Nuclear power station

Four nuclear reactors are under construction in United Arab Emirates, called Barakah – Arabic for Divine Blessing. Why have the Emirates invested in new nuclear, will they destabilise the volatile Gulf region, and what are the safety, security, and environmental risks?

The South Korean Korea Electric Power Corporation's (KEPCO) winning bid for the construction of the UAE reactors was spectacularly low, about 30% lower than the next cheapest bid. Although nuclear reactor design has evolved, the cost of key improved safety design features would have made their APR1400 reactor design uncompetitive, so they chose not to include them. Having done so, KEPCO was able to dramatically undercut its competition for the UAE bid, with the Chief Executive of a French nuclear corporation comparing the Korean reactor to 'a car without airbags and seat belts'.

And KEPCO acknowledge their reactor design doesn't contain essential features such as either secondary reactor containment or a 'core-catcher' – both of which are design features expected in all new nuclear reactors in Europe. This is important, because these are safety features designed to defend against significant radiation pollution release in the event of an accidental or deliberate large airplane crash, or military attack. Particularly worrying is the lack of a core-catcher which, in the event of a failure of the emergency reactor core cooling system, would catch the core if it breached the reactor pressure vessel.

And then there's the cracks in the reactor containment buildings. Christer Viktorsson, Director General of the UAE's Federal Authority for Nuclear Regulation admitted that cracks in the reactor containment building for No. 3 reactor were discovered at Barakah in 2017. In October 2018, Abu Dhabi's Emirates Nuclear Energy Corporation (ENEC) acknowledged concrete cracking in the containment buildings of two of the four reactors at Barakah. Subsequent examination was conducted on the containment buildings for the Nos. 1, 2, and 4 reactors, and cracks were found in all of them. Not only that, but the reactor's Pilot Operated Safety Relief Valve (POSRV) leaks. The POSRV is designed to protect the pressurizer against overpressure – but in the UAE APR1400 reactor, when the valve is opened, cooling water has leaked during start-up. These giant valves should be redesigned and replaced ahead of reactor operation at Barakah – but they haven't.

Back-Draft

The Gulf region faces unique challenges. The tense geopolitical environment makes nuclear an even more controversial issue in the region than elsewhere, because Gulf states are concerned that neighbours might use their civilian nuclear programs for military ends. And they have a point. Unless uranium enrichment and reprocessing technologies are tightly regulated against diversion of civil materials for military purposes, the fact is that new nuclear power plants provide the cover to develop and make nuclear weapons. Whether that capability is turned into actual weapons depends largely on political inclination, and Saudi officials have made it clear on more than one occasion that there is another reason for their interest in nuclear energy technology which was not captured by the royal decree on the Saudi nuclear program – the relationship of the civil program to nuclear weapon production.

There's a very real possibility that the Emirates will follow suit and decide to pursue advanced nuclear fuel cycle capabilities. One issue will be the fate of separated plutonium, and whether overseas reprocessing will encourage the UAE to use plutonium-based fuels at Barakah. These fresh plutonium-bearing mixed oxide (MOX) fuels, pose a more serious proliferation risk than spent fuel or low enriched uranium fuels. Here, it's unsettling to reflect that up to 30% of the Barakah APR1400 reactor cores can be loaded with MOX fuel with minor modifications.

As recent military strikes against Saudi oil refineries confirm, nuclear safety involves the broader issue of security ‒ especially since some armed groups may view UAE military operations as a reason to target their nuclear installations, or intercept enriched uranium fuel or waste transfers. Perhaps disconcertingly, Yemeni rebels have already claimed to have fired a missile at the Barakah nuclear power plant site in 2017. UAE subsequently denied the claim, insisting it had an air defense system capable of dealing with any threat. Yet the protection of the UAE nuclear plant with fighter aircraft or surface-to-air missiles may not be an easy task, and time available to scramble fighter aircraft or fire surface-to-air missiles may prove limited, as recent events in Saudi indicate.

Marine Ecosystem

The sub-compartments of the Arabian Gulf are widely identified as slow-flushing sea areas. Whilst some Gulf surface waters have a flushing time-scale of more than 3 years, surface waters in the southern sector of the Gulf, including Kuwaiti, Saudi, Qatar and UAE sectors, have a longer flushing time of 5+ years. The highly saline and dense bottom waters of the Gulf have a flushing time of circa 6 years. The Gulf is an unusually shallow sea area, and the UAE coastal territorial waters are some of the shallowest areas of the Gulf, with less than 20 metre depth area extending a long way seaward. Thus, both normal operational radioactive discharges and pollution from accidents or incidents at Barakah would remain in the Gulf marine environment for a considerable time period.

