UK Out of Step with Global Nuclear Trends
As we wait for the European Commission to rule of the justification of the proposed subsidies for the construction of the Hinkley Point C power nuclear power plant in Somerset it is worth reflecting on the state of the global nuclear industry. In particular to see if the UK Government’s proposal to enable the commissioning of new nuclear units is matched by developments in other countries and how nuclear power is faring in comparison to renewable energy.
Currently there are 31 countries operating nuclear power plants in the world. A total of 388 electricity-generating reactors have a combined installed capacity of 333 GWe (1). These figures assume the final shutdown of the ten reactors at Fukushima-Daiichi and –Daini, which are unlikely to ever restart following the earthquake and tsunami in March 2011 and the Long-Term Shutdown of 45 units that have not produced power for at least 18 months. Overall, the nuclear industry is in decline as there are 50 less operating reactors than at the peak in 2002. The associated electricity production peaked in 2006 at 2,660 TWh and dropped by 11 percent to 2,359 TWh in 2013. As a result of rising electricity demand and rapid deployment of competing technologies, the nuclear share in the world’s power generation has declined steadily from a historic peak of 17.6 percent in 1996 to 10.8 percent in 2013, the lowest level since 1982. Similarly nuclear’s share of global commercial primary energy production dropped to 4.3 percent.
As of July 2014, 67 reactors were under construction (one more than in July 2013) with a total capacity of 64 GW, in fourteen countries. In 2013, construction started for the first time in Belarus, while Taiwan has halted construction work at two units. The average building time of the units under construction is 7 years. However eight reactors have been listed as “under construction” for more than 20 years, another one for 12 years. Furthermore, at least 49 have encountered construction delays, most of them significant (several months to several years). For the first time, major delays—several months to over two years—have been admitted on three quarters (21/28) of the construction projects in China, which is host to over 40 percent of the world’s nuclear new build. Twenty-eight years after the Chernobyl disaster, none of the next generation (III+) reactors have entered service with construction projects in Finland and France many years behind schedule and over budget. In the absence of major new-build programs, the average age of the reactors continues to increase and by mid-2014 it stands at 28.5 years. Of these over 170 units (44 percent of total) have operated for 30 years including 39 for 40 years or more.
Construction costs are a key determinant of the final nuclear electricity generating costs and many projects are significantly over budget. Investment cost estimates have increased in the past decade or so from $1,000 ($600) to around $8,000 (£5000) per installed kilowatt. The latter figure is for the two EPRs at Hinkley Point, which are said to cost £16 billion for two 1.6 GW units a threefold increase in the expected cost less than a decade earlier. At the time of the announcement by the UK Government and French utility EDF of an agreement on commercial terms, it was expected that the final investment decision would be taken in July 2014, a deadline which has been and gone. However, construction cost estimates increased in virtually all countries, including China, Finland, France, the UAE and the U.S. In the U.S., the builder of two units at the VC Summer site in South Carolina has asked for the seventh rate increase since 2009 to meet rising costs.
In some countries (including France, Germany, the U.S. and Sweden), operating costs – especially for major repairs – have escalated so rapidly that they are barely below the normal band of wholesale power prices or in some cases exceed those. The largest nuclear operator in the world, the French state-controlled utility EDF, lost about €1.5 billion (£1.2 billion) in 2012, because tariffs did not cover the running costs. According to the French Court of Accounts, the cost of generating nuclear power increased by 20 percent between 2010 and 2013 (49.6 €/MWh to 59.8 €/MWh [£39.5-47.5]). In Germany, operator E.ON announced that it would close one of its reactors seven months earlier than required by law because of the projected income does not cover the costs. In Sweden, income from electricity sales of at least three reactors were below production costs in two of the past four years. In the U.S., utilities decided to retire at least five reactors that no longer cover operating costs, including two with valid operating licenses beyond 2030. One study identifies up to 38 U.S. units threatened by the same fate.
The extension of operating periods beyond original design basis is handled differently from country to country. While in the U.S. about three quarters of the reactors have already received extended licenses up to 60 years, in France, only 10-year extensions are granted and the safety authorities made it clear that there is no guarantee that all units pass the 40-year test. According to one assessment, the costs for upgrading the plants for operating beyond 40 years could vary between €1 billion (£800 million) and €4 (£3.2 billion) billion per reactor. Also, life extension is likely in conflict with the French government’s target to reduce the nuclear share from the current three quarters to half by 2025.
