With many countries setting targets to reach Net Zero by mid-century, fossil fuel reliance will have to end. To compensate, recent research by the IEA (International Energy Agency) has suggested that nuclear energy could fill the void. However, their findings suggest that globally, nuclear power capacity will need to double by 2050 for nations to fulfil their emissions targets and help ensure energy security.
“Nuclear power plays a significant role in a secure global pathway to net zero. Nuclear power doubles from 413 GW in early 2022 to 812 GW in 2050 in the NZE (Net Zero Emissions by 2050 Scenario).” - IEA[i]
A further influencing factor is the war in Ukraine, whereby the resulting global energy crisis is seeing governments look for alternatives to importing Russian fossil fuel. According to data from the IEA, at present, Nuclear is the second largest source of so-called ‘low emissions power’ after hydropower, with nuclear plants in 32 countries.
Figure 1: Top 10 nuclear-generating countries by amount generated (thousands GW-Hr)
However, concerningly, 63% of nuclear-generating capacity today comes from plants which are more than 30 years old, where many of these facilities were constructed during the oil crisis in the 1970s. Carbon Brief notes in an article on Europe’s ageing nuclear power plants that “Forty years is a typical lifespan for a nuclear power plant built in the 70s or 80s. While it’s quite common for plants to have their operational lifetime extended, particularly in the US, many close earlier.”[iii] Such is the issue- not only will new capacity be required in the form of brand-new nuclear plants, but also ageing facilities will either need to have their life extended (with security and safety taken into account) or be replaced. Crucially, in the IEA’s report, it prices the extensions as “competitive even with solar and wind in most regions”. Thus, this has big implications for investment.
“In the NZE, the lives of over half of these plants are extended, cutting the need for other low emissions options by almost 200 GW. The capital cost for most extensions is about USD 500 to USD 1 100 per kilowatt (kW) in 2030, yielding a levelised cost of electricity generally well below USD 40 per megawatt-hour (MWh).”[iv]
IEA Executive Director Fatih Birol said in a statement: “In today’s context of the global energy crisis, skyrocketing fossil fuel prices, energy security challenges and ambitious climate commitments, I believe nuclear power has a unique opportunity to stage a comeback. However, a new era for nuclear power is by no means guaranteed. It will depend on governments putting in place robust policies to ensure safe and sustainable operation of nuclear plants for years to come – and to mobilise the necessary investments including in new technologies.”
Encouragingly, there is also a positive attitude emerging in terms of investment. Firstly, nuclear will join the EU's green taxonomy next year, potentially easing investor concerns about whether it should be considered environmentally friendly. The move could, in turn, open new funding sources for European nuclear operators, such as Electricité de France SA, or EDF, and Fortum Oyj, as the industry faces up to €550 billion of investment needs through 2050, based on EU forecasts.
"The perception is shifting" among environmental, social and governance investors, said Marina Petroleka, global head of ESG research at Sustainable Fitch. "Suddenly, nuclear is back in the conversation."[v]
The IEA also reported that the failure of advanced economies to invest in the nuclear industry and seek technological advancement in the sector has meant that Russia and China are now dominating the space. In fact, since 2017, 87% of new nuclear reactors use Russian and Chinese designs[vi], as IEA Executive Director Fatih Birol noted in a recent press release:
“The nuclear industry must quickly address the issues of cost overruns and project delays that have bedevilled the construction of new plants in advanced economies. As a result, advanced economies have lost market leadership, as 27 out of 31 reactors that started construction since 2017 are Russian or Chinese designs.”[vii]
In the United States, the federal government is currently implementing a $6 billion scheme to address the financial struggles seen with many existing nuclear power plants, the hope being that closures can be prevented. According to the Department of Energy, since 2013, there has been the loss of 13 commercial nuclear reactors in the United States, with all of these closing early. “U.S. nuclear power plants contribute more than half of our carbon-free electricity, and President Biden is committed to keeping these plants active to reach our clean energy goals,” said U.S. Secretary of Energy Jennifer M. Granholm. “We’re using every tool available to get this country powered by clean energy by 2035, and that includes prioritising our existing nuclear fleet to allow for continued emissions-free electricity generation and economic stability for the communities leading this important work.”[viii]
[ii] Top 15 Nuclear Generating Countries (nei.org)
[iii] The trouble with Europe's ageing nuclear power plants - Carbon Brief
[v] ESG investors warm to nuclear power after EU green label award | S&P Global Market Intelligence (spglobal.com)
[vi] Russian and Chinese designs in 87% of new nuclear reactors: IEA Chief (cnbc.com)
[vii] Nuclear power can play a major role in enabling secure transitions to low emissions energy systems - News - IEA
[viii] DOE Seeks Applications, Bids for $6 Billion Civil Nuclear Credit Program | Department of Energy