Tim Deere-Jones, a marine environment scientist, notes that aqueous radioactive discharges from Barakah nuclear power plant will include a broad cocktail of at least 60 radionuclides, with half-lives ranging from the short to the very long. Liquid discharges won't be steady-state, but will be 'pulsed' with wide fluctuations in intensity and time-scale. Many of the liquid radioactive discharges, including tritium, will be soluble – leading to risk of both radioactive transport and incorporation into mudflats in interstitial water. Since caesium-137 has a half-life of 30 years, radionuclide pollution following any accident or incident would comprise a significant pollution threat, particularly in deep sediment, as would strontium-90, which has a half-life of circa 28 years. Plutonium-239, due to its high density and half-life of 24,100 years, would be transported in more complex ways, persisting in deep sediment for millennia.

Deere-Jones points out that the UAE coast is notable for fairly dense areas of both eel grass and mangrove – and coastal lagoon, eel grass and mangrove environments represent a crucial ecosystem, comprising an important nursery and juvenile area for a very large range of Gulf marine life, including those species that support human life. UAE's extensive mangrove habitats grow on and in coastal fine sediments and mudflats. Such sedimentary environments are notable for their ability to sequester a range of pollutants including radioactivity, and it's widely understood that fine sediment deposits act as a 'sink' for the concentrations of such pollutants which increase and concentrate over time.

When suspended in the water column, fine clay organic particles provide material onto which radionuclides can adsorb; leading to both long-range transport through the water column, and eventual re-concentration in deposition and accretion sites distant from the discharge point. During periods of rapid deposition and incorporation, sedimentary adsorbed pollutants may also be sequestered in sedimentary deposits where – isolated from sunlight, oxygen and biological activity – they remain as an un-degraded toxic source to be released if those sediments are disturbed by storm action, tidal surge, and seismic event. Since maritime transport of sea-discharged radionuclides is well understood to extend to many hundreds of miles out from the point-source of the pollution, discharge of radioactive materials from the 4 PWRs at Barakah will inevitably lead to a human dietary dose from sea foods.

Sea-to-land transfer of marine radioactivity – via coastal flooding during storm surges, super tides, and via marine sea spray and aerosols – has been shown to extend at least 10 miles inland from coast lines, and to generate both human inhalation and dietary doses. Therefore any accident involving either a Fukushima type LOCA (loss-of-coolant accident) escape-to-sea of reactor coolant, cooling pond waters or emergency cooling waters; or Chernobyl type wash-out or fall-out of aerial plume material onto sea surface, presents a significant risk – with consequent impact on area-wide fisheries, tourism, and public health.

Drinking Water

And then there's the drinking water. The Gulf region is one of the most water-scarce in the world. With few freshwater resources and low rainfall, many Gulf states rely on desalination. The Middle East has 70% of the world's desalination plants – mostly in Saudi Arabia, the United Arab Emirates, Kuwait, and Bahrain. Saudi Arabia leads the world in the production and consumption of desalinated water, with an estimated SR91bn (US$24.3bn) of expansion plans in the pipeline until 2020.

The 250,000 sq km Gulf is more like a salt-water lake than a sea. It's shallow, just 35 metres deep on average, and almost entirely enclosed. The few rivers that feed the Gulf have been dammed or diverted and the regions hot and dry climate results in high rates of evaporation. With groundwater sources either exhausted or non-existent and climate change bringing higher temperatures and less rainfall, Gulf states plan to nearly double the amount of desalination by 2030. Given the clear and present danger of radioactive sea-water pollution following an accident or incident at Barakah, it follows that all Gulf desalination plants and, hence, all Gulf drinking water will be at significantly increased risk.

Climate Change

The International Panel on Climate Change have just reported that extreme sea level events that used to occur once a century will strike every year on many coasts by 2050, whether climate-heating emissions are curbed or not. This means that coastal nuclear power plants, such as Barakah, are increasingly vulnerable to sea-level rise, storm surge, tidal ingress, flooding of reactor and spent fuel stores, and nuclear islanding, which under many climate change scenarios, may well happen quicker than planned for.

Perhaps alarmingly, the UK Institute of Mechanical Engineers (IME) point out that coastal reactors, together with radioactive waste stores including spent fuel, may need to be relocated. In this sense, adapting coastal nuclear power, such as Barakah, to climate change may well entail significantly increased expense for decommissioning and radioactive waste storage.

