Nuclear industry status – better than claimed?

11 December 2009

2008 was the first year since the 1950s in which no new commercial nuclear reactor was connected to the grid. This has been taken by groups hostile to nuclear as proof that the mooted nuclear renaissance is mainly hype. Indeed, a recent report 'The World Nuclear Industry Status Report 2009', commissioned by the German government goes rather further and offers a seemingly plausible and detailed analysis purporting to show that nuclear is gradually shutting down worldwide. This is worth examining in more detail as it becomes clear that the case rests on a small number of assumptions, each of which is highly debatable.

The case for the slow death of nuclear is made on the basis that the current 435 reactors in operation are unlikely to operate much beyond 40 years and that there will be insufficient new reactors to replace those shutting down. Hence, the authors reason, the number in operation will soon start falling rapidly.

The reactors in operation today continue to run, in many cases after 30 years of operation, because they produce cheap electricity and do so safely. If they didn’t, they would be closed down. The marginal generating costs of nuclear, as the report recognises, are very low and substantially below other power prices. Hence the existing reactors make a lot of money for their owners who know that shutting them down would be expensive. Indeed, they are finding it worthwhile to increase the power outputs of these reactors where they can. (This mainly explains why world nuclear generating capacity continues to rise when the number of reactors in operation is already slightly below the level of a few years ago; another factor is that new reactors coming online tend to be larger than those shutting).

So why would owner/operators shut them down after 40 years, even though large numbers of reactors will reach this age over the next 20 years, following the boom in reactor construction in the 1970s and 1980s? Safety could be one good reason, but the report produces no evidence that 40-year-old reactors are intrinsically less safe than younger ones (indeed, both the Chernobyl and Three Mile Island accidents happened at reactors less than five years old). What about operating licenses? This is country-specific, but regulators have generally shown their willingness to allow extended operation of reactors provided they judge them to be safe. In the United States, over half of the existing 104 reactors have received license extensions of 20 years beyond the initial 40 and it is generally expected that most, if not all, of the remainder will do so when they need to. There is no reason to believe that this will not happen elsewhere – at least where large light water reactors (LWRs) are in operation. On the other hand, other types, such as the UK’s gas-cooled reactors and Russia’s RBMKs, may require large sums of money to be spent on them to keep them operating economically and/or safely.

Of course, politically-motivated closures may take place, but they are nothing to do with economics or safety. Although the German political landscape has changed since the elections in September 2009, the future of the reactors in Germany is not necessarily secure. What is clear is that the owners certainly don’t want to shut them down (and neither should the local power customers, unless they want more expensive and environmentally unfriendly power). The economic case for continued operation is so strong around the world that such closures are likely to be few and far between. Note the slow change in attitudes in each of Sweden, Switzerland and Belgium, which have long had policies which effectively meant a slow phase-out of nuclear.

The only point the authors of the report make against the extension of operating lives is that the 123 reactors which have already been shut down were on average 22 years old – therefore to believe that the existing 435 will operate for more than 40 years is somehow optimistic. This is shallow thinking. Making such a claim is rather like arguing that all the 40-year-olds in the UK are unlikely to make 60 because the average age of those of their peers who have already died is around 20.

It is agreed, however, that forecasting that nearly all reactors will operate for well beyond 40 years requires a belief that there will be no fundamental change in their economic circumstances from today – in other words that it will prove economic to replace key components, uprate power outputs and carry out necessary safety upgrades on the basis that the costs are substantially below the anticipated revenues. If decommissioning costs are already fully-funded, delaying closure is particularly attractive, as the funds can be invested for longer as expenditure is delayed. In reality, each reactor has to be viewed as an individual generating unit. There will be undoubtedly be circumstances where 50 year old LWRs that need a lot of money spending on them may have a new and cheap competitive generating unit starting up nearby and so may close. But this is highly unlikely to be the general rule around the world.

