowledges that these are longer for nuclear. “The issue is that with rapidly changing technology and the potential adoption of hydrogen for longer-term storage and on-demand resources, it is not always clear which technology is best.” On “evolving technology” the report points out that technology may be “a double-edged sword”, because while solving one issue, it can create others. “Waiting for developmental technologies, runs the risk of delaying decarbonisation or mischaracterising societal benefits.”

Finally, in terms of “reliability”, the report says “nuclear can support the transmission grid”. While evolving storage technology may mitigate the intermittent nature of wind and solar, the costs of such storage “are not often considered when deciding on generation capacity additions”. Also, wind and some solar installations “tend to relatively far from load centres, requiring more transmission system upgrades as well as contributing to higher line losses”. Large central stations (nuclear, coal, and natural gas plants) “provide voltage support and reactive power to the grid, ultimately aiding in reliability” but “their value is largely unappreciated until reliability suffers”. Transitioning to a grid that can supporting high levels of renewable penetration will take time and be costly and “large central stations need to be expanded in the meantime”.

The report concludes: “Overall, nuclear power is far from perfect but we believe it offers the best solution to network reliability from what is scalable at present and workable within the net zero by 2050 deadline.” It says “time is of the essence”. Regulatory, safety and compliance requirements mean nuclear has a longer planning, siting and construction timeline than most if not all other types of generation. “This makes decisions to extend the life of existing plants and to build new plants critical today given the expected generation capacity needs through 2050…. Given the long lead times for construction of current designs, and the even longer lead times to design, test and license new designs and concepts, any delays in committing to nuclear is effectively a decision to exclude nuclear from the generation fleet of the future.”

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