The low-lying nature of the UAE coastal zone emphasises the vulnerability of Barakah to climate change induced sea-level rise. Here, it's important to reflect that assessments of climate change sea level rise, storm surge, flooding, sea water temperature rise, thermal expansion, and increasing salinity in the Gulf proximal to Barakah are, as yet, conspicuous by their absence.

The Gulf and, more specifically, the coastal waters of the UAE already have high sea surface and bottom water temperatures and the trend appears ever upwards. UAE waters are even more susceptible, due to shallow draft and slow flushing times. Gulf marine system exhibits severe oceanographic conditions – notably, the world's highest sea temperature with seasonal maxima between 34°C – 36°C, along with abnormal seasonal fluctuations of about 20°C, and hypersaline seawater. Thus, despite the installation of large heat exchangers and condensers, future global heating induced temperature regimes may contribute to increasingly reduced reactor cooling at Barakah.

Hiding in Plain Sight

The case for nuclear power in the Middle East has never been strong, and market investment in new nuclear has proven to be uneconomic – this holds for all plausible ranges of investment costs, weighted average cost of capital, and wholesale electricity prices. So, the question remains: why has UAE cast significant resources at nuclear power, a quintessentially late 20th century technology, when other more efficient, less risky, technically and economically viable options already exist? Since new nuclear makes little sense in the Gulf, which has some of the best solar energy resources in the world, the answer may lie hidden in plain sight.

More information: See Paul Dorfman's Dec. 2019 report, 'Gulf Nuclear Ambition: New Reactors in United Arab Emirates', https://www.nuclearconsult.com/wp/wp-content/uploads/2019/12/Gulf-Nuclea...

Dr. Paul Dorfman is Honorary Senior Research Associate at the UCL Energy Institute, University College London; Joseph Rowntree Charitable Trust Nuclear Policy Research Fellow; Founder and Chair of the Nuclear Consulting Group: https://www.nuclearconsult.com, @dorfman_p

Nuclear power went backwards last year with the permanent shutdown of nine power reactors (totaling 6.0 gigawatts) and the grid connection of six (5.2 GW).¹ Grid connections were concentrated in Russia (three, including two very small 'floating' reactors on the Akademik Lomonosov barge) and China (two) with one in South Korea. The shutdowns were spread across eight countries.

Worse still for the industry ‒ much worse ‒ is the paucity of reactor construction starts. There were just three construction starts in 2019 (totaling 3.2 GW): one each in China and Russia, and Bushehr-2 in Iran which faces an uncertain future. No countries entered the nuclear power club in 2019 (construction starts or grid connections).

The mean age of the global power reactor fleet is 30.3 years as of Jan. 2020 and the average age passed 30 years in 2019.² That's an old fleet, increasingly prone to accidents, large and small; increasingly prone to extended outages and thus increasingly uncompetitive in electricity markets.

The International Atomic Energy Agency (IAEA) anticipates the closure of up to 139 GW from 2018‒2030³ ‒ more than one-third of current global capacity of 395 GW (including idle reactors in Japan). And the IAEA anticipates 325 GW of retirements from 2018 to 2050 ‒ 82% of current global capacity.³ Based on IAEA figures (and others, including those from the International Energy Agency), the industry will need about 10 new reactors (10 GW) each year just to match retirements. The industry did indeed average nearly 10 construction starts from 2008‒13 (a total of 59). But the number has sharply declined in the aftermath of the Fukushima disaster and catastrophic cost overruns, with just 26 construction starts over the past six years at an average of 4.3. There were more construction starts in 2010 (16) than in 2016‒19 combined (15).⁴

This table captures the birth and death of the nuclear power mini-renaissance:⁴

Diana Ürge-Vorsatz, Vice-Chair of an Intergovernmental Panel on Climate Change Working Group, notes in the foreword to the World Nuclear Industry Status Report 2019:⁵

"Trend indicators in the report suggest that the nuclear industry may have reached its historic maxima: nuclear power generation peaked in 2006, the number of reactors in operation in 2002, the share of nuclear power in the electricity mix in 1996, the number of reactors under construction in 1979, construction starts in 1976. As of mid-2019, there is one unit less in operation than in 1989."

The number of power reactors under construction has been falling slowly but steadily in recent years, from 68 in 2013⁵ to 46 as of Jan. 2020⁶ (52 according to the IAEA⁷).