Turning to possible new reactors, the report skates over one prime piece of evidence for a nuclear revival. There are now 20 more reactors under construction than was the case a few years ago and this number is increasing rapidly. The authors try to rubbish the 52 now under construction on the grounds that some have been in this category for many years, but many of the 52 are in countries such as China and Korea where construction schedules have been in the 4-6 year range. Indeed China alone may have close to 20 reactors under construction by the end of 2009; and it is reasonable, on previous performance, to see all of these coming into operation by 2015. And there will likely be many more in China beginning construction over the next few years, as most of the 20 represent initial pairs of rectors on one site which are quickly anticipated to take up to eight. Their aspiration to have beyond 70GWe of nuclear capacity by 2020, surpassing both France and Japan along the way, may appear optimistic, but is not out of line with the speed at which they build everything else. Are nuclear power plants much more than large construction projects?

Where the report is rather closer to the mark is in its pessimistic evaluation of the possibility of reactors starting in many new countries. This is unlikely to happen unless there is a substantial revival of reactor construction in the developed nuclear countries, particularly by 2020, where even the optimists can see no more than four or five likely candidates. For most of these developing countries, nuclear power will only become a reality in the 2020s, on account of some of the key issues that the authors highlight.

The key to the nuclear renaissance therefore lies essentially in the existing nuclear countries, notably the USA, Canada, Russia, UK and the other European countries plus the big developing countries China and India. And here there is lots of scope for growth; the report correctly notes that analysts such as the International Energy Agency, never regarded as being in the ‘nuclear’ camp, are becoming increasingly optimistic. This isn’t happening by accident; the arguments of those opposed to nuclear are looking increasingly flimsy. Indeed, the shallow nature of this report’s analysis makes this point perfectly.

Nevertheless, in some ways, the industry has done itself a disservice by talking so much about the manufacturing capacity and human resource issues within new build, which the report not surprisingly draws on. The simple fact is that the industry managed to accelerate rapidly to commission 20-30 reactors per year in the 1970s and 1980s. Then, it had to build up its capability from a low base. There is no reason to believe that this cannot happen again. The report talks about ‘new circumstances today’ – but these can be favourable as well as adverse. Having two major developing countries in China and India with a combined population of 2.5 billion now heavily committed to nuclear power from top governmental levels is clearly quite new.

It may take rather longer than is sometimes expected for new build programmes to get established in existing nuclear countries, but the momentum is still moving strongly in favour of this happening. If the experience of Finland’s fifth reactor has been so bad, is it not remarkable that three separate groups are interested in investing in a sixth? If it makes sense for a small, environmentally-conscious country in northern Europe to have six reactors (more than one per million population), how many are appropriate for a Europe of 500 million people or the United States at 300 million? What about another billion people in developing Africa?

The starting point for a proper analysis of the future of nuclear has to be a detailed analysis of existing reactor lifetimes rather than merely bold assertions. The best starting point is always to talk to the plant operators and owners to see what they think. Getting through the hurdles of new nuclear construction is going to be very challenging; the weak link on the human resources side may well turn out to be strong, determined leadership rather than skilled craft workers.

Nuclear projects are never going to be easy, but as time goes on they are likely to become seen as routine. But there are plenty of questions. Why has there been so much attention paid to the Finland-5 example while South Korea has been quietly building up its reactor numbers to 20 with another half-dozen under construction? Do commentators seriously believe that the Chinese will build nuclear reactors if the costs are US$5000 per kW? How many of the 50-60 countries suddenly interested in nuclear power would be able to act on their goals if there were small reactors of 100-200MWe on the market?

That the share of nuclear in world electricity generation will now fall for a period, until significant numbers of new reactors come online, is clearly evident. But this is no ‘empirically evident decline’ in nuclear – what is happening today in reactor start-ups reflects the dark years for nuclear power at the end of the last century, when hardly anybody was interested in building or operating nuclear plants. In common with 2008, some reactors will always be off-line, but this is a reflection of the need to ensure safety and undertake other significant refurbishment projects. Finally, some of the nuclear outages that the authors use as evidence of decline in fact show the opposite; the responsibility of the nuclear industry to put safety first. Did the authors of the report really expect the seven reactors at Kashiwazaki-Kariwa to be in operation after the magnitude 6.8 Chu-Etsu earthquake?

Author Info:

Steve Kidd is Director of Strategy & Research at 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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