The need to decarbonize the power and energy sector to avert the most dangerous consequences of climate change and to enhance energy security continues to drive the deployment of renewable energy, rather than that of nuclear power. The divergence of these trends was highlighted in 2013 in a number of ways, this included Spain, which generated more power from wind than from any other source, outpacing nuclear for the first time. It is also the first time that wind has become the largest electricity-generating source over an entire year in any country. Spain has joined the nuclear countries that produce more power from new renewables—excluding large hydropower—than from nuclear power including Brazil, China, Germany, India and Japan.
Global investment in renewable energy totalled $214 billion (£127 billion) in 2013, decreasing for the second year in a row, down from a record $300 billion in 2011 (£180 billion), but still four times the 2004 amount. As in 2012, with £54.2 billion (£32 billion) spent, China has been the largest investor. Some of the past large investors showed sharp declines in expenditures over the previous year, like Italy (-76 percent), Germany (-57 percent) and the U.S. (- 23 percent). On the other side, some countries increased investments significantly with Japan (+75 percent) advancing to the third position, the U.K. (+46 percent) taking rank four and newcomer Australia entering the Top 10 for the first time. Also, decreasing amounts pay for more installed capacity as system costs continue to decrease, explaining up to four fifth of the drop in expenditure. Regional analysis reveals that over the past decade Europe spent 40 percent of the $1.6 trillion (£950 billion) total investment, while China alone holds a 20 percent share. According to a new assessment by the OECD’s International Energy Agency, between 2000-13 global investments in power plants were split between renewables (57 percent), fossil fuels (40 percent) and nuclear power (3 percent).
Globally, since 2000, the annual growth rates for wind power have averaged 25 percent and for solar photovoltaics 43 percent. This has resulted in 2013 alone in 32 GW of wind and 37 GW of solar being installed, compared to a net addition of 17 GW of nuclear over the entire 13-year period – not even taking into account the units in Long-Term Shutdown. In the European Union, in the same time frame, wind increased by 105 GW outpacing natural gas plants with 103 GW and solar with 80 GW, while nuclear decreased by 13 GW. In 2013, wind and solar added 11 GW each to the European grids, while all fossil fuels decreased and nuclear remained stable. China, by the end of 2013, had a total of 91 GW of operating wind power capacity and the installed solar capacity with 18 GW for the first time exceeded operating nuclear capacity. China installed a new world record of 12 GW of solar in just one year – vs. 3 GW of nuclear – largely overtaking Germany’s previous 7.6 GW record. China now aims at 40 GW solar and will likely exceed the 100 GW wind power target for 2015.
The traditional concept of baseload electricity generation might be coming to an end with increasing renewable energy penetration in national grid systems. Several countries now experience periods of very low or even negative electricity prices on the spot market. Electricity generators literally pay to produce because shutdown and restart would cost them even more. As illustrated with empirical examples from Germany, nuclear plants turn out to be the least flexible to react to unfavourable economic conditions and keep operating for hundreds of hours at spot prices below their average marginal operating costs.
In 2013, the German system generated 152 TWh from renewables, 56 percent more than from nuclear plants. This trend is continuing in 2014 and on 9th August between over a seven-hour period solar and wind provided a minimum of 50% of power. In just the two past years, the number of hours with negative prices more than quadrupled, from 15 to 64. The hours with prices below €15/MWh (£12/MWh) increased from 161 to 727 (8 percent of the time). From 2011 to the first quarter of 2014, average baseload prices decreased by an astonishing 40 percent. Consequently, in 2013, Germany exported with 34 TWh net more power to neighbouring countries than ever, while nuclear France – otherwise also a net power exporter – remains a net power importer from Germany, the opposite of what many had forecast following the German nuclear phase-out decision.
The 5th Assessment Report (AR5) of the International Panel on Climate Change (IPCC) suggests that CO2 emissions from the energy sector could double or triple by 2050 from current levels without major changes. However, in order to reduce emissions to a level that is likely to not result in dangerous climate change will require a significant improvement in the energy intensity of global economies along with the rapid reduction in the use of fossil fuels. The wider public acceptance, established supply chains, rapid implementation and lower costs of renewable energy have meant that they are and almost everywhere are likely to be deployed in preference to nuclear power. The UK Government, even at this late stage in the decision-making on Hinkley Point should take note of these trends and reconsider its support for nuclear new-build.
(1) All figures are given for nominal net electricity generating capacity. GW stands for gigawatt or thousand megawatts.
This blog was written by Antony Froggatt and Mycle Schneider. Antony is an EPG Associate and Independent Consultant. He and Mycle Schneider are the lead authors for the annual World Nuclear Industry Status Report, which this blog is based upon. The full 2014 report can be download from: http://www.worldnuclearreport.org/IMG/pdf/201408msc-worldnuclearreport2014-lr-v3.pdf