Here are the World Nuclear Association's (WNA) figures on anticipated dates for commercial reactor startups (grid connections):⁸

If those figures prove to be more-or-less accurate, nuclear power will enjoy a few relatively good years before the rot sets in. But the WNA figures are never accurate (the WNA anticipated 15 reactor starts-ups in 2019 but the true figure was just six). Further delays in reactor startups will result in some smoothing out in the above table.

Currently, nuclear power reflects two contradictory dynamics. The earlier mini-renaissance is evident but will subside by the mid-2020s. The Era of Nuclear Decommissioning (END) is in its infancy (with nine reactor closures, historians may mark 2019 as the beginning of this qualitatively new era) and will be in ever-sharper focus by the mid-2020s. The END will be characterized by a decline in the number of operating reactors; an increasingly unreliable and accident-prone reactor fleet as aging sets in; countless battles over lifespan extensions for aging reactors; an internationalization of anti-nuclear opposition as neighboring countries object to the continued operation of aging reactors; and escalating battles over and problems with decommissioning and waste disposal.⁹

Until such time as the rot sets in, the nuclear industry can console itself with these figures indicating stagnation in the reactor count and near-zero growth in capacity:

• a marginal increase or decrease in the reactor count depending on whether reactors in long-term outage (most of them in Japan) are included or excluded.
• a 5.5% increase in nuclear capacity over the past 20 years (excluding reactors in long-term outage) ‒ a compound annual growth rate of 0.27% per year.

Pro-nuclear spin

So how are the nuclear industry and its supporters responding to the industry's miserable state? Mostly with denial and delusion.

Here are the 'top 6 nuclear power achievements' of 2019 according to the executive editor of POWER magazine.¹⁴

1. World’s first EPR nuclear power plant enters commercial operation with the Sept. 2019 commencement of commercial operation of the second of two EPR reactors in Taishan, China.

The original 2013/14 startup dates for Taishan 1 and 2 were missed by five years due to construction problems and safety concerns (including the extraordinary Creusot Forge scandal in France¹⁵). Excavation work for the Taishan reactors began in 2008 and construction of the two reactors formally began in 2009 and 2010. China General Nuclear Power Corporation acknowledged a cost increase of 40% for the two Taishan reactors to US$11 billion.¹⁶ As a result of delays and cost overruns, the market for EPRs in China has all but evaporated.⁵

The EPR reactor under construction at Flamanville, France, is 10 years behind schedule: construction began in Dec. 2007, the planned startup date was 2012, and EDF now says that commercial operation cannot be expected before the end of 2022.¹⁷ The current cost estimate of €12.4 billion (US$13.7 billion) is 3.8 times greater than the original estimate of €3.3 billion (US$3.6 billion).¹⁸

The EPR reactor under construction at Olkiluoto, Finland, is 10 years behind schedule: construction began in April 2005, startup was anticipated in 2010, and startup is now scheduled in 2020. The current cost estimate of about €11 billion (US$12.2 billion) is 3.7 times greater than the original €3 billion (US$3.3 billion) price tag.¹⁹

The estimated combined cost of the two EPR reactors under construction at Hinkley Point, UK, including finance costs, is £26.7 billion (US$35.0 billion) (the EU's 2014 estimate of £24.5 billion²⁰ plus a £2.2 billion increase announced in July 2017²¹). A decade ago, the estimated construction cost for one EPR reactor in the UK was almost seven times lower at £2 billion.²² The UK National Audit Office estimates that taxpayer subsidies for Hinkley Point will amount to £30 billion²³ (US$39.4 billion), while other credible estimates put the figure as high as £50 billion (US$65.6 billion).²⁴

Undeterred, POWER magazine claims that a 6-unit EPR project in India will be the world’s largest nuclear power plant "if completed as planned".¹⁴ It would be a miracle if the project is completed as planned; indeed it would be a minor miracle if it even begins given funding constraints.

2. World’s first ACPR-1000 nuclear power plant begins commercial operation in China

Grid connections of ACPR-1000 reactors in China in 2018 and 2019 mark a significant achievement. But the broader picture is highly uncertain. There has only been one reactor construction start in China in the past three years. The number of reactors under construction has fallen sharply from 20 in 2017 to 10 currently.²⁶ No-one knows whether or not the Chinese nuclear program will regain momentum. Wind and solar combined generated nearly double the amount of electricity as nuclear in 2018.²⁷

3. Akademik Lomonosov connects to grid

Estimated construction costs for Russia's floating nuclear power plant (with two 32-MW ice-breaker-type reactors) increased more than four-fold and eventually amounted to well over US$10 million / megawatt (US$740 million / 64 MW).²⁸ A 2016 OECD Nuclear Energy Agency report said that electricity produced by the plant is expected to cost about US$200 / MWh, with the high cost due to large staffing requirements, high fuel costs, and resources required to maintain the barge and coastal infrastructure.²⁹

The primary purpose of Russia's floating nuclear power plant is to help exploit fossil fuel reserves in the Arctic³⁰ ‒ fossil fuel reserves that are more accessible because of climate change. That isn't anything to celebrate; it is disturbing and dystopian.

