NS4960
Spring Term 2017
Nuclear Rebound?
Overview
• Oxford Analytica, “Nuclear Industry Will Rebound,”
November 13, 2013
• Nuclear power seems to be making a comeback
• Announcement by UK of a major new nuclear power
station – online 2022 at earliest
• Announcements other countries
• Japan restarting some nuclear plants
• Expansion of nuclear plants in
• China
• Russia and
• India
2
Trends I
• Fukushima likely to lead to greater and more expensive
certification requirements for new plants
• Older plants (pre 1981) will likely be retried more quickly
due to Fukushima
• Global electricity demand increased 3-4$ per year during
2000-10 and is expected to continue growing at around
2.5% until 2030 – in line with expected
• Global GDP growth,
• population increases and
• Industrialization
• As demand grows fuel mix for power generation
continues to diversify
• Coal and gas still dominate but
• Coal’s share declining and the renewables share (including)
hydro is increasing
3
Trends II
• Fukushima – changed landscape
• Nuclear had fairly good prospects for global power
generation prior to March 2011 disaster in Japan
• While absolute capacity is still expected to rise, the share
of nuclear power in global fuel mix now expected to
decline
• Impact on Japan
• Prior to Fukushjima disaster nuclear power provided
around 30% of Japan’s electricity
• Share had been predicted to grow to 40% by 2017
• Now hard to estimate as first reactor restarted in
September 2015
4
Trends III
• Gap in electricity production filled by increased
production from
• fossil-fueled thermal plants
• Reduced electricity demand
• Increased oil imports
• New coal-fired plants have also been constructed
• Impact beyond Japan
• Fukushjima disaster prompted many countries to reexamine their nuclear power programs
• German government decided to shut down seven of its pre-1981
reactors and halt all nuclear generagion after 2023
• Belgium, Switzerland and Taiwan indicated that extending
lifetime of older plants now less likely
• China imposed a freeze on nuclear plant construction following
the disaster though this was lifted after two years
5
Trends IV
• Long term decline
• Even before Fukushima production had been in absolute
and relative decline for some years
• While Fukushima was a huge setback for nuclear’s
prospects, production had been in absolute and relative
decline for some years
• Nuclear energy accounted for 17% of global electricity
generation in 1993 – peak year but
• By 2006 this had fallen to 15% and in 2012 its share just
11%
• Total nuclear output in 2012 was 7% lower than in 2011
and 12% below recent peak in 2002
• As of July 2013 there were 17 fewer reactors operating
comared to peak in 2002
6
Challenges I
• Ongoing challenges
• Safety
• increased requirements have greatly added to costs
• Competition
• facing increased competition from renewables where
operating costs are low and capital costs are falling
• Costs
• Nuclear construction costs have increased from $1,000 to
$7,000 per kilowatt of generating capacity over past ten years
• Shortages of skilled and experienced engineers also a problem
• Poor profitability, coupled with higher debt levels,
reduced credit ratings and falling share prices mean
energy firms poorly placed to develop new projects
• Building such high-cost plants very dfifficult in an open market
electricity system – some form of long-term contract underwritten7
by government inevitable
Prospects I
• Nuclear Renaissance?
• Despite drawbacks nuclear provides secure long term
zero emissions power
• Thus a number of countries continue to pursue new
nuclear plants as part of their generating mix
• Emerging markets
• Most new construction is concentrated in China, India
and Russia
8
Prospects II
• UK
• Successive UK governments have promoted
construction of new nuclear plants
• French Company EDF will do the construction
• First at Hinkley Point in Sommerset
• Six additional reactors at three additional sites
• UK Government agreed to “contract for difference” that
guarantees the generator an electricity price regardless
of market conditions
• Deal criticized because
• the agreed price is much higher than present market price
• Construction risk remains largely with the taxpayer and
consumer
• Deal may violate EU rules on state aid
9
Prospects III
• While costs of UK deal are well above conventional
thermal power (ignoring carbon charge) competitive to
some renewable sources
• Nuclear does not suffer problems of intermittency that
plague other renewables.
• Assessment
• Relative hiatus on new nuclear plant construction and
continuing retirement of older plants mean nuclear
output will continue to fall for a number of years
• Nuclear will likely come back once memories of
Fukushima fade
• Can expect a limited nuclear renaissance during next
decade
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