4. Vogtle nuclear expansion progresses

Yes, the Vogtle twin-AP1000 project in the US state of Georgia continues, for better or worse. Construction began in 2013 and the planned startup dates were April 2016 and April 2017. The project is 5.5 years behind schedule and it is unlikely that the revised completion dates of Nov. 2021 and Nov. 2022 will be met.³¹

In 2006, Westinghouse claimed it could build one AP1000 reactor for as little as US$1.4 billion.³² The current cost estimate for the two Vogtle reactors ‒ US$27‒30+ billion³³ ‒ is 10 times higher.

The Vogtle project only survives because of mind-boggling, multi-billion dollar taxpayer subsidies including US$12+ billion in loan guarantees, tax credits and much else besides. Westinghouse declared bankruptcy in 2017, largely as a result of its failed AP1000 projects in South Carolina (abandoned after the expenditure of at least US$9 billion) and Georgia, and Westinghouse's parent company Toshiba was almost forced into bankruptcy and survives as a shadow of its former self.

5. NRC approves Clinch River nuclear site for SMRs

6. NuScale’s SMR design clears Phase 4 of NRC review process

But who will pay for small modular reactors (SMRs)? Industry won't budge without massive taxpayer subsidies. A 2018 US Department of Energy report states that to make a "meaningful" impact, about US$10 billion of government subsidies would be needed to deploy 6 gigawatts of SMR capacity by 2035.³⁴ And the pro-nuclear authors of a 2018 article in the Proceedings of the National Academy of Science argue that for SMRs to make a significant contribution to US energy supply, "several hundred billion dollars of direct and indirect subsidies would be needed to support their development and deployment over the next several decades".³⁵

References:

1. IAEA, https://pris.iaea.org/PRIS/

See also World Nuclear Association, 3 Jan 2020, 'Reactor shutdowns outweigh start-ups in 2019', https://world-nuclear-news.org/Articles/Reactor-shutdowns-outweigh-start...

2. https://www.worldnuclearreport.org/

3. International Atomic Energy Agency, 2018, 'Energy, Electricity and Nuclear Power Estimates for the Period up to 2050: 2018 Edition', https://www-pub.iaea.org/MTCD/Publications/PDF/RDS-1-38_web.pdf

4. IAEA, PRIS database, https://pris.iaea.org/pris/ See also: IAEA, 2019, 'Nuclear Power Reactors in the World', https://www-pub.iaea.org/MTCD/Publications/PDF/RDS-2-39_web.pdf

5. Mycle Schneider and Antony Froggatt, Sept 2019, 'World Nuclear Industry Status Report 2019', https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Rep...

6. https://www.worldnuclearreport.org/

7. https://pris.iaea.org/PRIS/

8. https://www.world-nuclear.org/information-library/current-and-future-gen...

9. 'Nuclear decommissioning era approaches', 29 Jan 2019, https://theecologist.org/2019/jan/29/nuclear-decommissioning-era-approaches

10. https://pris.iaea.org/PRIS/WorldStatistics/WorldTrendNuclearPowerCapacit...

11. https://www.world-nuclear.org/information-library/facts-and-figures/worl...

12. www.worldnuclearreport.org/

13. Approximate figures based on data from the World Nuclear Industry Status report 2019 and the WNISR website. www.worldnuclearreport.org/

14. Aaron Larson, 26 Dec 2019, 'Top 6 Nuclear Power Achievements of the Year', https://www.powermag.com/top-6-nuclear-power-achievements-of-the-year/?p...

15. https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Rep...

16. World Nuclear Industry Status Report 2019; Nuclear Intelligence Weekly. https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Rep...

17. Priyanka Shrestha, 29 July 2019, 'EDF confirms further delay at Flamanville nuclear plant', https://www.energylivenews.com/2019/07/29/edf-confirms-further-delay-at-...

18. 28 October 2019, 'French nuclear power plant is seven years late and costs have tripled', https://www.thelocal.fr/20191028/french-nuclear-power-plant-is-seven-yea...

19. WNISR 2018, https://www.worldnuclearreport.org/World-Nuclear-Industry-Status-Report-...

20. http://europa.eu/rapid/press-release_IP-14-1093_en.htm

21. https://www.theguardian.com/uk-news/2017/jul/03/hinkley-point-c-is-22bn-...

22. https://energypost.eu/saga-hinkley-point-c-europes-key-nuclear-decision/

23. https://www.theguardian.com/uk-news/2016/jul/13/hinkley-point-c-cost-30b...

24. http://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2017/09/Time-to-...

25. Aaron Larson, 26 Dec 2019, 'Top 6 Nuclear Power Achievements of the Year', https://www.powermag.com/top-6-nuclear-power-achievements-of-the-year/?p...

26. WNISR 2019, https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Rep...

27. WNISR 2019, https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Rep...

28. Charles Digges, 25 May 2015, 'New documents show cost of Russian floating nuclear power plant skyrockets', http://bellona.org/news/nuclear-issues/2015-05-new-documents-show-cost-r...

29. OECD Nuclear Energy Agency, 2016, 'Small Modular Reactors: Nuclear Energy Market Potential for Near-term Deployment', https://www.oecd-nea.org/ndd/pubs/2016/7213-smrs.pdf

30. Jan Haverkamp, 28 May 2018, World's first purpose-built floating nuclear plant Akademik Lomonosov reaches Murmansk, Nuclear Monitor #861, https://www.wiseinternational.org/nuclear-monitor/861/worlds-first-purpo...

31. Julian Spector, 1 Aug 2019, 'More Delays Likely for Vogtle Nuclear Plant, Georgia Regulator Says', https://www.greentechmedia.com/articles/read/georgia-utility-regulator-m...

32. Jon Gertner, 16 July 2006, 'Atomic Balm?', https://www.nytimes.com/2006/07/16/magazine/16nuclear.html

33. Nuclear Monitor #867, 15 Oct 2018, 'Vogtle's reprieve: snatching defeat from the jaws of defeat', https://www.wiseinternational.org/nuclear-monitor/867/vogtles-reprieve-s...

34. Kutak Rock and Scully Capital for DOE's Office of Nuclear Energy, Oct 2018, 'Examination of Federal Financial Assistance in the Renewable Energy Market: Implications and Opportunities for Commercial Deployment of Small Modular Reactors', https://www.energy.gov/ne/downloads/report-examination-federal-financial...

35. M. Granger Morgan, Ahmed Abdulla, Michael J. Ford, and Michael Rath, July 2018 'US nuclear power: The vanishing low-carbon wedge', Proceedings of the National Academy of Science, https://www.pnas.org/content/115/28/7184

S&P Global Ratings has published a glum assessment of the prospects for nuclear power, in 'developed' countries at least. It states:¹

"The global nuclear industry, accounting for 10% of global power generation, faces many challenges as governmental and regulatory policies have shifted toward renewables, especially after the 2011 Fukushima nuclear accident. Concerns about the safety of nuclear plants and nuclear waste storage solutions, an aging global nuclear fleet, and massively escalating costs for many new projects have added to the industry's woes.

"Several developed countries, including Germany, Belgium, Switzerland, and Spain, are planning to phase out nuclear. Others, such as South Korea, Sweden, and even France aim to reduce it. In the U.S., the continuity of nuclear plants and future life extensions are under threat from prevailing low power prices. ...

"In developed markets, we see little economic rationale for new nuclear build. Renewables are significantly cheaper and offer quicker payback on scalable investments at a time when power demand is stagnating. New nuclear construction requires massive upfront investments in complex projects with long lead times and risk of major cost overruns. Returns over nuclear assets' long useful life are exposed to fundamental uncertainties about the global energy transition, technology development, regulatory shifts, and increasingly volatile electricity markets. …

"Most of the existing reactor fleet was built in the 1970-1980s. Notwithstanding the recent uptick in nuclear construction globally after 2014, the global trend in energy investments shows a clear preference for renewables, and investments in nuclear generation are several times smaller than renewable investments. This is fundamentally because public policies do not consider nuclear to be clean energy due to safety concerns and long-term nuclear waste issues, even though it results in zero direct CO2 emissions. In addition, new nuclear reactors require vast amounts of capital investment upfront and have high execution risks, long lead times, and very long asset lives. This makes private investors cautious about investing in nuclear amid lower and increasingly volatile power prices across major markets, and rapid and continued changes in the global energy system."

Thus the S&P report expects nuclear generation to gradually decline in the US and it notes that most Western European countries plan to reduce or phase out nuclear power, South Korea has been shifting toward renewable energy sources from coal and nuclear since 2017, the road ahead for Japan's nuclear industry "is likely to be long and challenging", and so on.

Small modular reactors are quickly dismissed: "they are still far too expensive and less scalable than renewables, and do not address fundamental nuclear safety and nuclear waste issues."

The report notes that even assuming investment costs come down significantly to US$4,500/kW, nuclear power would cost around US$100/MWh and its economic competitiveness would be "clearly questionable". The assumed $4,500/kW construction cost is "much lower than actual first-in-kind projects that have experienced large cost overruns" (and much lower than the US$6,900 ‒ $12,200 estimate in the latest Lazard report.²)

Dead and/or alive?

Despite the glum assessment outlined above, the S&P report predicts that nuclear power output is set to increase marginally over the next two decades. Questionable assumptions leading to that conclusion include the following.

Reactor lifespan extensions

Lifespan extension licenses are given undue weight in the S&P report. The escalating cost of continuing to operate aging reactors, relative to more competitive energy sources, isn't given due weight. The risks of continuing to operate aging reactors are ignored altogether (as are the connections between nuclear power and weapons).

The S&P report asserts that "a too fast nuclear phaseout" would have a "huge impact on CO2 emissions". Only if you assume that gas and coal are the replacement energy sources, and ignore renewables and energy efficiency altogether ‒ which is what the report does.

Emerging economies

The S&P report anticipates nuclear decline across developed countries but growth in 'emerging economies', with China taking the lead. China will need to "accelerate" the construction of new nuclear power plants to achieve its ambitious 2020 target of having 58 gigawatts (GW) of nuclear capacity in operation (from 45 GW in 2019) and 30 GW under construction (from 11.2 GW as of Nov. 2019³).

But no credible acceleration could possibly see China meet its 2020 targets. Recent years have seen a sharp deceleration ‒ just one reactor construction start since December 2016. A World Nuclear Industry Status Report briefing states:⁴

"China National Nuclear Corporation (CNNC), on 16 October 2019, announced the construction start of Zhangzhou-1, a Hualong or HPR-1000 design. ... This is the first new construction start for the Hualong design reactor ‒ and the first construction start of any commercial reactor ‒ since 23 December 2016 ... With the latest construction start, a total of 11 reactors are now under construction in China. This is significantly below the figure of 16 in 2017, and of 20 in 2016. This new-build decline is a clear demonstration of the slowdown of the Chinese nuclear power program. With currently 45.5 GW in operation and 10 GW under construction, China will be far from achieving its 5-year target of 58 GW operating and 30 GW under construction as of 2020."

According to the S&P report, China's nuclear program benefits from an economic learning curve effect, a complete supply chain, and "good project management that reduces execution risks". But the economic case for nuclear clearly isn't compelling ‒ hence the go-slow in recent years. Moreover, renewables have expanded far more rapidly ‒ wind already generates more power than nuclear and solar is catching up fast.

And there is a trade-off between safety and economics ‒ a trade-off ignored in the S&P report. Accidents ‒ large and small ‒ are all the more likely because of China's inadequate nuclear safety standards, inadequate regulation, lack of transparency, repression of whistleblowers, world's worst insurance and liability arrangements, security risks, and widespread corruption.⁶

References:

1. Elena Anankina et al., 11 Nov 2019, 'The Energy Transition: Nuclear Dead And Alive', S&P Global Ratings, https://www.spglobal.com/ratings/en/research/articles/191111-the-energy-... or https://www.euractiv.com/wp-content/uploads/sites/2/2019/11/Energy-Trans...

2. Lazard, Nov 2019, 'Lazard's Levelized Cost of Energy Analysis ‒ Version 13.0', https://www.lazard.com/media/451086/lazards-levelized-cost-of-energy-ver...

3. https://www.world-nuclear.org/information-library/facts-and-figures/worl...

4. World Nuclear Industry Status Report, 19 Oct 2019, 'China: First Commercial Reactor Construction‑Start in Three Years', https://www.worldnuclearreport.org/China-First-Commercial-Reactor-Constr...

5. https://www.worldnuclearreport.org/The-World-Nuclear-Industry-Status-Rep...

6. Nuclear Monitor #796, 19 Dec 2014, 'China's nuclear power plans: safety and security challenges', www.wiseinternational.org/nuclear-monitor/796/chinas-nuclear-power-plans...

The UK government is handing French and Chinese utilities tens of billions of pounds of taxpayers' money to build and operate the two Hinkley Point C reactors ‒ lifetime subsidies are guess-work but could amount to around £50 billion.¹ In November 2017, the UK Parliament's Public Accounts Committee said Hinkley Point amounts to a "bad hand" and "the poorest consumers will be hit hardest"² while the UK National Audit Office said Hinkley Point is "a risky and expensive project with uncertain strategic and economic benefits."³

Now the UK government is engineering an equally mind-boggling set of subsidies to persuade Japanese conglomerate Hitachi to proceed with two Advanced Boiling Water Reactors at Wylfa Newydd on the island of Anglesey in north Wales. It seems likely that the Japanese and UK government's will both provide direct financing for the reactors, with the two governments and Hitachi stumping up roughly one-third of the cost each.⁴ All sorts of other sweeteners are being offered to Hitachi by the UK government including loan guarantees and a guaranteed 'strike price' for electricity sold from Wylfa reactors (likely to be lower than the Hinkley strike price but still well above current wholesale rates, and significantly higher than the strike price for off-shore wind farms.⁴)

Thus governments are jumping in where private enterprise fears to tread. Hitachi hasn't found any private-sector partners, and Hitachi itself wants to dramatically reduce its stake in the Wylfa project. You'd think alarm bells would be ringing within the halls of government about the viability and economic logic of the project. Even with all the sweeteners being thrown in its direction, Hitachi has yet to commit to the project.⁵

Hannah Martin from Greenpeace UK said: "No bank, hedge fund or insurer will touch the UK's new nuclear programme with a bargepole. So Hitachi has no option but to ask the government for a taxpayer bailout to keep their collapsing reactor programme afloat. This would leave the British public to carry much of the cost and all of the risk. Any prudent investor would laugh at this request. After the Hinkley debacle, it's vital that the government stops trying to keep our energy policy a secret and presents any offer of a deal to Parliament before the Hitachi board meeting at the end of May. Otherwise it's difficult to know where their generosity to the nuclear industry might end."⁶

The 2010 Conservative Party election manifesto stated that: "we agree with the nuclear industry that taxpayer and consumer subsidies should not and will not be provided – in particular there must be no public underwriting of construction cost overruns".⁷ Now the Conservative government's position is that: "It remains the government's objective in the longer-term that new nuclear projects – like other energy infrastructure – should be financed by the private sector."⁸

Nick Butler noted in the Financial Times that a direct shareholding in the Wylfa project by the UK government will almost certainly be challenged in the courts on the grounds of competition policy and European state-aid rules. The UK is likely to be subject to EU rules at least until the end of the Brexit transition period.⁹

References:

1. Steve Thomas, Sept 2017, Time to Cancel Hinkley', http://www.no2nuclearpower.org.uk/wp/wp-content/uploads/2017/09/Time-to-...

2. World Nuclear Association, 23 Nov 2017, 'British MPs question value of Hinkley Point project', www.world-nuclear-news.org/NN-British-MPs-question-value-of-Hinkley-Poin...

3. Gerard Wynn, 29 Nov 2017, 'IEEFA Update: More Questions on U.K. Nuclear Project', http://ieefa.org/ieefa-update-questions-u-k-nuclear-project/

4. Adam Vaughan, 5 June 2018, 'UK takes £5bn stake in Welsh nuclear power station in policy U-turn', www.theguardian.com/environment/2018/jun/04/uk-takes-5bn-stake-in-welsh-...

5. NucNet, 29 May 2018, 'Hitachi Agrees To Continue Negotiations With UK Over New Nuclear At Wylfa', www.nucnet.org/all-the-news/2018/05/29/hitachi-agrees-to-continue-negoti...

6. nuClear news No.107, May 2018, 'Nuclear Subsidies – We Told You So', www.no2nuclearpower.org.uk/wp/wp-content/uploads/2018/05/NuClearNewsNo10...

7. Dave Toke, 4 June 2018, 'Wylfa: How the Tories are deliberately forgetting their nuclear lessons', http://realfeed-intariffs.blogspot.com/2018/06/wylfa-how-tories-are-deli...

8. Rachel Morison, 4 June 2018, 'U.K. Moves Toward Involvement on $27 Billion Nuclear Plant', www.bloomberg.com/news/articles/2018-06-04/u-k-weighs-taking-stake-with-...

9. Nick Butler, 4 June 2018, 'Stake in nuclear plant would be dramatic change of policy for UK', www.ft.com/content/7ba55ce6-63f3-11e8-90c2-9563a0613e56